SELF-EDUCATION EXPENSES

You may be able to claim a deduction for self-education expenses if your self-education relates to your current work activities as an employee or if you receive a taxable bonded scholarship. In some circumstances, you have to reduce the amount of your claim by $250.

Course eligibility

Self-education expenses are deductible when the course you undertake leads to a formal qualification and meets the following conditions.

The course must have a sufficient connection to your current work activities as an employee and:

  • maintain or improve the specific skills or knowledge you require in your current work activities
  • result in, or is likely to result in, an increase in your income from your current work activities.

You can’t claim a deduction for self-education expenses for a course that doesn’t have a sufficient connection to your current work activities even though it:

  • might be generally related to it – such as undertaking a full-time fashion photography course and working as a casual sales assistant on the weekends
  • enables you to get new employment – such as moving employment as a nurse to employment as a doctor.

Taxable bonded scholarship recipients

You can claim a deduction for self-education expenses if, in doing the course, you are satisfying study requirements to maintain your right to ataxable bonded scholarship.

If you are employed by the scholarship provider, normal work-related self-education rules apply.

Expenses you can claim

You can claim a deduction for following expenses related to your eligible self-education:

  • General course expenses
  • Depreciating assets
  • Car expenses.

General course expenses

You can claim a deduction for the following general course expenses:

  • accommodation and meals (if away from home overnight)
  • car expenses
  • computer consumables – for example, printer cartridges
  • course and tuition fees, if paid directly by you
  • decline in value for depreciating assets (cost exceeds $300)
  • purchase of equipment or technical instruments (costing $300 or less)
  • equipment repairs
  • fares
  • fees payable on some Higher Education Loan Program (HELP) loans, but not the loan itself
  • home office running costs
  • interest
  • internet usage (excluding connection fees)
  • parking fees (only for work-related claims)
  • phone calls
  • postage
  • stationery
  • student union fees
  • student services and amenities fees
  • textbooks
  • trade, professional, or academic journals
  • travel costs, including car expenses
    • between home and your place of education
    • between your workplace and the place of education.

Some travel for journeys can’t be claimed, but you may be able to offset the cost of these journeys against the $250 reduction.

If an expense is partly for your self-education and partly for other purposes, you can only claim a deduction for the amount that relates to your self-education.

Depreciating assets

You may be able to claim a deduction for assets that lose their value over time such as computer and printers.

Depreciating assets that cost more than $300 are usually claimed over the life of the asset (decline in value). However, if you have a depreciating asset that cost $300 or less you can claim a deduction for the full cost of the asset to the extent that you used it for study in the financial year you bought it. If you also use the asset for private purposes you must apportion your costs.

Car expenses

If your self-education has sufficient connection to your current employment, you can claim daily travel expenses from your:

  • home to your place of education and back
  • work to your place of education and back.

However, you can’t claim the cost of the last stage of your travel for example, from home to your place of education and then to work.

Expenses you can’t claim

You can’t claim the following expenses in relation to your self-education:

  • tuition fees paid by someone else or that you have been reimbursed for
  • student contribution amounts
  • repayments of Higher Education Loan Program (HELP) loans (although the fees paid by some HELP loans are)
  • Student Financial Supplement Scheme (SFSS) repayments
  • VET Student Loan (VSL) repayments
  • Student Start-up Loan (SSL) repayments
  • Trade Support Loan Program (TSL) repayments
  • home office occupancy expenses – for example, rent, mortgage interest or rates
  • accommodation and meals (unless sleeping away from home for study, such as to attend a residential school).

From the 2011-12 income year, you can’t claim a deduction for self-education expenses you incur if you only receive a qualifying Australian Government allowance or payment, as that allowance or payment is a rebatable benefit and eligible for the beneficiary tax offset.

Example: receiving Austudy payments

Alison starts a full time Bachelor of Pharmacy. As she has two young children, she applies for and receives Austudy payments from Centrelink rather than finding employment to support herself while studying. Austudy is a taxable government assistance payment and is eligible for the beneficiary tax offset.

Alison isn’t eligible to claim a deduction for her self-education expenses because she received Austudy payments and Austudy is a rebatable benefit.

$250 reduction in expenses

Self-education expenses are broken into five categories. If all of your self-education expenses are ‘category A’ items then you have to reduce your deduction by $250. However ‘category E’ expenses’ can be used to offset the $250.

Expenses offset against the $250 reduction

While you can’t claim a deduction for the following expenses, you can use them to offset the $250 reduction. These expenses include:

  • childcare while attending self-education activities
  • capital expenses related to your self-education such as, the purchase of a desk
  • fares, travel or car expenses for these journeys
    • for work-related self-education, the second leg of a trip if you went from home to your place of education and then to work, or the other way around
    • if you receive a taxable bonded scholarship and are not employed by the scholarship provider, travel from home to your normal place of education and back.

See also: Self-education expenses calculator

Apportioning expenses

You need to apportion some expenses between private purposes and use for self-education, such as travel costs and depreciating assets.

If you use equipment such as computers and printers privately and for study, you must apportion the expenses based on the percentage you use the equipment for your self-education. For example, if you use a computer 50% of the time for self-education and 50% for private purposes, you can only claim half the cost of the computer as a deduction.

Use our self-education expense calculator to get an estimate of your self-education deductions. It also provides information on your claim eligibility.

Recording self-education expenses

You may need to keep receipts or other documents showing your self-education expenses such as:

  • course feesexpenses bills
  • textbooks
  • stationery
  • decline in value of and repairs to depreciating assets.

 

 

You must also keep receipts, documents or diary entries for travel expenses. You can use our myDeductions tool in the ATO app to record your self-education expenses.

 

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

 

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

Working from home during COVID-19

We understand that due to COVID-19 your working arrangements may have changed. If you have been working from home, you may have expenses you can claim a deduction for at tax time.

Tracking these expenses can be challenging, so from 1 March to 30 June 2020, we have introduced a temporary shortcut method. It’s a simple way to calculate these expenses with minimal record keeping requirements. We may extend this period, depending on when work patterns return to normal.

In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.

Claiming a deduction

To claim a deduction for working from home, all of the following must apply:

  • you must have spent the money
  • the expense must be directly related to earning your income
  • you must have a record to prove it.

This means you can’t claim a deduction for items provided by your employer, or if you have been reimbursed for the expense.

If you are not reimbursed by your employer, but receive an allowance from them to cover your expenses when you work from home, you:

  • must include this allowance as income in your tax return
  • can claim a deduction for the expenses you incur.

Expenses you can claim

If you work from home, you will be able to claim a deduction for the additional expenses you incur. These include:

  • electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
  • cleaning costs for a dedicated work area
  • phone and internet expenses
  • computer consumables (for example, printer paper and ink) and stationery
  • home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the
    • full cost of items up to $300
    • decline in value for items over $300.

Expenses you can’t claim

If you are working from home, you can’t claim:

  • the cost of coffee, tea, milk and other general household items your employer may otherwise have provided for you at work
  • costs related to children and their education, including setting them up for online learning, teaching them at home or buying equipment such as iPads and desks
  • items that you’re reimbursed for, paid directly by your employer or the decline in value of items provided by your employer – for example, a laptop or a phone
  • time spent not working, such as time spent home schooling your children or your lunch break.

Employees generally can’t claim occupancy expenses such as rent, mortgage interest, water and rates.

Calculating your expenses

There are three ways of calculating home office expenses depending on your circumstances. The methods are the:

  • Shortcut method (80 cents) – only available 1 March to 30 June 2020
  • Fixed rate method (52 cents)
  • Actual cost method

You don’t have to use the shortcut method. You can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome, as long as you meet the criteria and record keeping requirements for each method..

Shortcut method

You can claim a deduction of 80 cents for each hour you work from home from 1 March to 30 June 2020 as long as you:

  • are working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls
  • have incurred additional running expenses as a result of working from home.

The shortcut method doesn’t require you to have a dedicated work area, such as a private study.

The shortcut method covers all additional deductible running expenses, including:

  • electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
  • the decline in value and repair of capital items, such as home office furniture and furnishings including capital items that cost less than $300
  • cleaning expenses
  • your phone costs, including the decline in value of the handset
  • your internet costs
  • computer consumables, such as printer ink and stationery
  • the decline in value of a computer, laptop or similar device.

You don’t have to incur all of these expenses to use the shortcut method, but you must have incurred additional running expenses in some of these categories when working from home.

If you use this method, you can’t claim any other expenses for working from home for that period.

When you are calculating the number of hours you worked from home, you need to exclude any time you took a break from working, for example the time you spent to stop and eat your lunch or to assist your children with home schooling.

You can calculate your deduction for additional running expenses using the shortcut method, with this formula:

  • Total number of hours worked from home between 1 March and 30 June 2020 × 80 cents.

If you use the shortcut method to claim a deduction in your 2019–20 tax return, include the amount at the other work-related expenses question in your tax return and include ‘COVID-hourly rate’ as the description. Remember, you can only use this method from 1 March to 30 June 2020.

For information on how to calculate your working from home expenses prior to 1 March, or if you also choose to use one of the existing home office expenses methods to calculate your deduction.

Records you must keep

You must keep a record of the number of hours you have worked from home. This could be a: expenses bills

  • timesheet
  • roster
  • diary, or
  • similar document that sets out the hours you worked.

If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses.

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

Ph 13 75 77 75

Visit link for more information on Tax returns 2020

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.