Did you know you can better yourself at work, equip yourself with the skills you need to advance your career and claim a tax break on the costs at the same time?
Self-education expenses are tax deductible if the course leads to a formal qualification, has a sufficient connection to your current employment and:
Maintains or improves the specific skills or knowledge you require in your current employment, or
Results in, or is likely to result in, an increase in your income from your current employment.
You can’t 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.
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Unsure if this applies to you?
Here are a couple of examples.
Example one: Masters of nursing
You are a nurse and choose to undertake a masters of nursing in your chosen field.
This will allow you to take on additional responsibilities in your job and should move you on to a higher pay scale.
This increases your skills in your chosen field of endeavor and is connected to your current income earning activities.
Result: You will be able to claim a tax deduction for undertaking the master's degree, and all related costs (see below).
Example two: Medical degree
You are a nurse and wish to train to become a doctor.
You commence a medical degree which opens up new income earning opportunities in the future and the cost of the course is incurred too soon to be regarded as being incurred in earning your assessable income.
Result: The costs of the medical degree will not be tax deductible.
What can I claim?
You can claim the following expenses in relation to your self-education:
Accommodation and meals (if you are away from home overnight)
Computer consumables (such as paper or ink)
Course or tuition fees
Decline in value for depreciating assets such as computers or laptops (cost exceeds $300)
Purchase of equipment or technical instruments costing $300 or less
Fares (bus/plane/train, etc)
Home office running costs (for any home study) such as heat, light, etc
Interest on any money borrowed to fund the course
Student union fees
Student services and amenities fees
Trade, professional, or academic journals
Travel to-and-from the place where the course takes place (only for work-related claims)
Expenses you can’t claim
You can’t claim the following expenses in relation to your self-education:
Repayments of higher education loan program (HELP) loans
Student financial supplement scheme (SFSS) repayments
Home office occupancy expenses (such as mortgage interest or rent)
Meals where not sleeping away from home.
Attending conferences and seminars
Even though attending such an event doesn’t typically generate a formal qualification, you can also claim the cost of attending seminars, conferences or workshops that are sufficiently connected to your work activities. This can include formal education courses provided by professional associations.
Here’s a great example:
You are a nurse and you attend a two-day professional development conference highlighting the latest advances in your field of nurses.
The knowledge you gain from attending this conference will be directly applied in your work when you go back to the hospital where you work.
Result: You can claim the costs of attending the course, as well as ancillary costs such as travel, accommodation and meals.
If, as is often the case, the conference or seminar is held somewhere warm and sunny, and you decide to stay on for a short holiday afterwards, you will need to apportion your expenses between conference-related and holiday-related expenditure.
Mark Chapman is director of tax communications at H&R Block.