Issue
Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for repayments of a loan under the Bridging for Overseas-Trained Professionals Loan Scheme (BOPTLS)?
Decision
No. The taxpayer is not entitled to a deduction under section 8-1 of the ITAA 1997 for repayments of a loan under the BOPTLS as paragraph 26-20(1)(c) of the ITAA 1997 prevents the deduction.
Facts
The taxpayer is enrolled in a bridging course for overseas-trained professionals at an Australian University.
The taxpayer received a loan under the terms of the BOPTLS and makes repayments of the loan.
The course of study undertaken by the taxpayer will improve their skills and knowledge in their current field of employment and if successfully completed will lead to a future pay increase.
The taxpayer has incurred expenses associated with the course such as student fees, books and stationery.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent that 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. However, a deduction will not be allowed where another provision of the ITAA 1997 specifically prevents it.
Paragraph 26-20(1)(c) of the ITAA 1997 specifically prevents a deduction for payments made to reduce a debt to the Commonwealth under Chapter 5A of the Higher Education Funding Act 1988 (HEFA). Chapter 5A of the HEFA governs the repayments of loans including those made under the BOTPLS (governed by Chapter 4B of the HEFA).
The taxpayer has made repayments of their loan under the BOTPLS. 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.