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'The old school cap' is getting tighter - Self Education Expense Deductions to be Capped

The Federal Government have announced that from 1 July 2014, tax deductions for self education expenses will be restricted to an annual cap of $2,000.  Currently, claims for self education expenses are unrestricted (apart from the first $250 being unavailable).  Self education expenses include seminars, course fees, books and materials, depreciation of computers related to study and travel expenses to attend the course.  The Government believes that capping self education expense deductions will stop people from rorting the system by including claims for expensive airfares and accommodation to travel to a course as self education expenses.

The 'cap' won't apply if an employer pays the expenses unless they are paying them as part of a salary sacrifice arrangement for the employee.

The announcement was made last week as part of a national reform to funding education and no draft legislation has been introduced at this stage.  The change is not yet law and subject to amendment.  No immediate action is required but we will keep you informed on the progress of this law change and advise how it will affect your circumstances.
For a pdf version of this tax alert please click here.