1 Are you entitled to a partial deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of tuition fees?
1 Yes. Question 2 Are you entitled to a deduction for textbooks, mouse, laptop stand, keyboard expenses? Answer 2 Yes. Question 3 Are you entitled to a deduction for the cost of airfares, your accommodation and food expense? Answer 3 No. Question 4 Are you entitled to a deduction for the student visa fee, travel insurance and Immigration health surcharge? Answer 4 No. This ruling applies for the following periods: Year ended 30 June 20XX Year ended 30 June 20XX The scheme commenced on: XX 20XX
You were employed by X (employer), as a full time XX Graduate. In XX 20XX, you took a leave of absence to work in an alternative professional role. In XX 20XX, you returned to work full-time with your employer. You are the recipient of an XX scholarship and you decided to undertake a XX degree at University-X. On XX 20XX, you paid $XX return flights to travel to the Country X. On XX 20XX, you received a flight stipend of $XX. On XX 20XX, you paid $XX for the Country X student visa and $XX for the immigration health surcharge. On XX 20XX, you received $XX for the first lump sum of the scholarship. On XX 20XX, you paid $XX for your academic tuition fees. On XX 20XX, you were promoted to a professional role at a senior level with your employer. On XX 20XX, you took a second leave of absence to study full-time at University X in the Country X. In XX 20XX, you departed Australia and you will return at the end of XX 20XX when you graduated. On XX 20XX, you paid $XX for travel insurance. During 20XX financial year, you also incurred textbook expenses. You purchased a mouse and a laptop stand merely for study purposes.
You will receive no allowances or reimbursement to study, such as Austudy, ABSTUDY, or Youth Allowance. You will not receive a taxable bonded scholarship. Your employer will not be providing an allowance for this study. The scholarship will fund for the study. Your employment Your main responsibilities include the following: • List of responsibilities and tasks provided. Performance of these duties and tasks requires you to understand the principles of relevant areas of your profession. Course detail The course offers the following 4 units • Description of 4 units provided. Expenses you intend to claim • Tuition fees • Student visa fee • Return airfares • Immigration health surcharge • Travel insurance • Mouse, laptop stand, keyboard • Textbooks and study related expense.
Income Tax Assessment Act 1997 section 8-1
Question 1 Are you entitled to a partial deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of tuition fees? Detailed reasoning Section 8-1 of the ITAA 1997 allows an employee can deduct a work expense to the extent that it is incurred in gaining or producing assessable income except where the expense is of a capital, private or domestic nature or relate to the earning of exempt income. Self-education expenses are deductible under section 8-1 to the extent that they: • are incurred in gaining or producing your assessable income, and are not • capital, private or domestic in nature • incurred in gaining or producing exempt or non-assessable non-exempt income • prevented from being deductible by a specific provision in the tax law. Paragraph 50 of the Tax Ruling (TR) 2020/1 Income tax: employees: deductions for work expenses under section 8-1 of the ITAA 1997 indicates deductions cannot be claimed for expenses incurred in earning tax exempt income. Application to your circumstances
In your case, it is accepted that the XX degree maintains or enhances the skills that are required in the performance of your employment with your employer. You are entitled to a deduction for your self-education expense. However, you received your first lump sum of the scholarship and used it to pay your tuition fees during the 20XX financial year. Since your scholarship is classified as exemption income and your tuition fees exceed the exempt scholarship you received in the same financial year. Therefore, you can claim the remaining balance of your tuition fees as a deduction. You cannot offset tuition fees against scholarship income received in a different financial year. Question 2 Are you entitled to a deduction for textbooks, mouse, laptop stand, keyboard expenses? Detailed reasoning Paragraph 119-120 of TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual states: Self-education expenses incurred for professional and trade journals, digital subscriptions and stationery, including pens and photocopying are deductible.
Reference books and textbooks that you use for self-education are generally deductible. Where the books, or sets of books, cost more than $300, you deduct an amount for decline in value instead of claiming a deduction in the year of purchase. Application to your circumstances In your case, you purchased textbooks, mouse, laptop stand, keyboard merely for study purpose. All expenses are under $300. Therefore, you are entitled for a deduction for these expenses. Question 3 Are you entitled to a deduction for the cost of airfares, your accommodation and food expense that you incurred? Detailed reasoning Paragraph 125 TR 2024/3 states: Airfares incurred to participate in self-education, provided you are not living at the location of self-education activity, are deductible. Airfares are part of the cost of undertaking the self-education activities.
Also, paragraph 130 TR 2024/3 indicates accommodation and meal expenses you incur in connection with self-education will be private and domestic living expenses where you are living at the location of the self-education activity. This will apply regardless of whether the self-education allows you to acquire and improve the skills and knowledge you require to carry out your income-earning activities or leads to, or likely to lead to, an increase in income from your income-earning activities. Application to your circumstances In your case, you departed Australia in XX 20XX and you will not return until the end of XX 20XX. You are living in Country X for the entirety of the study course. It is considered that you are living at the location of the self-education activity. Therefore, you are not entitled to a deduction for the cost of airfares. Similarly, you are living at the location of the self-education activity, therefore, accommodation and meal expenses will be private and domestic living expenses and are not deductible. Question 4 Are you entitled to a deduction for the student visa fee, travel insurance and Immigration health surcharge? Detailed reasoning
Paragraph 13 of the TR 2020/1 states: the pivotal element of section 8-1 for work expenses is the requirement that expenses be incurred 'in gaining or producing assessable income'. The High Court majority in Payne said it is well established that these words are to be understood as meaning incurred 'in the course of' gaining or producing assessable income, and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income. Application to your circumstances You were required to obtain a Country X student visa, travel insurance and immigration health surcharge to attend your course. It is accepted that obtaining these documentations were necessary to the self-education course that enabled you to travel to the location of the education activity. However, the costs incurred in association with obtaining a visa, travel insurance and immigration health surcharge are not expenses incurred in 'gaining' or 'producing' the assessable income. These costs are merely pre-requisites of the course, not a cost of the actual study course. Therefore, you are not entitled for a deduction for these expense under section 8-1 of the ITAA 1997.