Private ruling: Residency
Date of advice: 20 June 2017
Published: October 2017
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Questions and answers | 1. Are you entitled to a self-education deduction for the course fees for a Bachelor degree? | No. | 2. Are you entitled to a self-education deduction for the course fees relating to a subject which forms part of a Bachelor degree? | Yes.

Relevant facts and circumstances: You are currently employed as a professional. You are currently undertaking a bachelor degree. The subjects you are studying include have been documented. You are a full fee paying student.

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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction. In addition, if the study of a subject of self-education objectively leads to, or is likely to lead to, an increase in a taxpayer's income from his or her current income-earning activities in the future, the self-education expenses are allowable as a deduction. However, the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for self-education expenses if the study is to enable the taxpayer to get employment, obtain new employment or to open up a new income-earning activity (whether in business or the taxpayer’s current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. If a course of study is too general in terms of the taxpayer’s current income-earning activities, the necessary connection between the self-education expenses and the income-earning activity does not exist. In your case, you are undertaking a Bachelor degree. The Commissioner is satisfied that there is a sufficient connection between the skills and knowledge required in your current duties as a professional and the contract subject which forms part of the degree. The other subjects while they may be relevant they do not have a sufficient connection with your professional role. Accordingly, you are entitled to a deduction for the course fees associated with the contract subject.