Can you claim self-education expenses as tax deductions?

If you’re like many Australians and spent the lockdown teaching yourself something work-related, you may be able to claim self-education expenses on your tax return this tax season.

Tax time is right around the corner (yeah, this year has gone by really fast), so now is the time to figure out if these Python tutorials or Excel courses will add to your tax deduction, i.e.: can- do you claim self-education expenses?

The answer is, of course, yes and nope. The following has been summarized from documentation available from the Australian Taxation Office (ATO), links for further explanation can be found throughout.

How to claim self-education expenses on your tax return

You can claim a deduction for self-study and education expenses if the studies are related to your current professional activities or if you receive a taxable scholarship.

You generally cannot claim the first $250 of expenses for your self-education. It’s a bit confusing, and while you can’t claim the first $250, you must document the expenses.

What you can and cannot claim for tax

You can claim the self-study and study expenses you incur when the course you take leads to a formal qualification. The lesson must have a sufficient connection with your current professional activities as an employee and either: maintains or improves the specific skills or knowledge that you need in your current professional activities or results (or is likely to result) in an increase in your income of your current job employment activities.

You can’t pretend a deduction for self-study and study expenses for a course that: does not have a sufficient connection with your current professional activities; only generally relates to your current job – such as taking a full-time fashion photography course and working as a casual sales assistant on weekends or getting a new job or changing jobs – such as quitting your nurse job to doctor job.

If self-education expenses To do related to your employment, you can claim a deduction for accommodation and meals (if you are away from home overnight), car expenses, items adjacent to the computer (such as cartridges printer), course and tuition fees (only if you pay them), impairment for depreciation of assets (cost over $300), technical equipment or instruments (costing $300 or less), equipment repairs, tariffs, fees payable on certain education and support loans training (not repayments on the loan itself), home office operating costs, interest, internet and data usage (excluding connection fees), parking costs (only for work-related claims), your phone (if used), postage, stationery, student association fees, student services and equipment fees, textbooks, any documentation (such as journals commercial, professional or academic purchases) and travel expenses, including car expenses between home and your place of education or between your place of work and the place of education.

Again, you can only claim a deduction for self-education expenses related to your current job.

You cannot claim tuition paid by someone else or reimbursed by your employer or a third party, student contribution amounts, home office costs (such as rent, interest or mortgage rates), room and board or education reimbursements and education support loans such as the Higher Education Loans Scheme (HELP), Financial Supplement Scheme for Students (SFSS) , VET Student Loans (VSL) or the Trade Support Loan (TSL) scheme for start-up student loans (SSL).

The ATO has a handy self-education expense calculator to help you determine your eligibility for work-related self-education expenses and it also helps you estimate how much you can claim at tax time.

What home office expenses can you deduct from tax?

An employee who works from home (i.e. you) may be able to claim deductions for expenses you incur that are related to your job. But that doesn’t mean a daily coffee delivered by Uber Eats or an oodie (although that’s your “work” outfit) can be claimed.

The ATO has a guide on this for those of you who need it, but in summary, you should follow the three golden rules:

  • You had to spend the money yourself and were not reimbursed.
  • Expenses should be directly related to earning your income and not be private in nature.
  • You must have a record to prove this (a receipt is preferred).

Included in the list of items you can claim as a deduction at tax time home office equipment, including computers, printers, telephones, furniture and furnishings – you can claim either the full cost of items up to $300 or the lower of value (depreciation) for items over $300.

Can you claim a laptop to study tax?

If you are employed and must work from home and have recently purchased a laptop computer, you may be able to claim the value of your computer as capital cost allowance year over year. Saying that, you actually have to use the laptop for work. If you use the laptop for both jobs and for private purposes, you can only claim a percentage based on the work-related part of the use. If you paid for your computer, but your employer reimbursed you, you are not entitled to a deduction for that computer.

If you also use the laptop you bought for work and study, remember that you cannot claim the same thing twice.

If your laptop cost less than $300, you can claim an immediate deduction for the full cost of the item. If the laptop you used for your studies cost more than $300, you can deduct depreciation over the life of the equipment on your return at tax time. For laptops, this is usually two years and for desktops, usually four years.

How to file your tax return

You can file online using myTax, through a registered tax agent, or complete a paper tax return. Your tax return covers the tax year from July 1 to June 30. Tax time is July 1, 2022. If you need to file a tax return, you must file it or go to a tax official by October 31, 2022.

It’s best to discuss your tax options with an agent, this is just general advice, with links to official ATO documentation to guide you as you approach tax time.

Sam D. Gomez