Self education tax | 2023 Gotax

How to Claim Self Education Expenses on Your Tax Return in 2023

If you're undertaking education courses that are a necessary part of your job and future development of your job then you will be able to claim a deduction for self education expenses in your tax return.

What Are Self Education Expenses and Why They Are Important

Self education expenses are the costs you incur when you undertake a course of study that leads to a formal qualification. The course must have a sufficient connection to your current work activities, such as maintaining or improving your skills, increasing your income, or establishing a direct link between the course and your work.

Self education expenses are important because they can help you:
- Enhance your knowledge and skills in your current field or industry
- Advance your career and increase your earning potential
- Keep up with the latest trends and developments in your profession
- Meet the requirements of your employer or professional body
- Enjoy personal satisfaction and fulfilment from learning new things

By claiming a deduction for self education expenses, you can reduce your taxable income and pay less tax. 

What Are the Criteria and Types of Expenses That Qualify for This Deduction

To claim a deduction for self education expenses, you need to check all the boxes below. There is a four-step process to help you determine if your self education expenses are deductible, and here they are:

1. Identify the course you undertook or will undertake
2. Identify the work-related activity that relates to the course
3. Establish the connection between the course and the work-related activity
4. Check if any of the exceptions apply

The ATO also provides some examples of courses that are deductible and non-deductible. For instance, if you are an accountant who enrolled in a Master of Taxation course at a university, you can claim a deduction for self education expenses because the course improves your skills and knowledge in your current work activities. However, if you are an accountant who enrolled in a Bachelor of Arts course at a university, you cannot claim a deduction for self education expenses because the course does not have a sufficient connection to your current work activities.

If your self education expenses meet the eligibility criteria, you can claim a deduction for the following types of expenses:

- Tuition, course, conference or seminar fees
- General course expenses, such as textbooks, stationery, internet and phone costs
- Depreciation of study assets, such as computers and desks
- Car and other transport expenses, such as fares and parking fees
- Accommodation and meal expenses, if you are away from home overnight for study purposes
- Interest on borrowings, if you use a loan to pay for your self education expenses

You cannot claim a deduction for the following types of expenses:

- Child care costs related to attending lectures or other self education activities
- Travel expenses between your home and your normal place of education
- Capital costs of items acquired for self education purposes, such as computers and desks

How to Calculate and Claim Your Deduction for Self Education Expenses

To calculate your deduction for self education expenses, you need to add up all the allowable expenses and subtract any non-deductible amounts. And don't forget to keep records of your expenses, such as receipts, invoices, statements, diaries, logbooks, etc.  You can easily do that with the Gotax Deduction Grabber App.  Nice and handy on your phone. Scan the QR code..

For example, suppose you are an accountant who enrolled in a Master of Taxation course at a university. The course fees are $10,000 per year and you pay them yourself. You also incur the following expenses related to your self education:

- Textbooks: $500
- Stationery: $100
- Internet: $300
- Laptop: $2,000 (decline in value over 4 years: $500 per year)
- Car expenses: $200 (using the cents per kilometre method)
- Accommodation and meals: $400 (for attending a seminar interstate)

To calculate your deduction for self education expenses, you need to add up all the allowable expenses and subtract any non-deductible amounts. In this case, you can claim a deduction of $11,500, which is calculated as follows:

$10,000 (course fees) + $500 (textbooks) + $100 (stationery) + $300 (internet) + $500 (laptop decline in value) + $200 (car expenses) + $400 (accommodation and meals) = $12,000 (total self education expenses)

$12,000 - $0 (non-deductible amount) = $11,500 (deductible amount)

Note that before 1 July 2022, you had to reduce your allowable self education expenses by $250. However, this threshold has been removed from the 2022–23 income year.

To claim your deduction for self education expenses, you need to include the amount in your tax return. Using the Gotax Online site will help you through the self education maze.

Self education expenses can be a valuable tax deduction if they are related to your current work activities. However, you need to meet certain criteria and keep records of your expenses. By following the steps and tips in this article, you can maximise your deduction and save money on your tax return.