The Government’s short-sighted decision to announce that from 1 July 2014 an individual’s self-education expense deductions will be capped at $2,000 per year is still causing great concern in the community.

The Tax Institute is strongly arguing the case for change to the announced measure as a result of our deep concerns. We are urging the Government to reconsider the measure such that it does not adversely impact on legitimate claims for self-education expenses.

The imposition of a cap might well prevent large deductions from being claimed, but in doing so, it would also penalise people who are endeavouring to improve their qualifications for work or business who are not incurring unnecessarily excessive costs. Accordingly, many legitimate claimants would suffer higher out-of pocket expenses as a result of this measure.

An educated workforce should be one of the key objectives of Government. Providing a financial penalty to those seeking to self-fund their education is a significant disincentive. The objective of building a smarter Australia will be compromised through the introduction of the proposed cap.

This week The Tax Institute, in conjunction with the Business Law Section of the Law Council of Australia, wrote to the Prime Minister, the Hon Kevin Rudd MP to express our concerns. This is further to our letter to the then Treasurer in May. We have also raised our concerns with the Opposition, who are yet to advise of their position on the measure.

The imposition of a cap on self-education expense deductions is a very blunt instrument to achieve the object of preventing extravagant claims. The proposed measure would capture and limit all claims for self-education expenses, regardless of their nature.

Robert Jeremenko

Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.