Tax and Education Frequently Asked Questions
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There needs to be the necessary nexus (connection) to your current income for these expenses to be claimable as a self-education deduction. This means that the self-education needs to help you in your current job and not be undertaken to open up new job opportunities.
Example 1: Amanda is a pharmacy sales assistant who is studying for a pharmacy degree so that she can become a pharmacist. The expenses related to the study are not allowable as the study is designed to open up a new income-earning activity.
Example 2: Barry, a trainee accountant, is studying commerce part-time at university. He is allowed a deduction for the costs associated with the course because it will enable Barry to maintain or increase the specific knowledge required in his current position and to carry out his duties more effectively.
In March 2012 legislation was passed and Tax Laws Amendment (2012 Measures No. 1) Bill 2012 now denies any deduction for study expenses for full-time students who are in receipt of Youth Allowance, Austudy or Abstudy. Disallowing a deduction for expenses incurred in gaining or producing a rebatable benefit recognises that taxable government assistance payments are effectively tax-free and individuals should not be able to receive an additional benefit by way of a tax deduction against their assessable income for any expenses they incur in qualifying for the payment.
If you make an advance payment of at least $500, or enough to clear the debt entirely, you will receive a 5% discount on that payment. It is a good idea to make the payment before 1 June when the annual indexation is calculated. The indexation rate for 2015 is 2.1%. You should be aware that if you’re HELP repayment income is above $53,345 and you still have an outstanding HELP balance you may also be required to make a compulsory payment when you lodge your 2015 tax return.
Although it is the government’s intention to remove the bonuses, at the time of writing the enabling legislation had not been approved by parliament.
A new benefit was made available from the 2009 income year onwards which reduces the compulsory HELP repayment or accumulated HELP debt for eligible graduates in science, maths, nursing (including midwifery) or early childhood education.
The reduction amounts are indexed annually, and must be applied for after the end of the financial year. There is a fixed claim period of 2 years from the end of the financial year.
The benefit was designed to encourage maths and science graduates to work in specified occupations and early childhood teachers to work in specified locations. The benefit must be applied for each year and forms are available from the tax office or can be downloaded from www.ato.gov.au. Details of the qualifying occupations and locations can be found at www.studyassist.gov.au
In the 2014 Budget the Government announced that the HECS-HELP benefit scheme will end on 30 June 2015. Graduates would have until 30 June 2017 to claim HECS-HELP benefit for employment prior to 1 July 2015.
The tax office ruled that deductions for expenses incurred job seeking are not deductible as there is no income to offset them against.
After the Anstis case in November 2010 a deduction was allowed for job seeking expenses for the 2007, 2008, 2009 and 2010 years for taxpayers in receipt of a Newstart Allowance or Youth Allowance who were job seekers. In the 2011 year expenses were again allowed for those in receipt of a government Newstart or Youth Allowance payment for expenses directly related to seeking paid work. All expenses had to be fully substantiated and taxpayers must have kept written evidence to prove the expense has been incurred. This means receipts MUST have been kept. However, in March 2012 legislation was passed now the Government denies any deduction for job seeking expenses by those who receive Newstart or Youth Allowance.
The costs associated with seminars are tax deductible provided that they relate to your current income producing activities.
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