January 20, 2021
Treasury consultation on education and training tax deductions
The IRU has submitted a response to the Treasury’s consultation on Education and training expense deductions for individuals (tax deductions). The IRU response focuses primarily on the possible extension of tax deductions to education and skills that will benefit future job roles rather than just a person’s current role.
It is important for the future prosperity of Australians and the country together that citizens gain the learning and skills that will support them gain and retain employment. With a more dynamic labour market, most people now shift employment fields several times across their working lives.
The Government recognises the importance of Australians gaining post-school knowledge and skills through its major investment in tertiary education across higher education and vocational education and training. It supports individuals through the various HELP elements and by permitting them to deduct education expenses relating to current employment from gross income before tax.
The Discussion Paper explores the potential to widen the tax deduction to the cost of improving skills for future employment rather than just current employment.
- The best means to ensure Australians continue to gain new knowledge and skills is to expand funding directly for the provision of courses to interested citizens.
- Where courses are fee-based, support to students reduces the effective price, thus reducing the financial disincentive to renew knowledge and skills.
- A tax deduction for fees and other direct costs of study is one, loosely targeted, means to reduce the effective price of study.
- The need for people to shift employment fields across their working lives means the tax deduction should be available for all study likely to improve future employment.
- Limiting the deduction to courses delivered by registered higher education and vocational education and training organisations helps protect against misuse of the deduction.
- In claiming the deduction, each individual needs to be cognizant of the requirement that the study’s prime purpose is to improve current or future employment.