Budget 2022- Self education

 Changes to Self-Education Expenses – Budget 2021-2022 Announcement

Currently, the first $250 of eligible self-education expenses are non-deductible. Currently, individuals can offset non-deductible self-education costs against the $250, which still required substantiation. The Government’s announcement is to remove the non-deductibility threshold of $250 – which will in turn remove the requirement for substantiation of non-deductible expenses.

What self-education expenses are eligible to be deducted in your income tax return?

Self-education expenses that are incurred in relation to your current work may be eligible for a deduction. The self-education expenses are deductible where the course undertaken results in a formal qualification and meets both of the following conditions:

• Maintains or improve the specific skills or knowledge you require in your current work activities
• Result in, or is likely to result in, an increase in your income from your current work activities.

Deduction are not available where there is insufficient connection to your work activities, even where the course you are undertaking might be generally related to your work or enableing you to get new employment.

What expenses can be claimed?

Expenses that can be claimed are broken into 3 categories: general course expenses, depreciating assets and car expenses.

General course expenses

The following expenses can be deducted where the self-education eligibility requirements are met:

• Accommodation and meal (if away from home overnight)
• Car expenses
• Computer consumables
• Course and tuition fees – if paid directly by you and not utilizing the Government loan system
• Decline in value of depreciating assets (more than $300)
• Purchase of equipment or technical instruments ($300 or less)
• Equipment repairs
• Fares
• Fees payable to some HELP loans
• Home office running costs (but not occupancy expenses)
• Interest
• Internet usage (excluding connection fees)
• Parking fees
• Phone calls
• Postage
• Stationery
• Student union fees
• Student services and amenities fees
• Textbooks
• Trade, professional or academic journals
• Travel costs, including car expenses (travel between home and place of education, and between work and place of education)

Current expenses that can be offset again $250 non-deductible threshold

Under the current legislation, the following non-deductible expenses may be offset against the $250 threshold:

• Childcare while attending self-education activities
• Capital expenses related to self-education – like purchase of a desk and an office chair
• Fares, travel or car expenses for these journeys;
• For work-related self-education- the second leg of trip if you went from home to your place of education and then to work, or the other way around
•  If you receive a taxable bonded scholarship and are not employed by the scholarship provider, travel from home to your normal place of education and back.

When does the proposed change come into effect?

The Government has indicated that it expects the extension will start from 1 July 2022. This is subject to the amending legislation receiving Royal Asset - i.e. the amending legislation being enacted. This means that until the law is changed, the $250 threshold will remain in place, and that you will need to keep substantiation for non-deductible expenses that you intend to offset against the $250.

How can Tax Controversy Partners help you?

At Tax Controversy Partners, our experienced lawyers can assist you in understanding whether payments you have made towards tuitions or fees are deductible and whether there is sufficient nexus between your work and that self-education, as well as to assist individuals who are under review or audit.  Please contact us using our online contact form, via email at admin@taxcontroverypartners.com.au or by phone at 02 8513 3813.