Self-education expenses which are
- associated with a course
- to gain a formally recognised qualification
- from a place of education including a school, college or university
- that are related to your work as an employee
..may be a tax deduction if the following circumstances are true:
- the course maintained or improved a skill or specific knowledge required for your work at the time; and
- you can show that the course was likely to lead to increased income from those work activities; or
- other circumstances provided a sufficient direct connection between the course and those work activities
Deductible self-education expenses must be work-related at the time incurred.
In claiming the connection with work, the timing of expenses can be significant. In a recent AAT case, an employee was denied deductions for the costs of an MBA course which became payable after he was made redundant. See Thomas and Commissioner of Taxation (Taxation) [2015] AATA 687 (9 September 2015)
- Deductions which might otherwise be claimable against government assistance payments such as Austudy, ABSTUDY or Youth Allowance have not been allowed since 1 July 2011
- Expenses which enable new or unrelated employment are not allowable
- Payments to the various government student loans assistance schemes are not allowable
Self-education expenses are claimable at Item D4 of the individual income tax return.
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On 6 November 2013 the Treasurer announced that previously announced proposals to cap self-education expense claims will not proceed. See media release
The original proposal was that from 1 July 2015 work related self-education expenses be limited to an annual cap of $2,000 per person, and exclusion from FBT was to have continued, except where provided as part of a salary packaging arrangement.
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What’s included in a self-education claim
Expenses commonly qualifying for the self-education deduction include:
- tuition fees
- the cost of accommodation and meals during temporary overnight absences from home for the purpose of participating in self-education
- text books and professional or technical journals
- stationery
- student union fees
- computer expenses
- student services and amenities fees
- depreciation (decline in value) of a computer or other capital equipment (with apportionment for non-self-education use where applicable)
- travelling expenses for the trips between
- home and the place of education
- workplace and place of education
- interest on borrowings which are used to pay for deductible self-education expenses
- home study expenses – which includes the running expenses of a room set aside for self-education purposes. With appropriate substantiation, expenses associated with the study room may include:
- repairs & maintenance
- depreciation (decline in value) of furniture and equipment
- heating, cooling, lighting
- as an alternative to record keeping for the actual expenses, a fixed rate of 34 cents per hour of usage may be claimed to cover heating, cooling, lighting and the depreciation of furniture
How to calculate self-education expenses deduction
Self education expenses are essentially a claim for a work-related expense under Section 8.1 (General Deductions), together with specifically allowable expense claims such as repairs and depreciation. However Section 82A operates to reduce the deductions under s8.1 by $250 (referred to as the sec. 82A reduction amount.)
Therefore any expenses which are eligible under Section 82A but not also deductible under 8.1 are used to absorb the $250, in order to maximise the remaining expense claims which are fully deductible under 8.1
- For example child care expenses are not deductible under 8.1, but can be used to absorb the $250 threshold as eligible Section 82A expenses. Any child care expenses above $250 are not deductible.
Because of this, the calculations for self-education expenses claim require the listing and precise categorisation of expenses according to their type – S82A and otherwise.
Online self education expenses calculator
For the self-education expenses online calculator provided by the Tax Office – see Tax Office online self-education expenses calculator.
More information:
- ATO – Self-education expenses
- Claiming self-education expenses – specific expenses
- Depreciation more generally
- TR 98/9 Deductibility of self-education expenses incurred by an employee or a person in business
.
This page was last modified 2017-10-21
