What educational expenses are tax-deductible?

It’s that favourite time of the year again: lodging your taxes. Though a daunting (yet crucial) time for many, there are fortunately ways to reduce the amount of tax you pay through varying “deduction claims”, primarily comprised of work-related expenses. As a provider of nationally-recognised online training, students under Lumify Learn may be eligible to claim tax deductions under these self-education expenses.

The good news is, online study or training can fall under this category, provided the course is directly linked to improving one’s skills for the workplace; and has resulted (or is likely to result) in a salary increase from their current employment.

As such, we explore what you can and can’t claim on your tax return below; making for a faster, easier, and stress-free lodgement process.

What you can claim

When claiming a course as a tax-deductible self-education expense, the program must directly lead to a formal qualification.

Lumify Learn’s training typically leads to nationally-recognised (or even globally-recognised) certifications, making our students eligible for such claims, and leading to less payable tax when lodging their returns.

As mentioned, your course must also be directly connected to the improvement (or maintenance) of skills and knowledge in your current employment; has lead (or is likely to lead) to a boost in income; and must be directly paid by you. Those employed as a trainee and undertaking a course as part of their traineeship are also eligible for deductible expenses.

Eligible deductions include general course expenses, these including (but are not limited to): internet usage, computer equipment, course fees, home office costs, academic journals, phone calls, and textbooks.

“Depreciating assets”, such as computers and printers, are also eligible for tax deduction. Those that cost more than $300 AUD are typically claimed over the life of the asset, or its decline in value; while those that cost $300 AUD or less can be claimed for its full cost (to the extent of its use for study-related purposes during the financial year it was purchased). Students may also be able to claim a deduction for computer repairs, though upgrades are not included in this category. However, computer upgrades can be claimed as part of its decline in value.

If you loaned money to finance the cost of certain items related to your self-education, you may also be able to claim a deduction on any interest that has accrued.

Students must hold the proper documents to demonstrate their self-education expenses – these including receipts of course fees, textbooks and stationary purchase. The declining value of depreciating assets must also be documented.

What you can’t claim

If the course you’re undertaking isn’t directly connected to your current workplace activities, you can’t claim a deduction for self-education expenses; even if a course is “generally related” to your employment or it still manages to gain you new employment or a promotion. Additionally, if your tuition fees are paid for by someone else or you were reimbursed for your expenses – such costs are ineligible for tax deduction.

Other ineligible claims include VET Student Loan (VSL) repayments, home office occupancy costs (i.e. mortgage or rent), accommodation and meals (unless directly related to study), and Trade Support Loan Program (TSL) repayments.

Students looking to check their claim eligibility can use the ATO’s online self-education expenses calculator. The tool helps one estimate the potential deduction they can claim on their work or self-education-related expenses. All that’s required are the costs of all eligible self-education expenses (including depreciating assets) in the last income year – and students should receive a rough estimate for their claim to help guide their lodgement process.

Apportioning your expenses

Plenty of expenses can overlap with one’s personal use. A purchased laptop, for example, may be used for study; but can also be used for other activities in one’s personal time. The same applies to phone calls, home office equipment, and internet usage.

When claiming your deductions, it’s important to apportion your expenses between what was used for personal reasons and what was used under work or “self-education” purposes. If only 50% of your laptop as related to course training, then you’re only eligible to claim half of the device’s cost in your deduction. Using the ATO’s self-education expense calculator can help you determine these apportioned deductions.

The “$250 reduction”

In some situations, you may required to reduce your tax claim by $250 AUD.

Self-education expenses fall under five categories: (A) service, tuition, travel, and itemized expenses such as textbooks, stationary, and home office running expenses; (B) depreciating assets such as your desk, your computer, printer, and other digital devices; (C) any repairs made to devices or assets used for self-education purposes; (D) car expenses; (E) expenses related to your self-education, but aren’t tax-deductible.

Should all your expenses fall under category A, you must reduce your tax deduction by $250.

However, expenses in the other categories can be used to offset this deduction.

Though category E expenses are non-tax-deductible, they can also be used to offset against the $250. These typically include childcare costs while one attends their self-education activities (i.e. a workshop, lecture, or seminar); travel expenses from their place of education to another area (that isn’t their home); and the capital costs of items purchased in the financial year to support their self-education activities. Since Lumify Learn’s courses are delivered online, these purchases are typically the only expenses students are eligible to use as an offset.

Make smart investments through Lumify Learn’s courses!

Upskilling is a critical practice in our current age, with automation set to disrupt much of the Australian – and global – workforce. But don’t let the expenses of training alone deter you; through ATO’s resources, you may just be able to claim these for a hefty tax deduction.

Lumify Learn currently offers a wide range of online courses (from boot camp programs to diploma qualifications) across ICT’s most in-demand sectors, these including areas of data science, cybersecurity, cloud computing, and artificial intelligence. Students can acquire the nationally-recognised training they need to help advance themselves professionally, while staying eligible for tax-deductible self-education expenses.

Best of all, our online delivery allows one to pursue these studies around their personal needs, commitments, and schedule preferences.

Whether you’re pursuing a tech career, or simply wish to sharpen your skills in today’s ever-digitized landscape – Lumify Learn can offer you the in-depth, comprehensive training required to stand out in the job market.

Dive in the growing world of ICT today, and enquire with us on a course.