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Get your self-education tax refund now!
By William Cowie
Did you know you can get tax deductions to help with the cost of your studies? Some self-education expenses are able to be claimed on your tax return.
What are self-education expenses?
Self-education expenses are expenses you incur studying an eligible course to obtain a formal qualification from a school, university, college or other place of education (such as TAFE or private registered training organisation). The course(s) you study need to be directly connected to your current work or employment.
When can you claim a deduction?
To claim a deduction, courses must either:
- • Maintain or improve the specific skills or knowledge you require for your work.
- • Result in (or likely result in) an increase in your income in your current employment.
For example, if you’re working as a project manager without qualifications and have decided it’s time to formalise your skills with a Certificate IV in Project Management, then you should be eligible to claim self-education tax deductions.
When can’t you claim a deduction?
You cannot claim a deduction for self-education if your course is not closely related to your current employment, even if:
- • The course is generally related to your employment.
- • The course enables you to find new employment.
Unfortunately, that means you can’t claim deductions if you’re unemployed and your study will likely lead to you getting a job (there may be other assistance available through Centrelink).
Taxable Bonded Scholarship Recipients
You can also claim deductions if you’re on a taxable bonded scholarship, if the course you are studying fulfills the study requirements to maintain your right to a taxable bonded scholarship. If you work for the scholarship provider, then normal work-related self-education rules apply.
Check your eligibility with the Australian Tax Office tool: Self-Education Eligibility
What Self-Education Expenses Can You Claim?
You can potentially claim:
- • course fees
- • accommodation and meals (if you need to travel away from home overnight)
- • computer consumables
- • decline in value of depreciating assets
- • stationery
- • postage
- • home office running costs
- • travel to-and-from place of education
- • trade, professional, or academic journals
- • textbooks
- • interest
- • internet usage (excluding connection fees)
- • parking fees (only for work-related claims)
- • fares
- • phone calls
- • equipment repairs
- • purchase of equipment or technical instruments costing less than $300
- • student union fees
- • student services and amenities fees
If an item or service is used for multiple purposes, then you need to divide up each expense based on how much you used it for self-education.
For example, if you use your computer and internet connection for study, but ALSO use it for streaming movies, checking personal emails and surfing the web, you need to work out how much use is personal and how much is self-education.
You might study online for 16 hours a week, and spend 4 hours chatting to friends on social media and skype, for a total of 20 hours use.
Of your 20 hours use:
- • 80% (16 hours) is for self-education
- • 20% (4 hours) is personal
Therefore you’ll be able to claim 80% of your computer-related and internet expenses as tax deductions. It’s a good idea to keep a log of your usage so that you can justify your proportioning of expenses if the tax office asks.
How much can you claim?
How much will you be able to claim all up? Try the Australian Tax Office’s Self-Education Expenses Calculator
From 1 July 2014, work related self-education expenses will have an annual cap of $2,000 per person. That might sound low, but according to recent ATO data, the typical claim for formal qualifications is $905, less than half the proposed cap. Other expenses, such as conferences, seminars and workshops, are typically only worth a few hundred dollars on a claim.
What expenses can’t you claim?
You cannot claim repayments on Higher Education Loan Program (HELP) loans, including:
- • HECS-HELP
- • FEE-HELP
- • OS-HELP
- • VET FEE-HELP
- • SA-HELP
You also cannot claim:
- • Student Financial Supplement Scheme (SFSS) repayments
- • Home office occupancy expenses
- • Meals – when you’re not sleeping away from home
Under some circumstances, you may have to reduce your allowable self-education expenses by $250. You are able to offset other types of expenses, some of which aren’t allowed as deduction.
Expenses you can offset against the $250 reduction
- • Childcare
- • Computer purchase
- • Fares, travel or car expenses for certain journeys:
- – for work-related self education, you can offset the second leg of a trip in cases where you went from home to work, to you place of education (or vice-versa).
- – if you receive a taxable bond scholarship, and are not employed by the scholarship provider, you can offset travel from home to your normal place of education and back.
These expenses can’t be claimed as a deduction, but they can be taken into account when determining whether you have to reduce your overall claim.
Basic rules for claiming tax deductions
To claim an expense as a deduction, you:
- • Must claim the deduction in the same year that you made the purchase.
- • Can’t claim an expense that you have already, or will be, reimbursed for.
- • May have to substantiate your claims for deductions with written evidence.
If you purchase a service and pay up front, but the service extends beyond the current income year, then different rules apply.
GST, if included in the price, is part of the total expense and is part of any allowable deduction.
You can’t claim deductions for:
- • Any fines imposed under a law of the Commonwealth, a state or territory, a foreign country, or by a court, such as speeding tickets and car parking fines.
- • Costs you incur earning income from illegal activities.
Don’t miss out on your self-education deductions
If you think you’re eligible for self-education deductions, talk to a tax agent about maximising your tax return. Remember you need evidence to back up your claims, so keep your date-stamped receipts and track your usage of items and services that use for multiple reasons, not just study.
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