Keeping your skills sharp is crucial if you want to get ahead in life. Even if you’re more into your hobbies and social life than career progression, you need to keep learning to avoid falling too far behind. With technology racing ahead and companies constantly pushing to develop the next big thing, staying on top of your game may require you to hit the books (or the digital equivalent, anyway). Luckily, the Australian Taxation Office (ATO) gets it. They’ve set up ways for you to claim education expenses on tax, giving you the chance to boost your refund while you boost your skills.
Of course, like everything else tax-related, there are plenty of rules and exceptions! So, let’s break down the details and set you up to save some cash while investing in yourself.
What Are Self Education Expenses?
This broad category covers a whole range of costs you may incur in pursuit of knowledge and skills. These could include:
- The fees associated with undertaking courses at educational institutions, regardless of whether these courses lead to a formal qualification;
- Expenses you incur when attending work-related conferences or seminars;
- Self-paced learning;
- Study tours, both within Australia and overseas.
Are You Eligible To Claim Self-Education Expenses As A Tax Deduction?
To be eligible for a deduction, your self-education expense must have a direct link to generating income from your employment activities. By “employment activities,” we mean the responsibilities and tasks outlined in your duty statement, which define the expectations of your role.
You can establish this connection by proving that the expense:
- Contributes to maintaining or enhancing the specific skills and knowledge necessary for your job.
- Has the potential to increase your income from employment, either immediately or in the future.
By meeting these criteria, you can claim deductions for self-education expenses that align with your employment and professional development.
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What Self-Education Expenses Don’t Qualify As A Tax Deduction?
You can’t always claim a deduction for a self-education expense. Use the following questions to determine whether a self-education expense is claimable:
- Does the expense have a direct and sufficient connection to your current employment activities? If there is no clear link between the expense and your job responsibilities, it cannot be claimed.
- Are you currently employed? You cannot claim deductions for self-education expenses if you’re not employed at the time you incur them.
- Does the expense relate only in a broad or general way to your employment activities? It probably won’t be eligible for a deduction. An example would be pursuing a full-time fashion photography course while working as a casual sales assistant on weekends.
- Did you incur the expenses for the purpose of obtaining new employment or transitioning to a different occupation or position? Even if the new role is with the same employer, you likely won’t be able to claim the expense.
Quick Check List of Non Tax Deductible Self-Education Expenses
Want to hone in with more clarity on whether you can claim your education expense on tax? Check that it doesn’t appear on this list of non-claimable expenses:
- Child care costs related to attendance at lectures or other self-education activities;
- Travel expenses for the last stage of travel from your home to a place of education and then to your workplace;
- Similarly, travel expenses taking you from your workplace to your place of education and then to your home;
- Repayments of study and training support loans such as:
- Higher Education Loan Program (HELP), including FEE-HELP and HECS-HELPStudent Financial Supplement SchemeVET Student LoansStudent Start-up LoansABSTUDY Student Start-up Loans
- Trade Support Loan Program
Pro Tax Tip: You can’t claim fees paid by an employer or fees a third party has reimbursed you for.
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So, What Can You Claim As Self Education Expenses?
If your self-education expenses meet the necessary criteria, you are eligible to claim deductions for various types of expenses. These include tuition fees, course fees, conference or seminar fees, and general course expenses.
You can even claim a deduction for the decline in value of depreciating assets used for self-education purposes. If you incur transport expenses, such as car expenses, while attending self-education activities, these can also be claimed. If your self-education requires you to travel and stay away from home for one or more nights, you can claim accommodation and meal expenses. Interest on borrowings related to self-education can also be deducted.
Specifically, for tuition fees, you can claim a deduction if you are enrolled in a full fee paying place at a university or other higher education institution. Deductible course or tuition fees are incurred when the debt becomes a legal obligation that you need to pay. This includes fees paid with the assistance of a FEE-HELP loan or VET Student Loan (formerly known as VET-FEE HELP). However, voluntary or compulsory repayments of these loans cannot be claimed as deductions in your tax return.
Quick Check List of Tax Deductible Self-Education Expenses
- Tuition fees
- Textbooks
- Stationery
- Student union fees
- Student services and amenities fees
- Public transport fares
- Car expenses worked out using the ‘logbook’ method (other than the decline in value of a car)
- Car travel to the course using the cents per km method
- Running expenses for a room set aside specifically for study
- Decline in value (depreciation) deductions for items such as your computer, desk, or car
- Repair costs to assets used for self-education purposes
- Computer consumables – for example, printer cartridges
- Equipment repairs – for example, the cost of repairing a computer
- Internet and data usage (excluding connection fees)
- Phone calls
- Postage
- Stationery
- Student union fees
- Textbooks
- Trade, professional, or academic journals
Depreciation of Self-Education Assets
When it comes to self-education expenses, you’ll need to take into account the decline in value of depreciating assets. A depreciating asset refers to an asset that diminishes in value over time. You have the opportunity to claim a deduction each year for the decline in value, also known as depreciation, until the asset’s value reaches zero (in the eyes of the ATO). This period is referred to as the effective life of the asset.
For work-related self-education purposes, you can claim a deduction for the decline in value of various assets. These assets include computers, professional libraries, desks and chairs, filing cabinets and bookshelves, calculators, technical instruments and tools, and other equipment like desk lamps.
If the depreciating asset you purchase costs $300 or less, you can claim the full cost of the asset in the year of purchase. Of course, this is dependent on you using it for work-related self-education or earning other non-business assessable income during that income year. However, if you also use the asset for private purposes, you will need to apportion your claim accordingly.
If the depreciating asset you use for work-related self-education exceeds $300 in cost, you can claim a deduction for its decline in value over its effective life.
Pro Tax Tip: If you bought the asset partway through the income year or use it partly for private purposes, you must reduce your claim accordingly. Need help apportioning claims on your tax return? We’re here to help. Either book an appointment with one of our friendly accountants, or take a look at our guide to apportioning work-related expenses.
What About The $250 Excess?
If you’re still working on older tax returns, note that for self-education expenses incurred before July 1, 2022, the first $250 of expenses generally cannot be claimed. If this is you, we also highly recommend working with a certified tax accountant, who can help you resolve your outstanding tax returns and give you the best chance of avoiding penalties.
Back to education expenses, you’ll be pleased to know that the $250 excess no longer applies. Effective from July 1, 2022, the ATO’s changes mean you no longer have to cover the first $250 of your self-education expenses. Instead, you can claim a deduction for all allowable education costs.
Pro Tax Tip: You’ll still need to apportion your expenses between private and study use. For example, if you claim your laptop, you’ll need to work out the usage for study and your private time surfing the web. ITP’s tax accountants can help you perfect this ratio, ensuring you avoid trouble with the ATO while maximising what you claim back.
Self-education plays a vital role in today’s knowledge-based economy. As you take control of your education and expand your career opportunities, don’t forget to claim as many self-education expenses as you can. ITP Tax Agents will help you squeeze the most out of every single deduction you can make – even those you don’t know about. Even better, the cost of your appointment is tax-deductible on your next tax return. Phone 1800 367 487 or use our easy online system to book your appointment today.