Private ruling: Self-education expenses
Published: October 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer | Can you claim a deduction for the Fee-HELP debt you incurred while studying? | No.

Relevant facts and circumstances: You have a degree. You currently work in the health field. You commenced a second degree recently.

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 circumstances in which self-education expenses are allowable as a deduction. If your current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables you to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. If the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future, the self-education expenses are allowable deduction. Paragraph 15 of TR 98/9 also mentions that no deduction is allowable for self-education expenses if the study is to enable you to obtain employment, to obtain new employment or to open up a new income-earning activity (whether in business or in your current employment). This includes studies relating to a particular profession, occupation or field of employment in which you are not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. For example, in Case V132, 88 ATC 842, the taxpayer began studying for a graduate diploma in computer science while employed as a librarian with a state government. He claimed that he undertook the course in order to perform his duties as a librarian more efficiently and to enhance his chances of promotion. The next year he gained a new position as computer systems officer. It was held that the expenses of the course were not deductible. The costs of the course were incurred gaining a position in a new field of employment. It was not necessary for the taxpayer to undertake the course in his employment as a librarian. In your case you are currently employed in the health field. You are now studying a second degree. Although you are working in the health field, it is considered that your study does not have a sufficient nexus with your current employment. Therefore, the expenses were not incurred in relation to your current position or for training related to your current position, but rather to open up new income-earning activity in future employment. Therefore, your Fee-HELP debt cannot be claimed as a self education deduction under section 8-1 of the ITAA 1997.

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