The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

13 April 2013

Reforms to self-education expense deductions

The Government will better target work related self-education expense deductions as part of a package of reforms to make a down-payment on the National Plan for School Improvement.

The Government values the investments people make in their own skills and recognises the benefits of a tax deduction for work related self-education expenses. However, under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers' expense.

Education expenses include formal qualifications and associated tuition fees, textbooks, stationery and travel expenses and also conferences, seminars and self-organised study tours.

Without a cap on the amount that can be claimed under this deduction, it's possible to make large claims for expenses such as first class airfares, five star accommodation and expensive courses.

The Government will retain the incentive to invest in work related self-education through tax deductions and will introduce a cap on expenses to ensure the system remains fair.

From 1 July 2014, work related self-education expenses will be more fairly targeted through an annual cap of $2,000 a person.

Currently employers are not liable for fringe benefits tax for education and training they provide to their employees – this treatment will be retained, unless an employee salary sacrifices to obtain these benefits. This is in recognition of the need to encourage employers to continue to invest in the skills of their workers.

This is a targeted reform and the majority of those with self-education expenses will not be affected by this change.

According to the most recent ATO data, the typical claim for formal qualifications is less than half the proposed cap at $905. For other expenses, such as conferences, seminars and workshops, including those held locally, the typical claim is only a few hundred dollars, remaining well below the cap.

The Government will consult closely with employees and employers to better target this concession while still supporting essential training.

This reform will save around $520 million over the forward estimates period.