Self-education: What can you claim?

The ATO has recently released a new draft ruling on self-education expenses. While the ruling does not introduce new rules, it does reinforce what the ATO will and won’t accept.

What can be claimed

If you undertake study that is connected to your work, you can usually claim the studying costs as a tax deduction - assuming your employer has not already picked up your expenses. There is no limit to the value of the deduction you can claim.

What can’t be claimed

Self-education expenses are not deductible if you are undertaking education to obtain a new job, or something not connected to how you earn your income now.

One of the key challenges in claiming deductions for self-development or personal development courses is that the knowledge or skills gained are often too general. So, for example a stressed manager taking a stress management course would not be able to make a claim because the course is not related to a course designed to maintain or increase the skills or specific knowledge required in their current position.

If your employment (or your income earning activity) ends part the way through completing a course, your expenses are only deductible up to the point that you stopped work. Anything from that point forward is not deductible (that is until you obtain a new role and assuming the course remains relevant).

Overseas trips which include work

Overseas study tours are deductible in limited circumstances. If you are travelling overseas, you need to prove that the dominant purpose of the trip is related to how you earn your income. Airfares incurred to participate in self-education, provided you are not living at the location of the self-education activity, are deductible.The ATO are strict on this area.

A warning on large claims

The ATO is more likely to target large self-education expenses.

Expenses can ratchet up very quickly in certain situation, such as post grad study, particularly when you add in any other expenses such as books or travel. It’s important to ensure that there is a clear connection between your current job or business activity and the self-education expenses before you claim them.

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Date published 25 Oct 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.