Private ruling: Self-education expenses
Date of advice: 20 April 2017
Published: September 2017
Ruling period: Year ended 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2015

Ruling: Q1: Are university fees paid in connection with a self-education course at an Australian University an allowable deduction? | A1: Yes

Relevant facts and circumstances: You are employed by an Australian firm, having commenced there in 201X, and currently you are dealing with land transfer within the firm. Your employer has requested that you undertake further studies. The course will further develop your legal skills and knowledge of your current employment. In addition, the subjects you will undertake in the course will expand your knowledge in areas relevant to your employment position. On completion of the course you will continue your current role, and you will have acquired the additional ability to provide supplementary advice which is required to complete certain transactions. Completion and attainment of the relevant qualification will result in higher remuneration being paid. The course is running between the 2015-16 and 2019-20 financial years, and you will be completing part time study whilst you continue in your current role. Your employer will provide study leave at times throughout the duration of the course. You are likely to take over management of the firm as current principal reduces their role in the firm. You intend on paying for the course fees over the duration of the course, on a module by module basis.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Taxation Ruling TR 98/9 discusses the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's current income earning activities are based on the exercise of a skill or some specific knowledge, and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348). Further, paragraph 26 of TR 98/9 states that expenses relating to self-education which are compulsory and unavoidable, as well as those for which a need can be shown in terms of fulfilling the requirements of the course, are regarded as being 'necessarily incurred' and are expenses of self-education. It is considered that the study will maintain or improve your skill or knowledge used in your current income earning activity. Consequently you are entitled to a deduction for the course fees incurred.