Private ruling: Self-education expenses
Date of advice: 15 July 2016
Published: August 2016
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to claim a deduction for self-education expenses? | A1: Yes

Relevant facts and circumstances: You are looking at commencing a Master of Business Administration course (MBA) in 2016. You currently work as a manager. Your employer has requested your completion of the program and will contribute a portion of the fees toward completion of your MBA as it directly relates to your current role. You will be paying the fees upfront using the Fee-HELP system.

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

Reasons for decision: Summary: 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. In your case, it is accepted that the course you have undertaken will enhance the skills and knowledge that are required in the performance of your current employment duties. Consequently, the self-education expenses incurred in undertaking this course have the necessary and relevant connection with the earning of your assessable income and are deductible under section 8-1 of the Income Tax Assessment Act 1997 . Additional information In calculating your self-education expenses any reimbursements you receive from your employer for completing your course is used to reduce your total course expenses, to determine your net self-education expenses. The self-education expenses you can deduct may be subject to a reduction of up to $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 TR 98/9, which can be accessed on our internet website at www.ato.gov.au.