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Self-education and the Youth Allowance

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Upgrading your professional skills is an important part of improving both your employment potential and your earning capacity. Governments encourage this as a way of moving employees through the economy, leaving room for new entrants to the workforce.

An important part of this is allowing a tax deduction for the costs of self-education, as long as there is a direct connection between the studies you are doing and your current employment.

Until recently, if you were doing initial studies to prepare for a career, the costs could not be claimed because there is not a sufficient connection between the intended work and a course of study. Anyone claiming self-education expenses had to be working in the field of study, either full-time or part-time.

However, a recent court decision allows someone who undertakes a full-time course of study as a necessary part of receiving Youth Allowance to claim the costs of self-education. The government has announced that this will only apply for the 2011 financial year.

Can you make a claim?

You can if you are:

  • upgrading your qualifications for your current employment
  • improving specific skills or knowledge used in your current employment
  • employed as a trainee and you are undertaking a course that forms part of that traineeship
  • able to show that, while employed in that field, your course of study led, or was likely to lead, to an increase in employment income
  • receiving Youth Allowance for studying full-time and you are undertaking the course to satisfy the study requirements (applicable for the 2011 financial year only).

What can be claimed?

  • Most of the costs of getting to and from your study, the tools, equipment and books you use, and the cost of running an office at home. However, only the amount above $250 can be claimed for everything other than repairs, depreciation and car expenses. 
  • Tuition fees (but not those covered by HECS) can be claimed if you are using a non-HECS student loan to pay for them.
  • Textbooks, and professional and trade journals.
  • Stationery and photocopying.
  • Computer expenses, including repairs, depreciation and interest on money borrowed to buy the computer. Note that computer expenses have to be apportioned between study and private usage. Keeping a usage log will help you work this out.
  • Student Union fees.
  • Accommodation and meals, but only if your course requires you to be away from home for one or more nights.
  • Running costs of a room set aside specifically for study purposes. Once again you should keep a log.
  • Travel costs (such as fares) between your place of work and your place of study or from your home to the place of study. If you go from home to study to work (or vice versa) you cannot claim for the last stage of your trip (but see below for more about this). If you are receiving Youth Allowance you cannot claim travel expenses from home to study.

Car expenses are calculated on a cents per kilometre basis (the rate you can claim depends on the engine capacity of your car) or 12% of the cost of the car. You may only claim these if you have not claimed depreciation or repairs on your car elsewhere in your self-education claim.

The $250 threshold can be offset by expenses you have incurred but cannot claim as a deduction. For example, this includes the non-deductible travel costs mentioned above (including travel expenses for people receiving Youth Allowance) and the capital cost of equipment such as a computer or desk.

If in doubt, keep all your receipts and speak to your Bongiorno adviser when it is time to prepare your tax return.

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