Part 3 Tax Deduction Series – Self-Education Expenses

As mentioned in our blog post on the 5th June 2017, this week we continue our multi part series on Tax Deductions for individuals. In today’s issue, we focus on Self Education Expenses.

Depending on your industry, you may be entitled to claim a deduction for expenses related to self-education. Over the course of this article we will address what is an eligible course, what expenses you may be entitled to claim, what expenses you are unable to claim and finally the $250 reduction required for self-education expenses.

Eligible Courses

Firstly, self-education expenses may be deductible when the course you undertake leads to some form of formal qualification and meets the following criteria outlined below:

  • The course must have a sufficient connection between your current employment and:
    • Maintain or improve the specific skills or knowledge you require in your current employment, or
    • Result in, or is likely to result in, an increase in your income from your current employment.

Unfortunately, you are unable to claim a deduction for self-education expenses for a course that does not have a sufficient connection to your current employment even though it:

  • Might be generally related to it, or
  • Enables you to get new employment.

Expenses You Can Claim

If your course is deemed to be an eligible course and deductible as a Self-Education Expense, then you may be able to claim the following expenses in relation to the same:

  • Accommodation and Meals (if away from home overnight)
  • Computer Products and Consumables
  • Course Fees
  • Depreciation on assets acquired over $300
  • Purchase of equipment under $300
  • Repairs to equipment
  • Fares
  • Home Office Running Costs
  • Interest
  • Internet Usage
  • Phone Calls
  • Postage, Printing and Stationery
  • Student Union Fees
  • Student Services and Administration Fees
  • Textbooks
  • Trade, Professional or Academic Journals

With all expenses and deductions, only the portion that is attributable to your Self-Education is allowable as a deduction and any private use will need to be apportioned out.

Expenses You Can’t Claim

Whilst there are a lot of expenses which can be claimed in relation to Self-Education, there are a few expenses which are unable to be claimed:

  • Repayments of Higher Education Loan Program (HELP) loans (although the fees paid by some HELP loans are)
  • Student Financial Supplement Scheme (SFSS) repayments
  • Home office occupancy expenses
  • Meals where you are not sleeping away from home.

More likely than not, the above will apply to most people undertaking some form of education whether that be University, TAFE or some other form of education through a registered Higher Education Provider. As most people will usually get a HELP Loan (Formerly known as HECS) they haven’t paid any course fees as these are paid to the Education provider by the government and thus would not be entitled to claim the costs of their course fees.

$250 Reduction to Self-Education Expenses

In accordance with the ATO, Self-Education Expenses are broken into five categories which are listed below:

Category A Expenses:

  • Tuition fees, textbooks, stationery, student union fees, student services and amenities fees, public transport fares, car expenses worked out using the ‘logbook’ method, running expenses for a room set aside specifically for study.

Category B Expenses:

  • Decline in value (depreciation) deductions such as a computer, desk, or car for which you are claiming a deduction in Category A.

Category C Expenses:

  • Repair costs to assets used for self-education purposes.

Category D Expenses:

  • Car expenses using the ‘cents per kilometre’ method. You cannot claim car expenses under this category if you have included deductions for decline in value or repairs to your car under category B or C.

Category E Expenses:

Expenses you have incurred but cannot use as a deduction – for example:

  • for work-related self-education, travel expenses for the last stage of travel from your home to place of education and then to your workplace, or
  • workplace to your place of education and then to your home
  • for taxable scholarship recipients who are not employed by the scholarship provider, travel expenses from your home to your normal place of education and back
  • child care costs related to attendance at lectures or other self-education activities
  • capital costs of items acquired in the financial year and used for self-education purposes, such as a computer or desk.

If you only have Self-Education Expenses that fall into category A items then you will need to reduce your deduction by $250. However, it is important to note that if you have any expenses that fall into category E, then you can use these expenses to offset the $250 reduction.

For example, if you were attending lectures and required someone to take care of your child then then out of pocket cost you incur for childcare can be used to offset the reduction. Noting that this would not ordinarily be allowed as a deductible expense under the legislation.

We hope the above has assisted you in some way in understanding what you may be entitled to claim when it comes time to preparing your income tax return. If you would like any further information on the above or wish to discuss with our office in more detail, please feel free to contact us.

In our next few issues, we will be focusing on other deductions that you may be entitled to claim as a taxpayer such as mobile phone costs, purchase of tools and equipment and other expenses you may or may not be aware of.

ChalkBoard Consultancy Co.


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