Bonus Article – Treasury discussion paper on self-education expenses

Late last year, Treasury released a discussion paper around the announcement in the 2020-21 Federal Budget to allow individuals to claim deductions for education and training expenses they incur where the expenditure is not related to their current employment. This is on top to the FBT exemption already announced for employment-provided retraining and reskilling for redundant, or soon to be redundant, employees where the benefits are not related to their current employment.

The discussion paper canvasses a number of issues, including:

  • Whether tax deductions for individuals are appropriate, given the very significant government support for education and training that already exists.
  • Whether deductions should be targeted to registered providers that are subject to appropriate regulation.
  • Whether “lifestyle and personal development courses” should be excluded.
  • Whether support should be targeted at areas of expected jobs growth (picking winners).
  • Should deductions be limited to tuition fees?
  • How should tax deductions interact with government funding and subsidies (if at all)?
  • Should the existing $250 exclusion be removed?
  • How to minimise opportunities for abuse?

There may well be further consultation before we see any law change. The government seems highly likely to follow through with a major expansion in the deductibility of self-education expenses that will have implications for many taxpayers.