ATO Interpretative Decision
ATO ID 2012/65
Income Tax
Deductions: student services and amenities feeFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a taxpayer, who is entitled to deduct self-education expenses incurred in respect of a course of higher education, deduct the student services and amenities fee charged by the higher education provider?
Decision
Yes. A taxpayer, who is entitled to deduct self-education expenses incurred in respect of a course of higher education, can deduct the student services and amenities fee charged by the higher education provider under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
Facts
In 2005, the Higher Education Support Act 2003 (HESA) was amended to abolish compulsory up-front student union fees. This led to a decline in student guilds and the generally non-academic services they provided for students.
The HESA was further amended in October 2011 to allow higher education institutions to charge, from 1 January 2012, a fee to students for student services and amenities of a non-academic nature, such as sporting and recreational activities, employment and career advice, financial advice and food services.
The taxpayer is studying a course at a higher education institution to gain qualifications in a profession, business or trade in circumstances where relevant self-education expenses are deductible.
The higher education institution charges students who undertake a course at the institution a student services and amenities fee of $250.
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.
Taxation Ruling TR 98/9 addresses the circumstances in which work or business related self-education expenses are deductible under section 8-1 of the ITAA 1997. The ruling explains when a course of study will have a relevant connection to a taxpayer's current employment or business activities so that self-education expenses are incurred in gaining or producing assessable income.
Self-education expenses that are not work or business related may nevertheless be deductible under section 8-1 of the ITAA 1997 where the student's continuing entitlement to particular income (for example, a taxable scholarship) is conditional on enrolment and satisfactory progress in the relevant course of study: Federal Commissioner of Taxation v. Anstis (2010) 241 CLR 443; (2010) 76 ATR 735; (2010) 2010 ATC 20-221..
Where a taxpayer is entitled to deduct self-education expenses in respect of the course of higher education, because the expenses are work or business related or are otherwise incurred in gaining or producing assessable income, and the student services and amenities fee is imposed as a compulsory levy on students at the institution, the fee is incurred by the taxpayer in undertaking the course of study. It is not considered to be an outgoing of a private nature. The fee is deductible under section 8-1 of the ITAA 1997.
A taxpayer who obtains a loan from the Commonwealth under Part 3-5 of the Higher Education Support Act 2003 to pay the student services and amenities fee (SA-HELP assistance) incurs the fee for section 8-1 of the ITAA 1997 purposes. The fee would be deductible in the income year in which the taxpayer obtains SA-HELP assistance.
Year of income: Year ended 30 June 2012
Legislative References:
Income Tax Assessment Act 1997
section 8-1
section 82A Higher Education Support Act 2003
Part 3-5
Case References:
FC of T v Anstis
(2010) 241 CLR 443
(2010) 76 ATR 735
(2010) 2010 ATC 20-221
Related Public Rulings (including Determinations)
TR 98/9
Keywords
deductions & expenses
self-education expenses
ISSN: 1445-2782