Self-education expenses

Example: course related to apprenticeship

Isaiah is employed as an apprentice hairdresser. As part of his apprenticeship he's required to work 4 days a week at his employer's salon receiving on-the-job training, and one day a week at TAFE doing a Certificate 3 in Hairdressing. Isaiah pays for the TAFE course himself.

The course will improve the knowledge and skills that Isaiah requires to carry out his employment activities. Isaiah can claim a deduction for the self-education expenses he incurs.

Example: course leading to increased income

Ranita is one of several systems administrators employed by a large company. Ranita's employer pays systems administrators more if they know how to use a particular programming language.

Ranita enrols in and pays for a course on how to use the programming language. On completion, Ranita's employer gives her a pay rise.

Ranita can claim a deduction for the self-education expenses she incurs because the course results in an increase in income from her employment activities.

Example: expense only generally related to employment

Louis is a computer science student who works at the university laboratory installing computers. The course and the job are generally related, and what Louis learns might help him in his job.

However, the high-level professional skills Louis acquires from his studies are well beyond the skills he requires for his current job. There isn't a sufficient connection between his current employment income and his course so Louis can't claim a deduction for his self-education expenses.

Example: employment ceases while studying

Callum is an employee software developer. To improve his skills in his current employment, Callum starts a Graduate Diploma in Advanced Software and Network Technology. The course takes one year and is paid for in 2 instalments, which become due as each semester starts. Callum’s employer is supportive of his study and offers paid leave for Callum to study each week.

During semester one, Callum is made redundant. He chooses to continue studying the course while unemployed.

Callum can claim a deduction for the semester one payment, as he was working and earning income when he made the payment and the course had a sufficient connection to his employment income at that time.

Callum can’t claim a deduction for the semester 2 payment. As Callum was unemployed at the time he made the semester 2 payment, it was not incurred in earning his income.

Example: deduction for course fees

Tara enrols in 2 subjects for her Master of Business Administration course. Each subject cost $10,000. Tara has deferred payment of the course fees through a FEE-HELP loan.

Tara's subjects have a census date of 22 March, meaning she will not need to pay the course fees if she withdraws from the subject before this date.

Tara decides to withdraw from one subject on 17 March due to an unexpected increase in workload. On 22 March, Tara incurs the course fees of $10,000 for the remaining subject she enrolled in.

Tara can claim a deduction for the course fees of $10,000 she incurs on 22 March in the income year it occurs, even though she has a deferred payment through a FEE-HELP loan.

On 15 June, Tara gets a bonus of $5,000 from her employer. She decides to use the bonus to make a voluntary repayment of $5,000 to her FEE-HELP loan.

Tara can't claim a deduction for the voluntary repayment of $5,000 that she makes to her FEE-HELP loan. She also can't claim a deduction for any compulsory repayments included on her notice of assessments that she is required to make to her FEE-HELP loan.

Example: apportioning deduction for decline in value of assets

Danika is employed full time as a senior manager and is completing a Masters of Business Administration (MBA) part time. When she completes the course, Danika's employer will give her a pay rise. Danika can claim a deduction for the cost of the MBA because:

• the course will improve the skills and knowledge she needs to carry out her current duties
• on completion of the course, Danika's salary will increase.

On 1 February, Danika purchases a laptop for $1,400 and a desk for $229.

Based on her records, Danika works out that she uses the laptop and desk 80% for self-education purposes and 20% for private purposes.

As the desk cost less than $300, she can claim its cost in the year she purchased it. However, because Danika used her desk for private purposes as well as self-education purposes, she must apportion her deduction. Danika calculates her deduction as:

$229 (purchase cost) × 80% (time used for self-education purposes) = $183.20

Danika chooses to use the diminishing value method to calculate the decline in value of her laptop. She uses the Depreciation and capital allowances tool to calculate her deduction. The tool calculates Danika's deduction as follows:

• Year of purchase  
  • Opening adjustable value: $1,400.00
  • Decline in value: $575.33
  • Taxable use: 80%
  • Days held: 150
  • Deductible decline in value: $460.26
  • Adjustable value at end of year: $824.67
• Year 2
  • Opening adjustable value: $824.67
  • Decline in value: $824.67
  • Taxable use: 80%
  • Days held: 365
  • Deductible decline in value: $659.74
  • Adjustable value at end of year: $0.00

Danika can claim a deduction of $460.26 for the decline in value of her laptop in the year she purchased it. She can claim $659.74 in the following year, at which time the value of the asset is nil. This means Danika can't claim any further deductions for the laptop.

Example: car and parking expenses deductible

Akito is a mechanical engineer. Akito's employer pays for him to attend a 5-day conference on current issues and trends in the industry. The conference will allow Akito to improve the specific knowledge that he needs to carry out his current employment activities.

Akito drives his own car from his home to where the conference is being held and pays $15 for parking each day. At the end of each day, Akito drives directly back to his home. His employer does not reimburse him for the cost of using his car or his parking fees.

Akito can claim a deduction for the car expenses he incurs when he travels between his home and the conference centre each day. Akito can also claim the cost he incurs for parking at the conference centre each day.

Example: certain public transport fares deductible

Lyle is employed as an assistant visual merchandiser in a retail store. To improve his skills and apply for a promotion to be a visual merchandiser specialist, Lyle enrols in a Diploma of Visual Merchandising. The course requires Lyle to attend the place of education for 3 hours one day per week.

On the day he attends the place of education, Lyle takes:

• the train from his house to the place of education in the morning (trip one)
• the bus from the place of education to his place of work after lunch (trip 2)
• the bus from his place of work to home at the end of the day (trip 3).

Lyle can claim a deduction for the cost of his train fares for the journey from his home to the place of education (trip one).

Lyle can't claim a deduction for the cost of trip 2 or 3. These are private travel expenses being from the place of education to his work and then work to his home.

Example: attending a conference

Amara is employed as a computer programmer. Amara is taking a holiday in the United States of America (USA) and decides to attend the annual 3-day conference on software developments in Las Vegas immediately following her holiday. She arrives in Las Vegas at dinner time the day before the conference begins. Due to the finish time on the last day, Amara stays the night in Las Vegas and flies home the next day.

Amara's employer is supportive of her attending the conference and pays the registration fee for her to attend as it will improve the skills and knowledge she uses to carry out her employment activities. Her employer doesn't pay or reimburse Amara for any accommodation or meal expenses.

Amara can claim a deduction for the amount she spends on 4 nights of accommodation in Las Vegas (one night before the conference and 3 nights of the conference) and the meals she purchases during this time.

Amara can't claim a deduction for the amount she spends on accommodation and meals leading up to the conference. These are private expenses.

Example: study expenses while on leave from work

Jamal is an employee research laboratory assistant in Adelaide. Jamal takes 12 months leave without pay to do a postgraduate course on understanding research methods at a university in London.

Jamal moves out of his rented unit in Adelaide and moves to London for a year. While he is in London, Jamal rents a unit with another course participant.

Even though the course will improve the skills and knowledge Jamal requires to carry out his current employment activities, he can't claim a deduction for the cost of accommodation and meals while he is in London studying. The expenses are private living expenses.

Example: interest on borrowings

Tim is employed as a solicitor and is undertaking a Master of Law degree part-time. He borrows $10,000, repayable over 3 years, to pay for his tuition fees. He incurs $1,000 interest each year.

Tim can claim a deduction of $1,000 for interest in each of the 3 years (provided he continues to be employed as a solicitor for those 3 years).

Example: receiving Austudy payments

Alison starts a full-time Bachelor of Pharmacy. She applies for and receives Austudy payments from Centrelink to support herself while studying.

Austudy is a taxable government assistance payment and is eligible for the beneficiary tax offset.

Alison can't claim a deduction for her self-education expenses because the Austudy payments are her sole income and Austudy is a rebatable benefit.

Example: course overall isn’t connected to current employment

James is an employee civil engineer. His duties include designing water and sewerage systems, determining the materials to be used for the systems, carrying out environmental impact studies, and project management of the projects he works on.

After 10 years in a workplace, James decides to enrol in a Master of Business Administration (MBA) at a university to broaden his career opportunities, including possibly opening his own firm in the future. The cost of each subject is identified in documents he receives from the university.

Not every subject in the MBA has a sufficient connection with James’ current employment activities, so James can't claim a deduction for the total course fees. However, if James studies a subject on project management as part of his MBA qualification, that particular subject would have a sufficient connection to his current employment activity of managing projects. James would be able to claim the cost of the project management subject as a deduction.