Your guide to self-education and Australian income tax deductions

Self-education is defined as courses undertaken at an educational institution, attendance at work-related seminars or conferences, self-paced learning and study tours (overseas or within Australia).

Self-education expenses are the costs you incur to undertake a course of study at a school, college, university or other recognised place of education.

Work-related self-education expenses are expenses you incur when you undertake a course to obtain a formal qualification from a school, college, university or other place of education that is
relevant for your current employment

‘Self-education expenses’ and ‘work-related self-education expenses’ are used interchangeably.  ‘Self-education expenses’ must be related to your current field of work to be potentially deductible, hence these expenses are often referred to as ‘work-related self-education expenses.’

Unfortunately, there is no precise tool or way to determine the requisite connection between your study program and your employment. The main principles to follow are:

• A deduction is allowable for self-education expenses if the taxpayer’s income-earning activities are based on certain skill/specific knowledge that the course undertaken aims to maintain or improve.
• A deduction is allowable for self-education expenses if the course will, or is likely to lead to an increase in the taxpayer’s income from current income-earning activities.

As long as the MBA has sufficient connection to your current employment, maintains or improves the specific skill or knowledge that is required of you in your current employment, or studying the MBA results in or is likely to result in an increase in your income from your current employment, and you meet all the eligibility criteria, than yes, an MBA can be tax deductible.

From 1st of July 2022, there is no minimum amount that you can deduct for self-education expenses. If you incur self-education expenses before this date, you may need to reduce your total allowable deduction by $250.

To claim any self-education deductions, you must keep receipts and demonstrate how the course taken is related to your current role.
For depreciating assets, retain receipts and document how you calculated the asset’s life if it differs from the norms set by the ATO, the methods of depreciation chosen, and how you determined the percentage of use for self-education purposes.

To organise and store your records, you can download the ATO app and use the myDeductions tool.

AIB cannot advise whether you are eligible to claim a deduction for self-education expenses. This guide provides general information on the likelihood of eligibility and the types of items that you are likely to be able to claim for. It is recommended that you refer to the Australian Taxation Office website, utilise the self-education online tools and calculators and seek personal advice from your tax accountant or other independent professional advisor.

Claiming a tax deduction for self-education expenses is beneficial as you are able to decrease your overall taxable income, thereby reducing the overall amount of tax that you are liable to pay. E.g. If you claim a deduction of $2000 for allowable self-education expenses, your taxable income would be reduced by $2000 which, in turn, would reduce your overall tax liability. For specific information it is best to speak to your tax professional.

For more information about Self-Education Expenses please visit the Australian Taxation Office website or consult with your tax accountant or other independent tax professional for advice.