With a range of self education expenses qualifying as tax deductible in Australia, your studies could save you a bundle come June 30 should your circumstances meet the strict criteria required by the Australian Taxation Office. (Please contact us to discuss your circumstances should you have any questions)
Generally speaking, self-education expenses are deductible to a taxpayer where the expenses are directly connected with the taxpayer’s current income-earning activities.
Self-education expenses are expenses relating to courses of education provided by a school, college, university or other place of education. Self-education expenses also include work-related seminars and conferences conducted by commercial training organisations. Expenses can include tuition fees, textbooks, and travel and living expenses where the course is undertaken away from home.
If you are eligible to claim your self education expenses, the next step is to know, and understand, exactly which ATO self education expenses you can claim, and how. To help we have put together the tax tips below, all of which relate specifically to ATO self education expenses.
When Self Education Expenses are Allowable as a Tax Deduction
You may be able to claim the costs of self-education if one of the following describes your situation:
- At the time the expense was incurred there was a direct connection between the self-education and your current work activities.
- You can show that the study leads to, or may result in, an increase in income from your current employment or work activities.
- Any other direct connection can be found between the self-education and ongoing work activities.
You cannot claim self-education expenses if:
- The study was undertaken to obtain a new job, to open up a new business or to facilitate new income earning activities. For example, a receptionist studying to become a vet cannot claim self-education expenses as the qualification is not required for her current role; it is creating a new income earning activity.
The intention or purpose of a taxpayer in incurring self-education expenses is often considered when determining whether the expenses are characterised as allowable. Where a taxpayer genuinely undertakes a course of self-education to obtain a promotion within his current employment activities, then this would normally be indicative of expenses that are deductible.
There are circumstances where apportionment is required. For example, if a study tour or attendance at a work-related conference or seminar is undertaken for income-earning purposes and private purposes, it is appropriate to apportion the expenses between the two.
What You Can Claim as Self Education Expenses
General Self Education Expenses
If you are eligible to claim self-education expenses, these include:
- Student union and course fees.
- Text books, stationery, photocopying, professional and trade journals.
- Home office expenses, software, printer cartridges, and internet access.
- Interest on loans used to purchase computers or to pay fees.
- Depreciation on major equipment, like computers and printers.
- Other expenses, such as typing of assignments.
Interest on Borrow Monies as a Self Education Expense
Interest incurred on borrowed monies, where the funds are used to pay for self-education expenses associated with a course of education can be considered as a deductible expense. The expense can only be claimed if the self education enables a taxpayer to maintain or improve their skills or knowledge, or is likely to lead to an increase in income from the taxpayer’s current income earning activities.
The connection between the interest expense, and the income-earning activity in each income year will be considered. If interest is claimed because of a change in circumstances, for example, a change of employment, the necessary connection between the expense and the current income earning activity may no longer exist. Interest is not deductible where the use of the borrowed money is to pay HECS-HELP fees.
Travel as a Self Education Expense
Travel expenses, including public transport fares and the running costs associated with motor vehicles, include:
The cost of travel between:
- a taxpayer’s home and their place of education;
- a taxpayer’s place of education and home;
- work and a taxpayer’s place of education;
- a taxpayer’s place of education and work.
Only the first leg of each trip is deductible where a taxpayer travels:
- from home to their place of education, then to work; or
- from their workplace to their place of education then home.
Meals and Accommodation as Self Education Expenses
- As a student, you can only claim accommodation and meals tax rebates if you maintain a home, and have to stay overnight, away from your home, due to your study. For example, if you live in Ballarat, but study in Melbourne, you could claim the cost of staying overnight in Melbourne once a week, if you have a permanent house in Ballarat.
- The cost of meals is generally a private and non-claimable expense. However, you may be able to claim the cost of meals while travelling if:
- You are undertaking self-education directly connected to your current work, and
- That self-education requires you to be temporarily absent from your home for one or more nights
Overseas Travel as a Self Education Expense
If you undertake overseas travel as part of your self education, a deduction can be claimed for airfares incurred as part of self-education expenses when attending:
- Overseas study tours
- Work-related conferences or seminars
- An educational institution
What You Cannot Claim as Self Education Expenses
You cannot claim the following self-education expenses:
- Occupancy expenses like mortgage interest, rent, house insurance, and council rates
- HECS-HELP payments
- Financial Supplement Loan Repayments
- Open Learning Agency of Australia basic charges
For more information, visit: Student Tax Deductions
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Contact Online Tax Australia for All Your Self Education Expense Claims
If you’ve been searching for an experienced, professionally qualified, transparent accountant that understands all the ins and outs of self education expenses, then contact the friendly team at Online Tax Australia today:
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