Self-education expenses - Post Graduate Education Loans scheme

Is the taxpayer allowed a deduction for Postgraduate Education Loans Scheme repayments under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

No. Paragraph 26-20(1)(c) of the ITAA 1997 specifically denies a deduction for Postgraduate Education Loans Scheme repayments.

The taxpayer is enrolled in a Postgraduate course at an Australian University.

The taxpayer has received assistance under the terms of the Postgraduate Education Loans Scheme and has made several repayments of the loan.

The course of study undertaken by the taxpayer will improve the taxpayer's skills and knowledge in their current field of employment and may lead to a future pay increase.

The taxpayer's Postgraduate course has a clear connection to the taxpayer's current income-earning activities. The taxpayer's general education expenses associated with the course (student fees, books, computers, etc) are allowable deductions.

Subsection 8-1(1) of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable. However, paragraph 8-1(2)(d) specifically prevents you from claiming a loss or outgoing where a provision of the ITAA 1997 prevents you from deducting it.

Section 26-20 denies deductions for certain HECS and student assistance payments.

Paragraph 26-20(1)(c) specifically denies a deduction for payments made to reduce a debt to the Commonwealth under Chapter 5A of the Higher Education Funding Act 1988 (HEFA 1988). Chapter 5A of the HEFA 1988 governs the repayments of loans made under the: • Higher Education Contribution Scheme (Chapter 4 of the HEFA 1988) • Post-graduate Education Loan Scheme (Chapter 4A of the HEFA 1988), and • Open Learning Deferred Payment Scheme (Chapter 5 of the HEFA 1988).

The taxpayer has made repayments of their Post-graduate Education Loan. Paragraph 26-20(1)(c) of the ITAA 1997 operates to deny the taxpayer a deduction for the loan repayments. Therefore the taxpayer cannot claim a deduction in respect of the loan repayments under section 8-1 of the ITAA 1997.

Taxation Ruling TR 98/9