Further study can improve an individual’s knowledge and skills which will hopefully improve earning capabilities. The decision to undertake further study can often come down to necessity to adapt, passion for knowledge and cost. Self-education expenses can be costly and it is important to know what costs may be deductible when preparing your personal tax return.

Generally, self-education expenses are deductible if the study being undertaken has a sufficient connection with your current employment. There are a number of conditions which would satisfy the sufficient connection criteria, such as:

  • The study will improve or maintain an employee’s skills or knowledge in their current employment. For example, a construction worker enrolling in a course to learn how to use certain machinery at the work site.
  • The study will lead, or is likely to lead, to an increase in income from their current employment.
  • The study is an upgrade of a qualification in the current employment. For example, upgrading from a Bachelor’s degree to a Masters.
  • The study forms part of the traineeship when employed as a trainee.

If the self-education expenses relate to gaining new employment, then those costs will not be deductible. For example, if a nurse enrolls at university to study a medical degree in order to become a doctor, this study would be considered to be in the course of gaining new employment and not connected to the current position as a nurse. The costs associated with the degree would, therefore, not be deductible.

Here’s some examples from previous cases:

  • A mining engineer was denied a deduction for for costs of undertaking an MBA course after he was retrenched as a mine manager – even though he was eventually employed by another mining company.
  • A medical technologist successfully claimed costs for a trip to an immunology conference in Paris
  • An actress successfully claimed costs for a trip to attend a BBC radio drama course
  • A maths and science teacher was denied a claim for costs related to financial accounting and marketing subjects
  • A features editor of a newspaper was allowed a deduction for speech therapy costs undertaken to enable him to better present himself to people in work situations

If a connection between the self-education undertaken and current employment can be established than expenses incurred to carry out the education can be claimed. General self-education expenses to claim can include:

  • Course and tuition fees
  • Text books
  • Stationery
  • Internet usage
  • Car expenses from home to your place of education
  • Equipment costs
  • Home office running costs (52c per hour from 1 July 2018)
  • Meals and accommodation (if travelling away overnight)

The expenses that related to self-education which are not deductible include:

  • Repayments on Higher Education Loan Program (HELP) loans, repayments on Student Financials Supplement Scheme loans (SFSS) or other Government assisted educational loans.
  • Accommodation and meal expenses when not travelling overnight.
  • Home office occupancy expenses. Examples being; a percentage of rent, mortgage interest or rates

Author: Allan Edmunds
Email: allan@faj.com.au