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Which training courses are tax deductible?

Which training courses are tax deductible?

Your next tax return will probably feature a number of work-related expenses, and if you’ve enrolled in some training since the beginning of the financial year, your course could be eligible as a tax deduction.

Whether you enrolled in a course since July 1 last year or are looking to enrol in training soon, it’s worth considering the tax implications of doing a course because it could make the course fee look a lot smaller. All vocational training courses are potentially tax deductible; you just need to understand the rules around what you can claim. Here are four things you should know about self-education expenses.

1. You must pay for the course
This sounds obvious but you, as an individual, must incur an expense before you can claim a deduction, so you must have already paid for the course (not just have been invoiced for it). This also means courses that your employer pays for are not eligible, although the organisation can claim the tax deduction.

Fees paid under FEE-HELP (Higher Education Loan Program) and VET FEE-HELP schemes are also eligible for deduction in the financial year you incur the debt. Account keeping costs related to these schemes are not eligible.

2. The course must be directly related to your current role
The Australian Tax Office (ATO) is quite strict about what counts as ‘directly related’. The course must maintain or improve the specific skills or knowledge you require in your current employment, or result in (or is likely to result in) an increase in your income from your current employment.

In other words, you need to be able to prove that your current role benefited from you doing the course. This means that you can’t claim tenuously related courses, for example you can’t claim a tax deduction on the Diploma of Library and Information Services if you are working as an events manager, even though you may have enjoyed the course.

It also means, and this is important, that you can’t claim for a course that you use to get a new and different job. Say you’re working as a bookkeeper and graduate from the Diploma of Tourism and after that you become a travel agent; you cannot claim that course. If you were working as a travel coordinator when you did the Diploma of Tourism, then you can claim that course. Basically, the ATO doesn’t like speculation about career-related education; it wants you to know, before you enrol, that the course will benefit your current career.

3. You can claim for more than course fees
Expenses related to study, for example textbooks, transport to the classroom (if you attended on campus) and computer and internet costs (proportional to use for study) are also eligible under the self-education tax deduction rules. Again, the ATO is very strict on this. If you took evening classes, for example, and travelled from work to class, then from class to home, you may only make a transport claim for the portion between work and class.

Delegate fees for conferences and seminars are also eligible as self-education expenses as long as these meet the other eligibility rules; self-education is not just restricted to courses.

4. From July 1, 2014, self-education will have a $2,000 cap
The 2013 Federal Government Budget set a cap of $2,000 on self-education expenses claims, which will come into effect from July 1, 2014. This means individual taxpayers may only claim up to $2,000 on any fees paid from the 2014/15 financial year onwards. At the moment the amount is uncapped, so if you’re after a qualification where the course fees are more than $2,000, now is the time to enrol and pay.

Need more information? Go to the ATO Guide to claiming deductions on self-education expenses.

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