Claiming self-education expenses

The question of whether study expenses are tax deductible can be a complex one. Claiming a deduction under the “self-education” section of your tax return involves fitting into strict criteria, and deduction thresholds apply.

Self-education deduction rules

The following summary is from the ATO website:

Self-education expenses

You can claim a deduction for work related self-education expenses when your course of study is directly connected to your current employment by either:

  • maintaining or improving the specific skills or knowledge you require
  • resulting in, or being likely to result in, an increase in your income.

You can also claim a deduction for study expenses if you receive a taxable bonded scholarship and doing the course satisfies study requirements to maintain your right to the scholarship.

You can claim a deduction for expenses such as travel, computers and some course fees.

Source: https://www.ato.gov.au/Individuals/Studying-and-student-debt/Tax-deductions-and-offsets-for-students/Self-education-expenses/

The key is that the study is sufficiently linked to current employment.

Deduction not allowable to open up a new income earning activity

No deduction is available if the subject of self-education is designed to get employment, to obtain new employment or to open up a new income-earning activity.

This includes a move to a new job within the same company.

The ATO cites this example:

Joseph is currently employed as a clerk in a public service department. He would like to transfer to a position in another section of the department and undertakes a course of study designed to equip him with the skills needed in that position. The study is unrelated to the skills required in his current position and is not likely to lead to an increase in income. As the study is designed to enable Joseph to enter a new income-earning activity, no deduction is allowable.

This is based on a tribunal case where a public service clerk studying for a law degree later obtained a legal officer position in the public service. Such expenses of self-education were incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

What kind of expenses are deductible?

  • Course or tuition fees
  • Books, journals and stationery
  • Accommodation and meals (only as part of a travel expense where you are away from home overnight)
  • Decline in value (depreciation) on computers and other devices (study use % only)
  • Home office expenses (utilities, internet)
  • Travel to and from campus

ATO Resources:

Tax ruling 1998/9
Self-education eligibility tool
Guide to completing the self-education section of your tax return