Are you feeling stuck in a career?
Maybe a promotion seems out of reach, or you dream of taking on new responsibilities but lack the specific skills.
Many Australians use the power of self-education to get exciting career opportunities.
The best part? The Australian tax system rewards your ambition by allowing you to claim deductions for many self-education expenses.
But wait, you might be thinking, “Isn’t all education expensive?
How can I possibly afford it and get some money back?”
The good news – if your chosen course helps you improve your current job skills or potentially increases your income, the Australian Taxation Office (ATO) might give you a helping hand.
Is Your Course Tax Deductible?
Before you dive headfirst into that online marketing course or coding, let’s check if it qualifies for tax deductions.
Here’s the key: the course needs to have a clear connection to your current employment.
There are two main ways a course can qualify:
- Maintaining or Improving Your Current Skills: This means the course hones your existing knowledge and abilities, making you a more valuable asset to your employer.
- Boosting Your Income Potential: This applies if the course equips you with new skills likely to lead to a raise or promotion within your current field.
Which Courses Don't Qualify For Tax Deductions?
Here are some of the examples of courses which don’t qualify for tax deductions:
- Courses Leading to New Careers: If the course preps you for a completely different profession (like becoming a doctor when you’re a nurse), it doesn’t connect to your current job and therefore isn’t tax-deductible.
- General Skills Courses: This applies to courses that might be broadly helpful in your field, but don’t directly translate to on-the-job skills.
- Studying While Unemployed: If you’re not actively employed while taking the course, the expenses probably won’t be deductible.
What Expenses Can You Claim?
If your self-education expenses meet the eligibility criteria, you can claim the following:
| Expenses Category | Deductions |
|---|---|
| Course Fees | Tuition fees, student union fees, and amenities fees (even if paid with a HELP loan). |
| General Course Costs | Stationery, textbooks, computer consumables (printer cartridges, etc.), phone calls, internet usage (excluding connection fees), postage, and trade/professional journals. |
| Decline in Value of Assets | The gradual decrease in value (depreciation) of equipment used primarily for self-education (e.g., computers, desks, calculators) costs more than $300. |
| Travel & Accommodation | Expenses for travel (including car expenses) between your home/workplace and the place of education, and accommodation & meals if you need to stay overnight for the course. (Remember, this only applies if the travel is work-related!) |
| Interest on Borrowings | Interest on loans used to pay for deductible self-education expenses. |
Non-Claimable Self-Education Expenses
The following expenses cannot be claimed as self-education deductions:
- Tuition fees paid by someone else or reimbursed by your employer
- Tuition fees for Commonwealth-supported places at universities or higher education providers
- Repayments of study and training support loans (e.g., HELP, VET Student Loans)
- Accommodation and meals when you are not required to be temporarily away from home
Calculating Your Self-Education Deduction
To calculate your self-education deduction, follow these steps:
- Determine the expenses that are directly related to your eligible self-education
- Apportion expenses that are partly for self-education and partly for other purposes (only claim the self-education portion)
- If you incurred the expense before July 1, 2022, subtract $250 from the total (this rule has been removed for expenses incurred after this date)
- Keep detailed records of all expenses, including receipts, invoices, and any calculations for apportioning expenses
Important Reminders
- Receipts: Keep receipts and invoices for all your education-related expenses.
- Apportionment is Key: If you use an asset (like a laptop) for both personal and work-related education, you can only claim the portion used for study.
- Not All Payments Qualify: The ATO won’t allow deductions for expenses reimbursed by your employer, funded by government loans (HECS-HELP, VET Student Loans), or for meals unless you’re away from home overnight.
Bottom Line
So now that you have your sights on that new course, but tax deductions sound super confusing? Don’t worry, you’re not alone! This blog gave you a breakdown on what self-education expenses you can claim and how they can help you save money.
Now, figuring out all the rules and claiming your deductions can feel like studying for a whole new class. The good news is you don’t have to go it alone. Our team of tax accountants at KPG Taxation are self-education experts! They can help you with:
- Understanding the guidelines: They’ll make sure your chosen course qualifies for deductions and answer any questions you have about what you can claim.
- Sorting out your expenses: Not everything counts, and they’ll help you figure out what receipts you need to keep.
- Claiming your deductions on your tax return: No more stress, they’ll make sure you get every deduction you deserve.
Don’t miss out on getting some money back for your hard work! Contact KPG Taxation today. They’ll be your guides on the path to tax-deductible self-education!
