Claiming Self Education Expenses as Tax Deductions

Self education is essential for our minds, our general sense of well-being and our future employment prospects

Technology, software, and workplace processes change so fast, that if you don’t keep on top of it, you’ll quickly find yourself left behind in your career. Worse still, find yourself replaced by a more efficient, clued up, better educated version of you! The other BIG bonus about continuing to educate yourself is that many self-education expenses are tax deductible. Seriously, how much more encouragement do you need to make a better you?

Of course, when it comes to expenses for personal development, we are talking about the ATO and tax here so, unfortunately, you can’t just claim whatever you want.

Here’s a quick education in claiming back your cash!

What are self education expenses?

What are the rules?

A few points to remember before including your expenses on your tax return:

There needs to be a direct connection between the course you’re studying and your employment at the time. According to the ATO, you must satisfy one of these four conditions.

You need to be:

1. Maintaining your qualifications for your current role.
2. Improving your skills or knowledge used in your current role.
3. A trainee and the course you take forms part of the traineeship.
4. Able to show the course you were taking led to, or was likely to lead to, an increase in your current salary.

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It’s not possible to claim your expenses if your intention is to get:

• a different job, or
• money from a new income-earning activity (such as starting a new business).

You also cannot claim the following expenses:

• tuition fees if they were paid for by your employer, or anyone else, or if you were reimbursed for fees you paid yourself.
• loan repayments for:
  • Higher Education Loan Program (HELP) loans, including HECS-HELP,
  • Student Financial Supplement Scheme (SFSS),
  • the Student Startup Loan (SSL)
  • or the Trade Support Loans Program (TSL)
• home office occupancy expenses (mortgage interest, rent, rates etc.)
• accommodation or meals, unless you attended a residential school or had to stay away from home to attend a course.

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Which education expenses can I claim on my tax return?

Tax deductible education expenses include:

• course/tuition fees
• accommodation and meals (if away from home overnight)
• travel expenses and parking fees
• costs of computer consumables (printer ink, software, USBs etc.)
• decline in value for *depreciating assets (for items costing in excess of $300)
• purchase of equipment or technical instruments (costing $300 or less)
• equipment repairs
• home office running costs
• internet usage (excluding connection fees)
• phone calls
• postage
• stationery and textbooks
• purchase of trade, professional, or academic journals
• student union fees
• student services and amenities fees

*Depreciating assets are items that cost over $300 and lose value over time, such as computers. You claim the cost of the item over the length of its ‘useful life’. This is the ATO’s estimate of the number of years an item is likely to be of serviceable use.

Can I claim my laptop if I use it for personal stuff as well as my studies?

Yes, you can! But only a percentage of the cost.

You can claim expenses that are for both study and personal use but you need to work out what percentage is study and what percentage is personal. So, if you use your laptop 70% of the time for your course and 30% for personal use, you can claim 70% of the expense as a self education tax deduction.

The $250 reduction on self-education expenses

Note: the ATO has removed the $250 reduction on self-education expenses as of July 1 2022, so it does not apply from the 2022-23 tax year, onwards

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Now, the $250 reduction is where self education expenses get a little complicated. Up until June 30 2022, you can’t claim the first $250 of self education expenses for items in what the ATO refer to as ‘Category A’ expenses, such as textbooks, stationery, tuition and student fees.

However, you CAN offset other types of expenses against these Category A expenses, such as the depreciation on items costing over $300, and repair costs. These can reduce or cancel out that $250 deduction.

Confusing, right?

Luckily, our friendly accountants make sure Etax clients claim ALL the education expenses they’re entitled to. So don’t worry about trying to work out confusing ATO calculators or how many years they think your laptop will last – seriously! Life’s too short.

Make self education expenses easy

With Etax, you don’t need to know anything about tax, because that’s our job.

Don’t forget to keep your receipts!

You should keep ALL your receipts, diaries and logbooks safe and up to date, so tax time doesn’t mean searching through thousands of emails, the glove box or piles of paper in your office. Remember: You can’t claim it if you can’t prove it!

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