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Maximise Deductions with Self-Education

July 15, 2024

Maximise Self-Education Tax Deductions

Self-education expenses can be a valuable deduction for taxpayers aiming to improve their skills and knowledge related to their current income-earning activities. According to the ATO’s guidelines, these expenses are generally deductible to the extent they are incurred in gaining or producing assessable income and are not capital or private in nature. Here’s a simple guide to help you understand how to claim self-education expenses, identify common traps, and provide examples to illustrate your content.

Self educationContents

  1. What Expenses are Deductible?
  2. Apportioning Deductions
  3. Traps to Avoid
  4. Examples of Non-Deductible Self-Education Expenses
  5. Example: Claiming Self-Education Expenses
  6. Gotax Deduction Grabber App
  7. Gotax Advice

What Expenses are Deductible?

Course or Tuition Fees

You can claim a deduction for course or tuition fees related to a full fee-paying place for a course of study (not a Commonwealth supported place).

Study Materials

This includes the cost of textbooks, digital subscriptions, professional and trade journals, and stationery.

Depreciation of Assets

You can claim depreciation (or decline in value) of assets such as a computer used for self-education activities.

Travel Expenses

Travel expenses incurred to participate in a self-education activity, including the cost of airfares, accommodation, and meals (where an overnight self-education activity is involved), are deductible.

Interest on Borrowed Money

Interest incurred on borrowed money used to pay for deductible self-education expenses is also deductible.

Apportioning Deductions

There are circumstances where a self-education expense may be deductible only in part. This typically occurs when the expense is incurred partly in gaining or producing assessable income and partly for some other use. In such cases, the expense must be apportioned between income-earning and other purposes.

Traps to Avoid

Incorrect Apportionment

Ensure you correctly apportion expenses that are partly related to income-earning activities and partly for personal use.

Claiming Non-Deductible Expenses

Be aware that expenses such as course fees related to a Commonwealth supported place are not deductible.

Lack of Documentation

Keep accurate records and documentation to support your claims, such as receipts, invoices, and proof of payment.

Examples of Non-Deductible Self-Education Expenses

Example 1: Studying for a Career Change

John is a marketing manager who decides to undertake a full-time course in culinary arts to become a chef. Since this course is not related to his current income-earning activities in marketing, the expenses incurred are not deductible.

Example 2: Unrelated Part-Time Work

Sarah is a full-time fashion photography student who works part-time at a high-end fashion store. The skills and knowledge required for her casual work are not improved by her course. Therefore, the costs associated with her fashion photography course are not deductible.

Example 3: Industry Placement Requirement

Stuart enrols in a hotel management course that requires a semester of paid industry placement. Since the course is designed to enable him to obtain employment after completion and not to derive income during the course, the expenses are not deductible.

Example: Claiming Self-Education Expenses

Maria is an accountant who enrols in a course to improve her knowledge of international tax law. She pays $2,000 in tuition fees, buys textbooks for $200, and uses her laptop (worth $1,500) exclusively for the course. Maria can claim a deduction for the tuition fees and textbooks, and she can also claim depreciation on her laptop.

Gotax Deduction Grabber App

Maximise your deductions with the Gotax Deduction Grabber App. It has all the log books and tax expense recording systems you need. Scan the QR code to download and simplify your tax management.

Deduction Grabber

Gotax Advice

Self-education expenses can significantly reduce your taxable income if claimed correctly. Always ensure that your self-education activities are directly related to your current income-earning activities and keep detailed records of all expenses. When in doubt, seek Gotax advice to maximise your tax benefits.

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