2024 End of Year Tax Planning

End of Financial Year

In a previous article (see here), we discussed the ideal timing for tax planning.  It is crucial to regularly assess your business performance and implement strategies that optimise tax outcomes.  We recommend conducting a minimum quarterly review of your business to allow ample time for the implementation of growth and tax-related strategies.

If you haven’t yet reviewed your business performance and tax outcomes for this financial year, now is your final opportunity to make a difference before 30 June.

When we engage in end of year tax planning for our clients, we begin by evaluating their year-to-date performance.  This analysis provides insights into their projected financial position at year-end and estimates their tax liability for the year.

Outlined below are some key tax planning ideas for 2024, along with upcoming changes that will come into effect on 1 July 2024. 

Remember, there is still time to schedule an end-of-year tax planning meeting with us.

Depreciation of assets


Small Businesses (Aggregated turnover < $10 million)

Between 1 July 2023 and 30 June 2024, the 2023-24 Budget, the Federal Government announced that small businesses with an aggregated turnover of less than $10 million can claim the instant asset write-off for assets acquired for less than $20,000.  This was extended to 30 June 2025 as part of the 2024-25 Federal Budget.  However, the legislation for this $20,000 threshold has not yet been passed. 

Assets valued at more than $20,000 can be added to a small business depreciation pool and depreciated at 15% in the first year and 30% thereafter.

Without legislation passing, the threshold for immediate deduction of assets if $1,000.

Large Businesses (Aggregated turnover > $10 million)

For businesses with an aggregated turnover above $10 million, a deduction can be claimed for depreciation of assets based on their effective life.

EOFY Tax tip: If you are looking to acquire capital assets for your business, we recommend doing so prior to 30 June.  You may be eligible for an instant asset write-off or, if not, a deduction for depreciation.

Business tip: If you have sold an asset that you have previously written off, the sales proceeds are assessable income in full, in the year of sale.

Business tip: The tax depreciation deduction is only available once the asset is installed and ready for use.  Getting assets installed and ready for use by 30 June might be difficult for some businesses given the current lack of supply for equipment and vehicles.

Employee super

The June quarter superannuation guarantee liability is required to be paid by 28 July.  However, a business can only claim a tax deduction for employees’ superannuation when it is actually paid.  As such, to ensure you get a deduction in the current year, you need to pay your employees’ June superannuation guarantee liability prior to 30 June (cashflow permitting).  We recommend that the payment be made by 20 June (to ensure it is received and processed by the recipient superfund). 

EOFY Tax tip: Pay your employee June quarter superannuation by 20 June to get a deduction in the current financial year.

Business tip: The ATO are currently allocating considerable resources to reviewing employer compliance with paying employees’ superannuation guarantee.  There are significant penalties that apply if you pay your employee superannuation late. 

Business tip: The payment of your June quarter superannuation liability does not impact on your profit and loss position (as the superannuation liability has already been recorded in your profit and loss).  The payment before 30 June simply brings the tax deductibility of the payment forward to the current financial year.  If you make the payment after 1 July (and before the 28 July cut-off), the payment will be deductible next financial year.

Business tip: From 1 July 2024, the superannuation guarantee rate increases to 11.5%.  This will continue to increase by 0.5% per year until it reaches 12%.  This will have flow-on implications for payroll tax, workcover etc. 

Personal superannuation

You may also want to make personal contributions to super.  For the 2023/24 financial year, the maximum concessional (deducted) contribution cap is $27,500.

However, if your superannuation balance was less than $500,000 as at 30 June 2023, it may also be possible for you to contribute more super by taking advantage of the unused concessional cap carry forward rules (read our article to find out more).  You have until 30 June 2024 to make contributions to catch-up on the 2019 carried forward concessional cap.

EOFY Tax tip: If you have unusually high income during the 2024 financial year, consider whether making additional deductible superannuation contributions fits within your personal financial plan.  We recommend speaking with your financial adviser regarding your superannuation contributions.

Trade debtors

You should review your trade debtors as at 30 June.  You must ensure that any debts that are uncollectible are written off prior to 30 June in order to claim a tax deduction for the write-off in the current financial year. 

EOFY Tax tip: To write off a bad debt – you must have made reasonable and commercial attempts to recover the debt and have now determined it is uncollectible.  You then need to make a decision in writing to write off the bad debt (eg. you have removed the debt from the customer’s account and have recognised a bad debt expense).

Prepay or bring forward your expenses

Make sure you review all of your expenses and bring forward any expenses to June (where possible).  For example, stock up on stationery and office consumables, prepay your insurance and interest (if applicable) and look at any other expenses you may be able to pay in June.  By bringing these expenses forward to June, you are obtaining a tax deduction in the current financial year which will reduce your overall tax bill for the 2024 year.

EOFY Tax tip: If your business is in a loss position, it may not be advantageous to bring forward expenses to the current financial year.  Please contact us to discuss whether this strategy is appropriate for you.

Defer assessable income

Consider whether it is possible to defer your assessable income (being mindful of cashflow implications) to next financial year. 

Motor vehicles

If you are using a vehicle for a high percentage of work-related travel, make sure you keep a logbook.  Without a logbook, an individual is limited to claiming a maximum of 5,000km at $0.85 (or $4,250) in the 2024 financial year.  If you keep a logbook, you can claim the business percentage of the operating costs of the vehicle (petrol, registration, servicing, depreciation, interest etc).

Logbooks must be kept for 12 continuous weeks and remember to record your vehicle’s opening and closing odometer readings each year.

EOFY Tax tip: A logbook started prior to 30 June can be used to support a logbook claim even if the logbook isn’t completed until after 30 June.

Working from home

If you worked from home during the 2024 financial year, you may be able to claim a deduction for a percentage of the running costs of your home.  There are two different methods you can use to calculate your deduction:

(1) Revised Fixed-Rate method ($0.67 per hour) – this method covers electricity, internet, mobile and home phone, stationery and computer consumables.  It does not cover depreciation of office equipment.  If you are using this method, you must have a diary of your actual hours worked from home.

(2) Actual cost method – you can calculate and claim the work-related portion of your actual expenses provided you have kept appropriate records.

For more information about your working from home deduction – see our earlier article.

EOFY Tax tip: You must have a diary to record your hours working from home.  If you do not have diary evidence, we cannot claim a deduction for these hours.

EOFY Tax tip: The ATO will be specifically reviewing deductions for working from home during the 2024 year.  Ensure you have appropriate documentation for your hours and you are not claiming twice (eg. by claiming the rate per hour ($0.67) plus a deduction for your phone).

Trust minutes

Prior to 30 June, make sure the trustees of your discretionary trusts decide how they are going to distribute their income and capital.  This decision must be documented in a trust minute before 30 June (or as otherwise specified in your trust deed).  It is important that you review your trust income for the 2024 financial year to ensure that the trust minute accurately reflects the trustee’s intention.  Given the recent announcements from the ATO with regards to the distribution of income to adult children and other tax advantaged beneficiaries, it is important that you get tax advice for your end of year tax minutes.

EOFY Tax tip: Your trust minutes must be prepared prior to 30 June to evidence the trustee’s decision regarding the distribution.  Keep this minute with your tax records.

Rental properties

For your rental properties, if you have any expenses coming up in the next few months, try to pay these prior to 30 June – this will bring the deduction into the current tax year and will help you to reduce your 2024 tax bill.

In relation to any interest you are claiming on your rental property, make sure you only claim the interest on the loan that was used to purchase the property.  If you have drawn down on the same loan for private purposes (eg. for a holiday), the interest that relates to the private usage is not deductible.

EOFY Tax tip: Consider getting a depreciation report for your rental property.  You may be able to claim additional tax deductions for the cost of the building and potential its fixtures and fittings.

EOFY Tax tip: Consider undertaking repairs to your property prior to 30 June.

EOFY Tax tip: Rental property deductions are being specifically reviewed by the ATO during the 2024 year.  Make sure your rental expenses are correct and that you have appropriate supporting documentation.

Cryptocurrency

It is important to ensure you include all cryptocurrency transactions on your tax return.  If you have had any cryptocurrency gains in the current financial year, you may wish to consider some additional tax planning measures before 30 June to reduce any tax liability.

EOFY Tax tip: Make sure you have all of your documentation available for all cryptocurrency transactions.  Noting that changing your investment from one cryptocurrency to another constitutes a transaction which may result in a tax liability. 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore, it should be regarded as confidential and not be made available to any person without our consent,

ATO Hit List – 2024 tax returns

ATO Hit List 2024 tax returns

The ATO have released their hit-list for the 2024 tax returns – essentially, this is a list of key areas that they will be focusing on for their tax return reviews (noting that, really, all areas are subject to review):

  • Incorrectly claiming work-related expenses
  • Inflating claims for rental properties
  • Failing to include all income in your tax return

Work-related expenses

Last year the ATO changed the records that were required to be kept to claim the fixed rate working from home deduction (see more in our article here).

To claim a working from home deduction using the fixed rate method, you need to have kept the following records:

  • Diary evidence showing the total hours worked from home; and
  • Records of the additional costs you have incurred for working from home (eg. Electricity bill, internet bill).

Simply “copying and pasting” your deduction from last year will likely result in a review of your tax return.

Rental properties

The ATO have specifically identified repairs and maintenance of rental properties as one of the areas of concern.  General repairs can be claimed as a tax deduction, but expenses that are capital in nature are not deductible as repairs (these may be eligible for a depreciation deduction instead).

While not specially identified by the ATO, interest deductions are also another area where significant mistakes are made by taxpayers. 

You need to ensure you keep full and complete records to ensure so your tax return can be prepared accurately.

See our previous article for rental properties here.

Missing income

If you rush to lodge your tax return on 1 July, not all of your income will be available on your ATO prefill report. 

Check that your income statement from your employer is marked as “tax ready” before lodging your tax return. 

Also check that all of your investment income has been included in your tax return (as it can take some time for this to be available on your ATO prefill report).

By following these steps, it means it will be less likely that your return will need to be amended.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore, it should be regarded as confidential and not be made available to any person without our consent,

Higher Education Debt – should I make voluntary repayments?

Higher Education Debt: 

Should I Make Voluntary Repayments?

Higher education debts (eg. HECS/HELP debts) that are unpaid on 1 June (and have been outstanding for 11 months) are automatically increased by an indexation rate. Previously, these debts have been increased by CPI. Last year, the application of CPI as the relevant indexation rate saw HECS debts increase by 7.1% last year – the highest indexation rate ever applied. 

On 6 May 2024, the Federal Government announced that the calculation of the indexation rate for HECS/HELP debts would be changed.  They would be increased by either the Consumer Price Index (CPI) or the Wage Price Index (WPI) whichever is lower. They also announced that this would be backdated to 1 June 2023. The relevant WPI for June 2023 is 3.2% (less than half of the 7.1% CPI rate applied last year). Noting that this is subject to the legislation being passed

For anyone who had a HECS/HELP debt that was indexed on 1 June 2023 at the 7.1% CPI rate, you will receive a credit on 1 June 2024 for the difference between the 7.1% CPI and the new 3.2% WPI rate*.  

Prior to this announcement, we knew that the CPI rate for the June 2024 indexation of the HECS/HELP debts was 4.7%. We are now awaiting the release of the WPI figures to determine the indexation rate under WPI. The Federal Government have suggested that this will be approximately 4%*.  

For anyone who has a HECS/HELP debt, it is forecasted that it will be indexed on 1 June 2024 by approximately 4%* (with a credit also applied for the reduction in the indexation rate at 1 June 2023 noted above).

Any reduction of the debt prior to this date will mean the amount of indexation will be lower (as the debt is lower).  If you have an outstanding tax return that will reduce the debt, we recommend you lodge the return as soon as possible to ensure the payment from your tax return is applied. 

If you want to make a voluntary repayment towards the debt, we recommend this be done no later than 22 May to ensure it is received by the ATO and applied to your debt prior to 1 June. 

You can check your outstanding higher education debt via your myGov app if it is linked to the ATO.  You can also find payment details for the debt in your ATO account via myGov.  If you have any problems finding these details, please do not hesitate to contact us. 

For your reference, the following debts are affected by indexation: 

  • Higher Education Loan Program (HELP, formerly HECS)
  • VET Student Loan (VSL)
  • Student Financial Supplement Scheme (SFSS)
  • Student Start-up Loan (SSL
  • ABSTUDY Student Start-up Loan (ABSTUDY SSL)
  • Trade Support Loan (TSL)

 
* The recent announcements by the Federal Government are subject to the passing of legislation.  If the legislation is not passed, the backdated credit will not be applied for the 2023 year and the indexation rate applied on 1 June 2024 will be 4.7% (CPI).

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Use it or Lose it – Carried Forward Super Contributions

Super Contributions: Use it or Lose it

If your superannuation account balance was less than $500,000 as at 30 June 2023, you have until 30 June 2024 to catch up any unused concessional superannuation contributions from 2019.

From the 2020 financial year onwards, new rules came into effect that enabled individuals with a total superannuation balance of less than $500,000 to catch up on superannuation contributions that may not have been maximised made in prior years. 

For example, in the 2019 year, the total concessional contribution cap was $25,000.  If you only made contributions of $15,000, then you have $10,000 unused from that same year.  You can carry this unused cap balance forward for up to 5 years.  After 5 years, the unused balance expires.  This means that you have until 30 June 2024 to use up any unused concessional cap from the 2019 financial year.  If you don’t use up the 2019 carried forward balance before 30 June 2024, it will be lost.

But there’s a catch: your current year contributions first go towards this year’s cap.  Once that is maxed out, any extra goes towards past years, starting from the oldest.

So, to claim your 2019 unused cap, you’ve first got to max out your 2024 contributions ($27,500).  Anything above that goes towards your unused caps from previous years, starting with 2019.

Not sure what your prior year unused caps are?  Check your myGov account or as your tax agent.

Now, before you go all in, chat with your financial planner to make sure it aligns with your retirement goals.

Remember, if you are looking to claim a personal tax deduction for superannuation contributions, you need to:

  1. Ensure the contribution is received by your superfund prior to 30 June;
  2. Give your superannuation fund a “Notice of Intention to Claim a Tax Deduction” for the contributions;
  3. Receive an acknowledgement letter from your fund prior to lodging your 2024 tax return.

If you’re considering extra contributions this year, talk to your tax agent and your financial planner to figure out how much and if it fits your retirement plan.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Upcoming Changes to ATO Interest: What Businesses Need to Know

Upcoming Changes to ATO Interest: What Businesses Need to Know

As part of the Mid-Year Economic and Fiscal Outlook, the Government announced that it will pass legislation to deny deductions for ATO interest charges (this includes General Interest Charge (GIC) and shortfall interest charges (SIC)) from 1 July 2025.

This applies to all GIC and SIC charged by the ATO – including interest charged on payment arrangements.

Despite the ATO’s interest rates rendering it an expensive debt financing option (current rate is 11.34% in June 2024), numerous businesses have favoured it for its ease and accessibility, bypassing the formalities associated with traditional lenders like banks.

Although the ATO imposed GIC/SIC will no longer be deductible, if businesses were to seek finance elsewhere to pay their ATO debt, interest on this finance is deductible. 

What does this mean for businesses?

If you currently use payment plans with the ATO as a means of financing your tax liabilities (including GST, PAYG withholding and income tax), we recommend that you review your cashflow forecasting to ensure you have sufficient cashflow to pay your tax liabilities as and when they fall due.

Cashflow forecasting should always be a cornerstone of your business planning.  However, if you don’t currently forecast your cashflow, we recommend that you start from at least 1 July 2024 to ensure that you have sufficient cashflow to fund your 2024-25 and future ATO liabilities.

As needed, consider exploring alternative financing avenues to pay ATO liabilities, such as bank overdrafts or loans secured by property. Interest incurred on such borrowings is tax-deductible when used for business purposes, including paying ATO obligations.

How can we help?

We’re here to help you evaluate your business’s cash flow and forecasts. Additionally, we can connect you with finance brokers who specialise in assisting clients in accessing additional financing options for their businesses.

Note: Legislation to enact this has not yet been passed.  We will keep you up-to-date of the passage of the relevant legislation.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Selling a property? Do you need a tax clearance certificate?

Property Sales

Do you need a tax clearance certificate?

 

From 1 July 2016, purchasers of residential property were required to withhold 10% of the purchase price where the property cost was more than $2 million (this changed to 12.5% and $750,000 from 1 July 2017).  The ultimate goal of the withholding regime was to have tax withheld for the anticipated capital gain for foreign vendors.  However, under the legislation all sellers are deemed to be foreign vendors.  Australian residents could only avoid the withholding obligation by obtaining a clearance certificate from the ATO and providing it to the purchaser.

Recently, the Government announced that from 1 July 2025, it would increase the withholding rate to 15% and reduce the threshold for withholding to $0.  As such (provided the relevant legislation is passed for these changes), from 1 July 2025, all Australian resident vendors of property will be required to obtain a clearance certificate to provide to the purchaser.  Failure to do so will result in 15% of the sales proceeds being withheld by the purchaser and remitted to the ATO.

What do you need to do?
 
If you are an Australian resident selling property, currently you will need to obtain a clearance certificate from the ATO if the sales price is more than $750,000.  From 1 July 2025, all Australian resident vendors will need to obtain a clearance certificate.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Rental Properties – Getting the Best Tax Outcome in 2024

Rental Properties

Getting the Best Tax Outcome in 2024

 

To get the best tax outcome from your rental property, we recommend paying any upcoming expenses before 30 June. 

Any deductible expense that is paid prior to 30 June can be claimed in this financial year.  If you pay the same expense after 30 June, it can’t be claimed as a deduction until next financial year.

With the individual tax rates decreasing after 30 June 2024, you will get an even bigger advantage in paying your rental property expenses prior to 30 June (as a deduction is worth more in the 2024 year than the 2025 year).  For example, a $5,000 expense will get you a $125 greater tax deduction in 2024 than in 2025:

2024 year deduction

$5,000 repairs

Paid before 30 June
Individual earning $120,000

Repair total (deduction) = $5,000
Tax refund (2024 return) = $1,625
Net out of pocket = $3,375

2025 year deduction

$5,000 repairs

Paid before 30 June
Individual earning $120,000

Repair total (deduction) = $5,000
Tax refund (2025 return) = $1,500
Net out of pocket = $3,500

Rental expenses

For rental properties, examples of some of the deductible expenses you might be able to pay before 30 June include:

  • Repairs and maintenance
  • Cleaning
  • Gardening
  • Pest control
  • Smoke alarm review and maintenance
  • Servicing costs – eg. air conditioner, pool

Have a chat with your property manager to see if there are any expenses that can be paid prior to 30 June.

Depreciation

We also recommend getting a depreciation schedule for your property.  Contact a qualified quantity surveyor to prepare a depreciation schedule for your property (for example – BMT Tax Quantity Surveyors or Deppro).  The cost of the report can be claimed as a deduction and the report will also provide you with the details of the depreciation you can claim in your tax return.

What should you do now?

  1. Talk to your property manager about any expenses that you can pay for your property prior to 30 June;
  2. Book in any relevant services now to ensure that they are completed and paid prior to 30 June (keep a valid tax invoice for all services that you want to claim as a tax deduction);
  3. Contact a quantity surveyor to get a depreciation report for your property;
  4. Start compiling records for the expenses already paid for your property during this financial year.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Ensuring Asset Valuations: A Vital Responsibility for SMSF Trustees

Ensuring Asset Valuations:

A Vital Responsibility for SMSF Trustees

 

If you are a trustee of a self-managed superannuation fund (SMSF), you need to ensure that your fund’s assets are reflected at market value in the annual financial statements.

Our SMSF auditor will check that the assets have been valued correctly and that the basis of the valuation is appropriate.  These valuations are also reported to the ATO on an annual basis via the tax return. 

The ATO is using the data reported in the tax returns to identify funds who have recorded the same values for assets in their annual returns for the past several years (which suggests that these assets are not reported at an appropriate market value).

There are approximately 16,500 funds who have reported the same value for certain assets for at least three income years.  This includes residential and commercial property, unlisted companies and unlisted trust investments.  Furthermore, there were no auditor contravention reports listed for these funds for potential breaches of the market valuation rules for the assets.

The ATO will be sending messages to trustees of these particular SMSFs to remind them of the obligation to report assets at market values (and the next tax return will be monitored by the ATO).

If your fund fails to meet the valuation requirements, the fund and members may be required to pay additional tax and could be liable to administrative penalties. 

What do you need to do?

If you are the trustee of an SMSF, you need to review the value of the assets that you hold.  Each year, we will request evidence from you of the market value of these assets.  Often, these values will be readily available (for example, the current price of listed shares).  Other times, the services of an independent valuer may be required to confirm the valuation.  For example, if your fund holds direct real property, you need to factor in the cost of an annual valuation into the ongoing running costs of your fund.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Superannuation – Concessional Cap Increases

Superannuation Caps

 

From 1 July 2024, the concessional contribution cap for superannuation is increasing to $30,000.  This will have a flow on effect to other areas of super as well:

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Self-Education Expenses – TR 2024/3

Self-Education Expenses 

New Tax Ruling – TR 2024/3

On 21 February 2024, the ATO finalised the ruling for Self-Education Expenses (TR 2024/3).  The ruling sets out the principles on the deductibility of self-education expenses under the Income Tax Assessment Act and provides 38 examples.

When are self-education expenses deductible?

Self-education expenses are deductible to the extent they:

  • Are incurred in gaining or producing your assessable income; AND
  • Are not:
    • Capital, private or domestic in nature
    • Incurred in gaining or producing exempt income
    • Prevented from being deductible by a specific provision in the tax law.

If you are reimbursed for the self-education expenses, you cannot claim a personal deduction.

Gaining or producing assessable income

You need to be able to show one (or both) of the following apply:

  • Your income-earning activities are based on the exercise of a skill or specific knowledge, and the self-education enables you to maintain or improve that skill;
  • The self-education is likely to lead to an increase in income from your current income-earning activities.

They will not be deductible if you have incurred them to obtain new employment or open up a new income-earning activity.

Types of self-education expenses

Some of the self-education expenses that may be deductible include:

  • Course fees but not if you have a Commonwealth Supported Place (CSP) (including where you have used a FEE-HELP loan or personal loan to fund the fees)
  • Interest on monies borrowed to fund the self-education expenses
  • Books, digital subscriptions, stationery
  • Travel (including airfares, accommodation and meals)
  • Depreciation of equipment

Action to take

If you are personally paying for any self-education costs that are related to your current employment, please ensure you keep all details and invoices of the costs incurred.  We can review these at tax time to determine whether they are deductible in your individual tax return.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.