Issue
Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for fees that they incurred for the purpose of undertaking a subject in a course of study where they subsequently cancelled their enrolment?
Decision
Yes. The taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for fees that they incurred for the purpose of undertaking a subject in a course of study, where they subsequently cancelled their enrolment.
Facts
The taxpayer enrolled to study a subject that formed part of a course of study during the income year.
The course of study had a relevant connection to the taxpayer's income-earning activities.
The taxpayer paid their fees but later cancelled their enrolment before commencing the subject course.
Due to the late cancellation of their enrolment, the taxpayer did not receive a refund of the fee they had paid at the time of their enrolment.
Reasons for Decision
Section 8-1 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 income except where the outgoings are of a capital, private, or domestic nature, or relate to the earning of exempt income.
Expenses associated with a course of study are normally deductible self education expenses under section 8-1 of the ITAA where they have a relevant connection to the taxpayer's income-earning activities.
In this case, the taxpayer's intention at the time of incurring the expense was to undertake a subject that was part of a course of study with a relevant connection to the taxpayer's income producing activities. The fact that the taxpayer subsequently cancelled their enrolment does not alter the fact that when the expenditure was incurred there was a relevant connection between the expense and the taxpayer's income-earning activities.
As such, the expenses were incurred in gaining or producing the taxpayer's assessable income and therefore satisfy the requirements of section 8-1 of the ITAA 1997.
Consequently, the taxpayer's expenses are deductible under section 8-1 of the ITAA 1997.