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 1676 /1985 and Commissioner of Taxation [1986] AATA 334; (1986) 18 ATR 3050; 86 ATC 1176 (31 October 1986)

Last Updated: 5 August 2009

ADMINISTRATIVE APPEALS TRIBUNAL

Income Tax - allowable deductions - education expenses - external studies with University of London - whether "a course of education provided by ... a university ..."

Income Tax Assessment Act 1936 (Cth) – s 51; s 159U

No.  1676 /1985
AAT No 3010

Mr. P.M. Roach (Senior Member)

31 October 1986

ADMINISTRATIVE APPEALS TRIBUNAL )
) No.  1676 /1985
TAXATION APPEALS DIVISION )

Respondent

REASONS FOR DECISION

Mr. P.M. Roach (Senior Member)

1. In this reference the applicant was at all material times a university graduate, a qualified accountant and a clerk in the office of the Commissioner of Taxation. He enrolled as an external student for the Degree of Bachelor of Laws with the University of London, a responsible and reputable educational institution. Upon enrolling he paid nominal registration fees and thereafter became eligible to proceed to qualify for that degree by examination. As a first step in his progress towards the degree it was required that he should successfully complete an intermediate examination in four subjects prescribed by the University.
2. In about October 1982 he gave notice to the University of his intention to submit himself for examination at the next examination scheduled to be held in June 1983. At his request he received from the University in relation to each course a syllabus; reading list; and study notes. The reading list nominated relevant texts and the study notes provided guidance for the student. The applicant did not receive any direct or personal tuition by way of lectures, seminars or tutorials nor did he undergo any program of essays or other written assignments which would be submitted for assessment or subjected to criticism. In June 1983 he submitted himself for examination in two subjects but had to withdraw from others because of illness. In the following November or thereabouts he gave fresh notice to the University of his intention to submit himself for examination and in April 1984 paid fees to the University of London which would enable him to sit for the forthcoming examinations ($174.00) and fees to the Education Department of his State for their services as examination supervisors accredited to the University of London ($60.00). He also incurred expenses in relation to stationery, photocopying and phone calls to the United Kingdom ($35.00). The expenses totalled $269.00.
3. He claimed a deduction in relation to all expenses pursuant to s.51 of the Income Tax Assessment Act ("the Act"). His claim was disallowed and he objected. The Commissioner considered his objection and thereupon determined that as to $250.00 the claim was allowable as a rebate claim for self-education expenses pursuant to S.159U of the Act and as to $19.00 pursuant to s51 of the Act. At the hearing the Commissioner's representative conceded that, but for s159U of the Act, the applicant would be entitled to succeed.
4. The issues to be determined upon the reference were whether the applicant had engaged in "a prescribed course of education" as that phrase was defined by s159U(5) of the Act and, if yes, whether the fees paid in relation to examinations and other matters were "expenses necessarily incurred ... for or in connection with" such a prescribed course. It was agreed that all other elements necessary to establish the claim of the taxpayer had been satisfied.
5. The essential contention of the applicant is that the studies he undertook could not be fairly or accurately described as "a course of education provided by a .... university because the University did not provide tuition or instruction in any form with the consequence that, even if the studies he pursued could be described as "education", it could not be described as a "course of education" and certainly not as a course of education "provided by a university". That contention was put despite the applicant's acknowledgment that the University of London is a respected institution in the realm of higher education; that it defined the scope of the particular courses by its syllabus; that it set the standards for examination as well as prescribing the text of the examination papers and by its accredited representatives supervising the performance of the candidate; and that it assessed the examination papers submitted by candidates and would make available to candidates at their request an appraisal of papers submitted (although regarded by the applicant as an unsatisfactory standard of appraisal). In addition, it was acknowledged that the University recommended the texts to be studied and provided notes to assist students in their study, giving guidance as to the relative importance of various parts of the syllabus and relative merits of texts nominated. In addition, it provided "vacation courses" in England for external students although attendance at these was subject to payment of a fee and was not practicable for the applicant so long as he resided in Australia.

6. Having considered all aspects of the matter, I am of the opinion that the program of study undertaken by the taxpayer did constitute "a course of education provided by a ... university". It was "education" in that it was a learning process involving the development of the student's mind. It was nonetheless education because he was largely left to his own resources. The learning dimension in the educational process is always the province of the student. It was a "course" of education in that the objectives were defined by the syllabus and the means of achieving them by reference to the reading list and study notes. Further, it was a course of education "provided by a university" in that it was the University of London which determined the nature and content of the course and the standards to be achieved by students upon examination.

7. I would up hold the determination of the Commissioner upon the objection.