FBT Q&A ‘ Otherwise deductible for student amenities fee

Question

Where a course of study has the relevant nexus to an employee’s income producing activities it will be considered otherwise deductible for FBT purpose. Does the student amenities fee also receive this treatment?

In particular, we will pay for an employee’s cost of subjects that are studied at university. In terms of the student amenities fee, can the otherwise deductible rule be applied to this, even if a subject is failed by the employee?

Answer

The term ‘expenses of self-education’ is defined in ss. 82A(2) of ITAA 1936 as an expense necessarily incurred by a taxpayer in connection with a ‘prescribed course of education’.

A ‘prescribed course of education’ is defined in ss. 82A(2) to include a course of education given by a university and undertaken for the purpose of gaining qualifications for use in the carrying on of a profession or in the course of any employment.

The amounts excluded from deductibility by the provisions of s. 26-20 of ITAA 1997 are also specifically excluded from the definition of ‘expenses of self-education’ by ss. 82A(2)(ba) and 82A(2)(bb) of the ITAA 1936 respectively. Accordingly, neither a student contribution charge, nor any payment made to the Commonwealth to reduce a HECS-HELP debt incurred in relation to a student contribution charge can be taken into consideration when determining the quantum of a taxpayer’s ‘expenses of self-education’.

The university course presumably qualifies as a prescribed course of education and it is considered the student amenities fees would be ‘necessarily incurred’ in connection with the course. Consequently, those fees qualify as ‘expenses of self-education’, as defined in s. 82A of ITAA 1936 and further, are not an item excluded from deductibility by s. 26-20 of ITAA 1997.

As such, to the extent the course would be considered otherwise deductible, the student amenities fee will also have that same character as it is incurred in relation to that course.

Whether the student passes or fails does not alter the otherwise deductible status.

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