Question

Alan is currently an employee for the North Melbourne football club. He works in the marketing department full-time. He is also currently enrolled with a Commonwealth Supported Place (CSP) in a Bachelor of Marketing, studying on a part-time basis. In the current tax year, Alan has incurred expenditure for textbooks and consumables, as well as tuition fees in relation to the course. His employer, the football club, is supportive of Alan's studies and has provided Alan with study leave, the equivalent of one day per fortnight. In semester 2, 2019, Alan would drive directly from the club's premises to the university to attend classes; however, in semester 1, 2020, this ceased with COVID-19 causing closures of university campuses. He now completes his studies fully online. For this purpose, he has acquired a second monitor for $350 and desk for $150 and set these up in his lounge room. The club has also contributed $1,000 per course per semester. On completing the degree, Alan's role at the club will not change, however he expects it will lead to an increase in pay. REQUIRED: Advise Alan of the tax consequences arising from the above fact situation by answering the following four questions:

1. Is Alan entitled to a deduction for the expenditure on textbooks and consumables?

2. Is Alan entitled to a deduction for the tuition fees and what is the impact of the employer contribution on Alan?

3. Discuss the tax treatment of Alan's travel.

4. Discuss briefly the tax treatment of Alan completing his studies online.

Answer 1

1. Employees incur certain expenses on books, newspapers, periodicals etc The income tax law allows an employee to claim a tax free reimbursement of the expenses incurred. The reimbursement allowed to an employee is the lower of the bill amount or the amount provided in the salary package
However in this case alan spends some money on books and consumables thus we can say students who are interested in exploring various tax credits and deductions associated with their education can benefit from taking a closer look at the American Opportunity Credit and the Lifetime Learning Credit. Both of these programs allow students to offset some of their educational expenses with annual credits and tax saving opportunities .

2. basically exemption of tution fees is allowed under section 80C of income tax act upto maximum of Rs 1.5 lacs which may include Contribution towards life insurance premiun , ppf fund etc , and exemption for tution fees is also a component of it but it allows deduction for contribution for tution fees of two childrens , the act does not specify any limit for deduction of tution fees of individual itself and in the given case alan gets $1000 FROM ITS EMPLOYER for each semester which will be included in his salary income and hence taxable in his total income.

3. In second semester of 2019 Alan drive directly from club to university to attend his classes and there is no information related to expense and employer contribution is given in question thus we can say there will be no tax treatment or impact due to such travel.
4. Alan spend expenditure on monitor and desk as due to covid-19 , his university is closed thus he will not be able to go to attend classes and continues his studies full online which again have no impact on his tax and there is no tax treatment of it.