Private ruling: Work related expenses: self-education
Date of advice: 22 May 2018
Published: August 2018
Ruling period: Year ended 30 June 20BB
Date scheme commenced: 1 July 20AA

Ruling: Q1: Am I entitled to a deduction for course fees, application fees, living expenses, textbooks, additional costs (e.g. laptop, mobile phone etc.) and interest on a loan paid in connection with a self-education course (a Masters of Business Administration) at an overseas university? | A1: No

Relevant facts and circumstances: You are employed as a Manager. You work on strategy projects where you are responsible for identifying issues, structuring problems, engaging in analysis to efficiently and reliably develop insights into the business and potential improvements. Your work requires that you engage in analytics to efficiently and reliably develop insights about the business and potential improvements. You work with a broad range of senior stakeholders. You have undertaken high profile projects. You now propose to study an MBA at an overseas university. Your employer has formally agreed to support your MBA study by offering you leave without pay while you study. The MBA you propose to study offers a concentration on Strategy Consulting and Global Consulting which you believe is ideally suited to maintaining and enhancing the specific skills you require in your current role. For example: “This concentration will provide you with practical grounding in core skills such as:- ● Defining propositions that clients want ● Selling consultancy services to clients ● Delivering successful consulting assignments Before stretching your abilities in a real consulting environment.” Your job description notes that an MBA is a bonus but not essential for this role. However you note that your employer generally hires MBA’s for senior roles.

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. Based on the evidence submitted in support of this application it is considered that the proposed MBA has insufficient connection to the skills or knowledge used in your current income earning activity. Consequently you are not entitled to a deduction for the course fees incurred. Accordingly, you are not entitled to deduct any costs relating to this MBA.