Self-education expenses
Self-education includes courses undertaken at an educational institution (whether leading to a formal qualification or not), attendance at work-related seminars or conferences, self-paced learning and study tours (overseas or within Australia). For self-education expenses incurred before 1 July 2022, you generally can’t claim the first $250 of expenses. TR98/9 details the ATO’s views on the deductibility of self-education expenses.
Self-education expenses are tax deductible provided that a nexus can be demonstrated between the education being undertaken an dhow that person derives their assessable income.
In general terms, it is necessary to satisfy any of the following tests t be entitled to a tax deduction:
– the expense has a relevant connection to the taxpayer’s current income earning activities (ie the course must be relevant or incidental to how the taxpayer derives his/her current assessable income)
– the self-education program being undertaken enables the taxpayer to maintain or improve the skills or knowledge necessary to carry out his/her income earning activities, or
– the self-education leads to, or is likely to lead to, an increase in the taxpayer’s income from his/her current income earning activities in the future.
To be deductible, the self-education activity must be undertaken concurrently with the relevant employment.
Deductions for self-education expenses are not allowed if the course of study is designed to:
– obtain employment in a new field of endeavour (eg a teacher studying law to become a lawyer)
– obtain employment or obtain a qualification to enable the taxpayer to enter a restricted field of endeavour (eg obtaining a degree to be able to practice as a surveyor), or
– open up new income earning opportunities in the future (whether in business or in the taxpayer’s current employment) because they are incurred at a point too soon to be regarded as being incurred in gaining or producing the assessable income of the individual
It is possible for courses undertaken to have both deductible and non-deductible elements (eg a plumber who runs his own business who undertakes a business management course where completion of the course will enable the plumber to also practice as a qualified business administrator). In that situation, the deductibility of the expenses will be determined by the intention of the taxpayer when the course was undertaken. There may also be the potential for apportionment in some circumstances.
If the taxpayer can show that the course is incidental and relevant to existing income earning activities, the cost is deductible. Alternatively, if the course was undertaken with the specific intention of changing the taxpayer’s income earning activity, expenses would not be allowed.
Subject to the general tests of ITAA97 s8-1, these expenses are allowable,
– course or tuition fee (including studion union fees) (however excluding those imposed under HECS or HELP
– texbooks, professional or trade journals, technical instruments and clerical expenses such as work-processing or photocoying
– depreciation on professional libraries, desks computers and filing cabinets, etc.
– fares, accommodation and meals (if away from home overnight) incurred on study tours, work-related seminars or conferences away from the taxpayer’s home
– stationery or postage
– home office running costs
– internet usage (excluding connection fees)
– interest on money borrowed to pay the above expenses or purchase plant or equipment on which depreciation is allowable, and
– travel costs (including motor vehicle and fares etc – subject travel expenses rules)
Expenses which are not tax-deductible are
– Contributions made under the Higher Education Support Act 2003 and Student Assistance Act 1973, such as HELP (previously HECS) payments (unless paid or reimbursed by the employer: HELP payments are generally not tax deductible, however if they are paid or reimbursed by an employer they are tax deductible to the employer but FBT is payable)
– Education expenses against income received under various Commonwealth educational assistance schemes, such as the Youth Allowance
– Meals purchased while on normal travel between home and an education institution
– Travel expenses between home and an educational institution at which the taxpayer works