Self Education Deduction cap $2000pa

LWhodis on 15/04/2013 - 23:48

http://www.smartcompany.com.au/tax/055096-business-protest-c…

Of interest to ozbargainers who require self education each year just to stay on top of their industry and skills development. The government has really lost the plot. Basically, they're trying to cap self education expenses to $2000 pa for conferences, courses, study groups etc.

Now I'm a dentist and my average one day course costs about $800 as a conservative estimate for about maybe 6-8 hours of CPD. I'm required to do 60 hours in a three year cycle. You do the maths. This is utterly ridiculous.

Thoughts?

Financial

Comments

  • scotty on 15/04/2013 - 23:59
    +19

    Congratulation — ID of this post is 100,000 :)

    As of self-education deduction, yes $2,000 is ridiculously low for professionals. A single workshop / conference can easily cost that much. I guess people will have to rely on employers to pay for those courses or conferences, or are running business themselves to make deduction against the business.

    • hahaboy on 16/04/2013 - 20:07

      where are you looking to see it is post 100,000?

      • Junkee on 17/04/2013 - 07:55

        check the URL

    • Besean on 16/04/2013 - 21:39

      Though I agree capping self education is to $2K is pretty low - most of the examples people can think of - (ie. Going to a course or conference connected to your work or even doing a MBA course) isn't defined as Self Education with the ATO.

      • qazwsx on 17/04/2013 - 22:07

        MBA course is if you can meet the criteria for self-education

    • rmamila on 17/04/2013 - 13:56

      I think this is very common to almost all professionals. I can remember once my company allocated budget for training for us. Each has to go for some course under 1500. Some people managed to find some one day courses. The area that I am working on in IT we couldn't find anything below 3600. So at the end no one from my small team could go for any training. We just bought few books. no difference if we try to do our self learning. Even short training courses are very expensive these days.

  • Whodis on 16/04/2013 - 00:02

    Lol thanks. I'm lazy so I'm waiting for someone else to start lobbying.

    • dealman on 17/04/2013 - 12:27

      no use, you'll have better luck praying for time to pass sooner.

      Didn't you hear she has a tin ear..

  • retiredfeline on 16/04/2013 - 00:49
    +1

    I would have thought a percentage of the previous years gross income, up to some ceiling like $4k, would be fairer as the more pro you are the more training you need to stay ahead of the game.

    I don't suppose being a HN pro counts. :)

  • [Deactivated] on 16/04/2013 - 01:11

    Does $2k even cover a low skill level part time TAFE course?

    • dealman on 17/04/2013 - 12:28

      Well it would cover most courses offered by their mates in the labour union I guess.

    • dealman on 17/04/2013 - 14:53

      Well This Govt (Labour) just want all of us to become tradies and truck and forklift drivers , not that I have anything against trades, but that's about the only type of courses that you can do in 2000 $. Even in that learning most of the real trades would cost way more than 2000 $.

      It sucks to work on TFN.

  • ozshaz on 16/04/2013 - 05:45
    +1

    The cap of $2000 is half the fees of of one subject for a MBA !!! And the minimum subjects per year is 4..so doing the calculation it means $2000 tax beneift for $16000 of fees !!!

    They are just trying to fill the hole in the budget with a very less future vision !!

    • scotty on 16/04/2013 - 08:20
      +2

      I guess their argument would be that if you are doing an MBA you are rich enough to not to claim that extra expense. A bit short sighted, as when people skill up they ended up paying a lot more tax as their salary also increases.

      • weezlebub on 16/04/2013 - 09:29
        +1

        Yep, that's what I was thinking.

        Similarly, if you're a dentist and can't afford to pay for your own training, you're probably not very good at your trade. I'm sure the income more than offsets the cost.

        I would prefer training for unskilled people to get into professions, once they're working, they will have an income and should require less government assistance.

        • Whodis on 16/04/2013 - 09:53
          +5

          I've noticed the moment I mention I'm a dentist it seems to promote a lot of negativity, especially when it comes to me complaining about money. FYI, I work a relatively normal 5 – 5.5 day week including weekends and I earn a figure in to low 100's. I'm not exactly rolling in it, so this cap is a significant setback to my yearly income, especially considering that when I take time off to go to a course I don't get paid to do so. So not only am I paying for the course, I'm also losing out on that day's income as an opportunity cost. So then, let me ask, why would I go out of my way to do higher end learning?

          Dentistry these days does not automatically equal a gazillion dollars worth of income a year, given the influx of new graduates and oversaturation of the industry especially in the cities. A lot of new graduates come out and get employed for 1 day a week, and in the mean time their spare time is spent upskilling. Capping this deduction is crap, as it promotes deskilling for dentists old and young.

        • dealman on 17/04/2013 - 12:33
          +1

          I earn a figure in to low 100's.

          What people (Esp lefties Labour crowd) fail to understand is someone who ends up earning in 100 + mark got there by bloody hard work and spending years and years in learning and training taking on lot of debt, while their other mates were out partying and earning.

          They just think the government should take from the "rich" and keep on redistributing, failing to understand that doing that would cut down the incentive for people to move ahead.

          Why work 80 hour weeks when most of it goes in taxes anyway , better off taking it easy.

          Can someone please explain to them that you cannot tax your way into prosperity.

        • qazwsx on 17/04/2013 - 22:12
          +1

          It's not just that. It goes against the fundamental operation of the tax system, where if you incur expenses to earn money, you should not be taxed on those expenses. Simple as that.

          Unfortunately this just confirms my suspicion that the current Treasurer does not fully appreciate the finer details of business, finance and taxation.

  • whirlpool_guy on 16/04/2013 - 09:24
    +1

    Outrageous

  • tbargain on 16/04/2013 - 09:33
    +2

    I think it's a bit short sighted. As a specialist trainee doctor, my compulsory 'self-education' expenses mount up to 15-16K a year without exams. This does not include 'first class airfares and five star hotels' that Wayne thinks I fly and stay at. It's the cheapest flight and the least dodgy motel.

  • [Deactivated] on 16/04/2013 - 09:54
    +3

    This is a bit of a joke really. It is just going to hit the professionals who can't set up it up so that the fees are put through a business and claimed that way (either their own or their employers). I would imagine it would affect younger, less established professionals more so because of this.

    $2,000 is very unrealistic in terms of CPD (Continuing Professional Development). It would barely cover a 2 day course in my profession. All it will serve to do is make sure that professionals do only the cheapest, minimal courses required to maintain their license. Personally, I'd rather my professionals' education was up to date and of the best quality before they come anywhere near me! It will also drive professionals towards heavily subsidised programs (ie. sponsored by products), something else that should be avoided to maintain professional independence.

  • boretentsu on 16/04/2013 - 13:32

    I haven't read the press release for this change but I think the most important thing is to distinguish between whether the education expense is to maintain or improve your job position. I believe the ATO already identifies this line. If you choose to do an MBA, then that is pretty hard to argue that it's for maintaining your job position and therefore I think its completely fair to cap it.

    On the otherhand if you are a white collar professional e.g. Accountant, Lawyer, Doctor etc you are mandated to do CPD to maintain your current job status then it's not very fair. If you don't do the CPD, you lose your professional status and you lose your job - it's not an option/luxury.

    I think what they are (were) aiming at though is corporate junkets where people go for a week long pissup. Not sure how often this happens nowadays though.

    • Besean on 16/04/2013 - 21:48
      +2

      FYI - Courses and seminars, books etc that relate to your capacity to work in your profession is not 'Self Education.'

      Self Education only applies to courses, and expenses you incur that do not directly relate to your working capacity. ie. If I was a Doctor, and wanted to learn French for an odd chance I might go there one day and work, then the French course will be Self education if I can show some connection towards this earning me future income in a role. If I needed to go to a course to learn to improve my surgical skills - that is what the ATO describes as a Work Related Expense. Or even if I had a whole heap of French patients and I went for a 1 week language course - this will still be Work Related.

      in essence, any courses that provide CPD hours will be a Work Related Expense and not Self Education.

      There's only a few scenarios I can see people legitimately claiming self education, so this ruling probably doesn't affect most people.

      • squeeb on 16/04/2013 - 22:13

        University courses do count for CPD hours.

      • scotty on 16/04/2013 - 22:21

        Hmm. Google "self education expenses" led me to this page on ATO's website which says otherwise.

        To claim a deduction for self-education expenses, you must have met one of the following conditions when you incurred the expense:

        • the course maintained or improved a skill or specific knowledge required for your then current work activities
        • you could show that the course was leading to, or was likely to lead to, increased income from your then current work activities, or
        • other circumstances existed which established a direct connection between the course and your then current work activities.
        • Whodis on 16/04/2013 - 22:27
          -1

          Multi looks right.

          D5 - Other work-related expenses 2012

          This question is about any other work-related expenses you incurred as an employee and have not already claimed, including:

          professional seminars, courses, conferences and workshops

          reference books, technical journals and trade magazines

        • scotty on 17/04/2013 - 13:22

          Thanks to both @multi97 and @splathowa for picking that up.

      • squeeb on 17/04/2013 - 23:40

        Self Education only applies to courses, and expenses you incur that do not directly relate to your working capacity.

        This is completely WRONG! If a course or expense does not relate to your work, it is NOT deductible. Furthermore, the example of the French course would NOT be deductible as there is insufficient connection to your earning capacity (as a Doctor who might go to France or have French patients).

        What are self-education expenses?
        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.

        http://www.ato.gov.au/individuals/content.aspx?doc=/content/…

        Usually self-education relates a course undertaken over a semester or number of years and often leads to some kind of formal qualification eg diploma, bachelor, masters.

        Short courses usually fall under work related expenses.

  • skyva on 16/04/2013 - 15:30
    +1

    Going to hit me as I am doing post grad study. I am really sick of the government pushing up all my costs. I can't wait to see the back of them.

    • boretentsu on 16/04/2013 - 23:37

      …in the centrelink line.

  • IMBI3 on 16/04/2013 - 19:16

    Australia is a lucky country

  • seek on 16/04/2013 - 19:56

    agree. Lucky Australian bureaucrats can screw innocent and honest Australians over and over again without much real complaints.

  • squeeb on 16/04/2013 - 22:09
    +1

    It was established (in the High Court Ronpibon Tin case) that the court has no right to make a subjective assessment of what it considers to be a reasonable amount to spend. Swan's proposed change flies in the face of this no limits on deductions.

    The policy will cause a bias towards more affordable self-education. Taxpayers will ultimately source out self-education on a budget if the individual wishes to retain the tax deducible status. Cheaper education will ultimately come at a cost to the community. Australia does not need a nation of workers who are less skilled or not up to date. We need to remain competitive on an international level. Domestic enrolments will certainly decrease at a post-graduate level and our universities will suffer.

    If self-education expenses are the target now, what is next? A cap on other work-related expenses?

    I am happy for my doctor and dentist etc to claim a tax deduction to remain at the forefront of their occupation.

  • dealman on 17/04/2013 - 12:03

    All this is from a government that promised a surplus more than 500 times, can't protect our borders, cut defence spending, wasted cash that John Howard saved on school halls and pink bats and is now about to deliver the biggest deficit in Australia's history. LIARS ALL the way

    PATHETIC really, What I don't understand is what are the 29% who support Labour thinking, surely not all can be union members.

    Neggers, welcome..

    dealman on 17/04/2013 - 12:03 (Collapsed - Offtopic. Show)
    • Eivad on 17/04/2013 - 12:54

      Please don't turn this into a political discussion, and please don't post personal opinions as though they are facts.

      • dealman on 17/04/2013 - 13:53
        -1

        Please don't turn this into a political discussion

        Well what part of this isn't political already ? Tax rebates being cut ?

        don't post personal opinions as though they are facts.

        I'd have been glad if they were just opinions, sadly they are the facts that you choose to ignore.

  • qazwsx on 17/04/2013 - 22:16
    +1

    Has anyone read the press release?

    According to his press release, the Treasurer thinks that the $2,000 cap is more "fair" because it stops the rorting of deductions for first-class airfares and five-star hotel accommodation.

    Quote:
    "Without a cap on the amount that can be claimed under this deduction, it's possible to make large claims for expenses such as first class airfares, five star accommodation and expensive courses."
    http://www.treasurer.gov.au/wmsDisplayDocs.aspx?doc=pressrel…

    Now look into the mirror and be honest with yourself……

  • vicsta on 17/04/2013 - 22:32
    +1

    Another awful policy. Can't wait to send this government packing.

  • rc86 on 18/04/2013 - 21:18

    Salary sacrifice your education expenses will be the way to go.

    • ozshaz on 19/04/2013 - 05:39
      +1

      Doing that will increase the FBT on your acvount and company's

      • altomic on 24/04/2013 - 21:33

        which can impact on how much your HECS repayment/voluntary (compulsory) repayment is.

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