Private ruling: Self education expenses
Published: September 2017
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to a deduction for the course fees and associated expenses incurred for undertaking a Graduate Certificate in Business Administration and the subsequent Master of Business Administration? | A1: Yes

Relevant facts and circumstances: You are currently employed as a manager at Corporation X. You are required to make operational and strategic decisions in the course of your regular duties which include: Managing unplanned outages and implementing measures for return to safe operating conditions Facilitating investigations Taking immediate corrective action to ensure compliance Managing performance issues Making decisions on changes to plant operation or procedures for the whole refinery Investigating community complaints Developing training and succession plans Authorising promotions; and Managing coverage for overtime and leading an entire shift team of up to 30 staff. You have enrolled in a Graduate Certificate in Business Administration and upon completion, will articulate to the Master of Business Administration (the courses). The subjects covered in the courses include: Management Leadership Business operations management; and Design thinking for business. You are undertaking the course using FEE-HELP for this semester but intend to pay the fees upfront for subsequent semesters. Your employer has provided written confirmation to state that they support your studies and has confirmed that it is relevant to your current position.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 26-20 and | Income Tax Assessment Act 1997 Section 82A.

Reasons for decision: Summary: Section 8-1 of Income Tax Assessment Act (ITAA 1997) allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings 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 discusses the circumstances under which self-education expenses are allowable as a deduction. Self-education expenses are deductible where they have a relevant connection to the taxpayer's current income earning activities. 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; (1961) 8 AITR 406). Similarly, 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, a deduction is allowable. However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income earning activity, whether in business or in the taxpayer's current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income ( FC of T v. Maddalena (1971) 45 ALJR 426; (1971) 2 ATR 541; 71 ATC 4161). In your case, your study in the courses is considered relevant to your current role as a shift manager. It is accepted that the courses will help maintain or enhance the skills required in the performance of your employment duties. Consequently the self-education expenses have the necessary and relevant connection with the earning of your assessable income and are therefore deductible under section 8-1 of the ITAA 1997. | Detailed Reasoning - Limit to the deductibility of self-education expenses: The self-education expenses you can deduct may be subject to a reduction of $250 in accordance with section 82A of the Income Tax Assessment Act 1936 . An explanation on how this provision operates is provided at paragraphs 119 to 155 of TR98/9. | Detailed Reasoning - FEE-HELP: The tuition fee can be claimed in the financial year in which the expense is incurred. FEE-HELP and VET FEE-HELP was introduced by the Commonwealth to provide assistance to students who are not supported by the Commonwealth to pay course fees. You can claim tuition fees, including fees payable under FEE-HELP. However you are not entitled to a deduction for the repayment of the FEE-HELP debt itself (Section 26-20 of the ITAA 1997). As you have met the requirements for eligibility for a deduction for self-education expenses, the whole course fee is deductible when it is incurred. However, as stated above, you are not entitled to claim a deduction for repayments of the FEE-HELP debt.