Masters course fees not deductible as self-education expenses

July 17, 2023 | Robyn Bull

The Administrative Appeals Tribunal (‘AAT’) has held that tuition fees for a public policy Masters course were not deductible, on the basis that the course did not relate to the taxpayer’s work as a music teacher.

The taxpayer was a qualified teacher who specialised in teaching music.  He had commenced a Masters Course at the University of Melbourne (the Masters course), and subsequently claimed a deduction for work-related education expenses in relation to the subject tuition fees.  The taxpayer submitted that the Masters course would expand the breadth of subjects he could teach and therefore help him secure management positions.

However, the ATO disallowed the deduction as it was not satisfied that a real and direct connection existed between the study and the taxpayer’s work.

The AAT confirmed the ATO’s decision that the fees were not deductible as self-education expenses, as  the tuition fees were not incurred in gaining or producing the taxpayer’s assessable income.  The subjects undertaken by the taxpayer in the 2021 year, for which he was seeking to claim a deduction, “did not maintain or improve his skills or knowledge as either a music teacher or relief teacher“.

The AAT also noted that, in incurring the claimed self-education expenses, the taxpayer’s intention “of being able to expand his ability to teach in subjects outside of music and to gain leadership positions relate to new employment or new income-earning activities and as such is not sufficient basis for those expenses to be deductible”.