Self-Education Expenses Explained: How To Invest in Your Future and Save on Taxes
Have you ever felt the innate drive to advance in your career, only to be held back by the thought of further education? For many, this is a common roadblock – new certifications, diplomas, and courses often require both time and financial investment.
But what if furthering your education could also bring financial benefits this tax season?
When you embark on a new course, attend work-related conferences/seminars, or engage in self-paced learning aligned with your career, you may be eligible for valuable tax deductions.
In this blog, we’ll cover what self-education expenses are, eligibility requirements, which expenses qualify for deductions, and how we can support you in this journey of career growth.
Let’s get into it.
Before anything else, let’s get clear on what exactly self-education expenses are.
Put simply, self-education expenses are the costs you incur when you’re learning new skills or deepening existing ones within your career path.
This can look like —
Attending work-related conferences or seminars
Taking courses offered by a professional or industry organisation
Engaging in self-paced learning and/or study tours (whether here in Australia or abroad)
Enrolling in courses at an educational institution (regardless of whether they lead to a formal qualification)
Sounds like a sweet deal, right? Right. But, as with most things tax-related, there are eligibility requirements to consider if you’re planning to claim these deductions confidently.
To qualify, the self-education expense must have a clear link to the income you currently earn in your job.
Here are the two main questions to ask yourself about the course or learning experience —
Does this self-education activity maintain or improve the specific skills or knowledge I need for my current employment activities*?
Will this learning experience likely lead to an increase in my income from my current role?
(*Note: When we mention "employment activities," this refers to the core tasks and responsibilities listed in your job description.)
Here’s an example: imagine you’re a marketing professional at a firm, and you decide to take a digital marketing certification course to sharpen your skills in social media advertising. Since this course directly relates to your current role and enhances your abilities, you’d likely qualify to claim self-education expenses for it.
Generally, the rule is that your education must maintain or improve the skills or knowledge directly related to your current job to be eligible for a tax deduction.
So, when can’t you claim a deduction?
You won’t be able to claim if, at the time of the expenses:
You’re not currently employed
The course is for obtaining a new job or changing fields (for instance, moving from nursing to medicine)
It doesn’t have a strong connection to your current job responsibilities
It only broadly relates to your job – like enrolling in a full-time culinary course while working part-time as a waiter.
TAXABLE BONDED SCHOLARSHIP RECIPIENTS
If you’re receiving a taxable bonded scholarship, you can claim a deduction for self-education expenses as long as the course satisfies study requirements needed to maintain your scholarship.
Now that we’ve laid out the requirements of who can and cannot claim a deductible on self-education expenses, let’s explore which expenses you can claim —
General Course Expenses
You can claim a deduction for a range of expenses that come up while pursuing work-related self-education, including:
Repairs to equipment
Phone calls
Internet and data usage (excluding connection fees)
Computer supplies (like printer cartridges)
Stationary
Postage
Trade, professional, or academic journals
Textbooks
Student union fees
Car and Transport Expenses
If your self-education expenses are closely tied to earning income from your job, you can claim transport costs for trips between:
Home and your place of study (and back home)
Work and your place of study (and back to work)
However, if you’re travelling from:
Home to your place of study, then to work, or
Work to your place of study, then home
you can only claim the first leg of the trip. The second part is considered private and isn’t deductible.
Plus, if you pay for parking when attending your place of study or a course venue, you can claim those parking fees as well.
Tuition, Course, Conference, or Seminar Fees
You can claim a deduction for tuition fees, including student and amenities fees, if you’re enrolled in a full fee-paying program at a university or accredited higher education institution. Deductible fees become claimable once they are legally due – like on the census date – not when you actually pay them.
This includes fees covered by loans, such as:
FEE-HELP loans
VET Student Loans (VSL), previously known as VET-FEE HELP.
Keep in mind, however, that you can’t claim deductions for voluntary or compulsory repayments of these loans on your tax return.
If you’re unsure whether you’re in a full fee-paying program, a quick check with your university or provider can clarify.
Decline In Value Of Depreciating Assets
When we talk about depreciating assets, we’re referring to items that lose value over time – usually because of wear and tear. You can claim a deduction each year for an asset’s declining value until it’s worth nothing. This period is known as the asset’s “effective life”.
If you’re using any of these assets specifically for work-related self-education, you’re in luck – these can be claimed as deductions. Here’s a rundown of what you might be able to claim:
Professional libraries
Computers
Filing cabinets and bookshelves
Desks and chairs
Technical instruments and tools
Calculators
Other equipment, such as lamps
Interest On Borrowings
This one is pretty simple – if you take out a loan to cover deductible self-education expenses, you can claim the interest on that loan. For example, let’s say you borrow $10,000 for tuition, with an annual interest of $1,000 – you could claim a $1,000 deduction each year. However, keep in mind that you can’t claim deductions for repaying the loan principal itself.
Accommodation and Meal Expenses
When your self-education journey requires you to be away from home, you can deduct the costs associated with accommodation and meals. For instance, if you attend a three-day conference, you can claim your expenses for where you stay and what you eat. However, if you choose to pack your bags and relocate overseas for a year-long university program, those costs aren’t eligible. To keep it simple, you can claim these expenses when:
You’re participating in work-related self-education activities, or
Your learning requires you to be temporarily away from home for one or more nights.
Now that we’ve covered the intricacies of what can be claimed, let’s shed some light on what cannot be claimed —
Tuition fees for Commonwealth supported places at a university or higher education provider, which includes any fees you pay with the assistance of a HECS-HELP loan
Tuition fees paid by someone else or that your employer or a third-party reimburses you for.
Accommodation and meals where you are not required to be temporarily away from home for one or more nights.
Repayments of study and training support loans such as
ABSTUDY Student Start-up Loans
VET Student Loans (VSL)
Student Start-up Loans
Student Financial Supplement Scheme
Higher Education Loan Program (HELP), including FEE-HELP and HECS-HELP
Australian Apprenticeship Support Loans (AASL) (Formerly known as Trade Support Loans (TSL))
It’s important to note that if your only source of income is a qualifying Australian Government allowance or payment, you won’t be able to claim deductions for self-education expenses. However, this allowance/payment is a rebatable benefit and qualifies for the beneficiary tax offset.
Claiming deductions for self-education expenses can be a daunting task, especially if you don’t keep records of your expenses handy.
Here’s what you need to do to stay on top of your self-education deductions –
Keep your receipts for any and all self-education expenses you incur, including receipts such as:
Depreciating assets such as computers, laptops, and office equipment
Transport and travel expenses
Course fees
Text books
Stationary
Maintaining a detailed journal of these expenses and attaching receipts to their corresponding entries can be helpful.
Additionally, be prepared to explain how the course directly relates to your employment activities at the time you incurred those self-education expenses.
For depreciating assets that you claim deductions on, make sure to keep –
Details of how you calculated your claim for decline in value, including the method used and the opening adjustable value
Information on the percentage of time you use the asset for self-education
Documentation on how you determined the effective life of the depreciating asset, especially if you didn’t use the effective life specified by the ATO
Receipts or invoices that clearly show the cost of the depreciating asset and the purchase date
Embarking on a journey of further education is a bold move that can feel both exhilarating and a bit daunting. Whether it’s about advancing in your career, boosting your income, taking on greater responsibilities, or simply enriching your skillset, self-education is a powerful move. Thankfully, the ATO thinks so too and recognises the financial weight of self-improvement and offers valuable deductions for those in pursuit of it.
Knowing how to tap into these deductions can make a real difference in your financial journey. If you’re unsure about where to start, FRE.DM Wealth is here to make the process smoother. With Michaela’s expertise in tax and finance, you’ll have a trusted partner to guide you through claiming these educational expenses. Let’s make sure that your investment in knowledge pays off – not only in skill but savings too. Reach out so we can support your financial growth alongside your educational goals.
