The Deductibility of Self-Education Expenses

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Tertiary education is a great way to expand your career, increase your income and keep up with an evolving labour market.

Every year, millions of Australians enrol in courses at university, TAFE, RTOs and VET providers. Whether you’re working towards a formal qualification or an informal skill, the courses offered by these providers can give your career a boost.

Of course, undertaking study can attract a range of fees, including tuition, textbooks, travel expenses and more. To offset the cost and encourage Australians to grow their skills, the ATO allows you to claim tax deductions on eligible self-education fees.

In this article, we will discuss the deductibility of self-education expenses, and explain what you can and can’t claim on your personal tax return. You can also read up on how to tax yourself when being self-employed.

What Are Self-Education Expenses?

Self-education expenses are the costs and fees you encounter when you study at an educational institution, attend work-related conferences, or undertake self-paced study tours (within Australia or overseas).

Self-education does not need to lead to a formal qualification for your expenses to be tax deductible.

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Self-Education Expenses You Can Claim

You are eligible to claim a tax deduction on self-education fees if the education is “sufficiently” connected to an income-earning activity, e.g. your job.

Self-education is sufficiently connected to your income if one of the following applies:

  • The self-education helps you to maintain or improve the specific skills or knowledge needed to carry out your normal employment activities, and/or;
  • The self-education results in (or is likely to result in) an increase in your income from your employment activities.

Employment activities are any normal tasks or duties that you are expected to perform at your job.

For example, Ryan is an apprentice electrician. His apprenticeship requires him to work with his employer 3 days per week, and attend TAFE 2 days per week to study a Certificate III in Electrotechnology.

Ryan is paying his TAFE fees out of pocket. Because his study will improve the skills he needs for his current employment as an apprentice electrician, Ryan can claim a deduction for his self-education expenses.

You can claim a dedication for a broad range of self-education expenses, including:

  • Tuition or course fees, including FEE-HELP and VET loans.
  • Conference or seminar fees.
  • General course expenses, such as textbooks, subscriptions to academic journals, printing, internet usage, phone calls and more.
  • The depreciation of assets used for education purposes, including computers, office furniture, technical instruments, tools and other equipment.
  • Vehicle and transport expenses when travelling to and from your place of education. Some transport expenses may be considered private and are not eligible for a tax deduction.
  • Accommodation and meal expenses, where your education requires you to be away from home temporarily (e.g. attending a conference).
  • The interest payable on a loan you borrowed to pay for deductible self-education expenses.

Note that you cannot deduct any expenses that are paid for by someone else, such as your employer. You also cannot deduct expenses that you are reimbursed for.

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Excluded Self-Education Expenses

Not all self-education expenses are eligible for a tax deduction. You cannot claim self-education expenses if any of the following criteria apply to you:

  • You are unemployed
  • The training is not sufficiently connected to your current employment
  • The training will enable you to change employment, or find new employment (such as when you are changing career paths)
  • The training only relates to your normal employment activities in a general way

For example, Beth is studying a fashion degree at university while working at a clothing boutique. Her work and her study are generally related, but the professional skills Beth is learning as part of her study are far beyond the skills needed for her current employment.

Since Beth’s employment and study are only generally related, Beth cannot claim a dedication for self-education expenses.

Apportioning Partially Deductible Expenses

Self-education expenses may be tax deductible, even where a portion of the expense is unrelated to your current employment. Where this happens, the ATO requires you to apportion the expenses, and only claim a deduction on the eligible portion.

For example, Tim is working as a network engineer for an IT company. The company acquires a new client that uses a networking technology Tim is unfamiliar with. Tim decides to enrol in a course that will teach him how to use the new networking system.

Halfway through the course, Tim changes jobs and becomes a software developer, but he decides to complete the training course. Because the course is not related to his new job, Tim can only claim a tax deduction on the fees he paid for the first half of the course.

In this example, Tim’s expenses could be apportioned in one of two ways:

  • If the fees are broken into distinct parts (e.g. 2 payments for the entire course), Tim can claim a deduction for the parts that were directly related to his original employment.
  • If the fees are not broken into distinct parts, they could be fairly apportioned based on the amount of coursework he completed before changing roles. For instance, if he completed 40% of the course before changing jobs, he could claim a tax deduction on 40% of his expenses.

The way self-education expenses are apportioned must be considered on a case-by-case basis. We recommend working with a CPA to ensure you’re only deducting eligible expenses.

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Contact FP Lawyers for Professional Advice Regarding Taxation Issues and ATO Disputes

Australia’s taxation legislation is complex. Even if you work with a qualified accountant, you may find yourself dealing with the ATO over your personal or business tax returns.

When that happens, it’s important to seek professional advice from our tax lawyers in Brisbane.
FP Lawyers is a firm that specialises in taxation legislation and ATO disputes. Our principal lawyer is also a registered CPA with decades of experience, giving us unique insight into Australia’s tax system.

We provide advice, support and representation for all taxation matters and ATO audits, income tax disputes, negotiations and decisions. If you need help resolving a dispute over self-education deductions or any other taxation issues, we can help.

Speak with FP Lawyers for a confidential consultation, or give us a call if the ATO has contacted you about your tax obligations.

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