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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

Labour to cap tax deductions for self-education expenses at $2000 a year

16 July 2013

A group of up to twenty professional groups including doctors, lawyers, accountants, company secretaries, and engineers have joined forced in a show of solidarity against the Government’s decision to cap tax deductions for self-education expenses at $2000 a year.

The group representing at least a million Australians have banded together to form a campaign dubbed ‘scrap the cap’ hosted by Universities Australia. The campaign is rallying for Labor to axe the cap and also wants the Coalition to pledge to oppose it. The controversial tax which would see an annual cap of $2000 on how much taxpayers can claim as work-related, self-education expenses is a “tax on learning” and will “have a very profound impact on national productivity,” Belinda Robinson, Universities Australia Chief Executive has said.

The government has said of the tax that “it wants to ensure deductions are targeted at genuine upskillers rather than people who claim tax breaks on first-class airfares and five-star accommodation” but AMA president Steve Hambleton has commented that, “plans to cap tax deductions for self-education expenses would dumb down Australia”.

The Australian Medical Association, Engineers Australia and CPA Australia, insist the cap will be a disincentive to professional development while Hambleton added that “the Tax Office already had powers to punish anybody rorting the system: “This is not a handout. We’re talking about professionals that are funding their own education expenses.”

The government has suggested that currently some people attempting to claim deductions for expenses that are benefiting them in a personal way rather than being related to their employment, with the taxpayer footing the bill.

Many industry groups including Engineers Australia have said that the cap would penalise them for simply doing what was needed to maintain their registration and Universities have predicted a downturn in postgraduate enrolments as a result of the cap.

Under the current rule, legislation allows some people to claim large deductions for expenses that, while having some connection with their employment, provide a significant private benefit which is paid for by taxpayers,” the paper said. Treasurer Chris Bowen said the government had “made sensible changes to the allowable deductions for self-education that reflect an appropriate level of claimable expenses”.

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