ATO Audit- Work Related Expenses Claim Disallowed

Lsixthsense on 11/09/2018 - 09:50
Last edited 11/09/2018 - 10:57 by 1 other user

Hi Guys, needed some advice over the recent audit held by ATO.

I completed my MBA from one of the reputed Uni's at Melbourne While I was working as a design Engineer. My MBA is just the general MBA. (not specific to any streams like finance HR ) which did fetch me a managerial job in 2017. I stated MBA from 2013 and completed it in 2017 as part time.

But the recently ATO Audited me for my work related expenses and told me that my study was not related and I have to pay back the tax offset ($8750 mainly due to uni Fee) as I was not working as a manager. But there are a few subjects which I did during my MBA that did help me to at my previous job as design engineer eg: Project management, People management. etc. I have to be honest as not all the subjects were related at that time.. I did write back to ATO saying how this is related, but they disagree.

I am thinking to appeal this as I have an option. Do you guys think I am wasting my time and I should just suck it up and move on? Just for info I did my tax returns from one of the reputed tax agent. I did not do it myself. Also there is no penalty imposed on me. All they have asked is to pay back the tax that was deducted for uni fee other Expenses.

PS: I did send all the relevant documents Eg: study related expenses Fee receipt, and other related expenses. I did 5 subjects in 2015- 2016. So maximum tax was taken out around $8700.

All I would like to know is should I appeal or not. what are your thoughts?

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Comments

  • derpdeder on 11/09/2018 - 10:37

    Did it help you get a better job in the "Design Engineer" field?

  • Sage on 11/09/2018 - 10:45
    +3

    Paragraphs would make this easier to read.

    Anyway my understanding of the situation is the ATO are claiming the Master of Business Administration course isn't related to working as a design Engineer.
    Here are the official rules:

    To claim a deduction for self-education expenses, you must have met one of the following conditions when you incurred the expense:

    • the course maintained or improved a skill or specific knowledge required for your then current work activities
    • you could show that the course was leading to, or was likely to lead to, increased income from your then current work activities, or
    • other circumstances existed which established a direct connection between the course and your then current work activities.

    You cannot claim a deduction for self-education for a course that:

    • relates only in a general way to your current employment or profession, or
    • will enable you to get new employment

    It doesn't seem like the expenses were necessary for job.
    Hopefully the quote above helps.

    • HighAndDry on 11/09/2018 - 10:51
      +2

      Yeah, OP's course actually perfectly fits the two exemptions instead:

      relates only in a general way to your current employment or profession

      Yup - can't really get more general than "project management skills"; and

      will enable you to get new employment

      Literally what OP was aiming for and actually happened.

  • [Deactivated] on 11/09/2018 - 10:45
    +3

    I've got a cert III in applying paragraphs. Let me know if I can help.

    • HighAndDry on 11/09/2018 - 10:52
      +1

      Ah yes, but did you claim the costs of that course against your taxes?

      • [Deactivated] on 11/09/2018 - 10:53
        +1

        I completed the course for personal development only

        • HighAndDry on 11/09/2018 - 10:54

          Hahaha. Also wait I just realized… OP completed an MBA and this post is what we get? Hopefully it's not UNIMELB again…

  • mskeggs on 11/09/2018 - 11:17
    -1

    The important info is whether you pursued your MBA in the hope of furthering you design engineer career, e.g. to become a manager or team leader etc. and you can show the courses you chose were to achieve this.

    The unrelated job exception is if you are a brick layer studying nursing, for example.

    Ideally, you got a promotion in your old job as a result of your study, then changed roles later.

  • Diji1 on 11/09/2018 - 11:33
    -5

    LibLabs can't have you avoiding paying tax while the top 250 businesses in Australia. by market capitalisation, legally avoid paying tax on billions of dollars in profits that mostly leave the country.

    That would be against their ideology of screwing the poor to enrich the already wealthy.

    Diji1 on 11/09/2018 - 11:33 (Collapsed - Offtopic. Show)
  • Love a bargain on 11/09/2018 - 12:36

    Is the managerial job that you subsequently got in the same field?

    By the sound of it, I think you may have a case there. Not sure how much it will cost to appeal but if it's not much, I'd say go for it.

  • MoonlapseVertigo on 11/09/2018 - 13:29

    fight the system i say mate. There are some companies who avoid paying tax altoghether from their australian income streams, they are what the ATO should be targeting, not a little drip in the ocean employee who lives an honest life and pays tax to earn a wage and live in this beautiful country.

    Contact a lawyer for a free quote…..!

  • IMadeYouReadThis on 11/09/2018 - 13:36

    Good luck objecting that OP.

  • CheapskateQueen on 11/09/2018 - 14:09

    of the subjects you claim related to your then job as a design engineer, e.g. Project management, People management, what was the relationship of those subjects to your then job functions and how did it help you/improve you in relation to your then job functions?

    if you can't provide a good response to that question, then dont' bother. If you can, then you may have a chance to object against the decision only in relation to the cost of those certain subjects. But there has to be a decent enough connection and not "people management helped me communicate better with my peers which made me a better engineer"

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