Self education deduction PDF

Preview

Summary

Taxation...

Description

Southern Cross University Taxation – ACC00132 Work Related self education expenses {TR98/9} Conditions to claim work-related self-education expenses Self-education expenses are the costs you incur to maintain a course of study at a school, College, University or other recognised place of education. You can claim a deduction for self-education expenses if, in doing the course, you are satisfying study requirements to maintain your right to a taxable bonded scholarship, or if your education is strictly related to your current employment. See TR 98/9. Work-related self-education expenses are deductible if you work and study at the same time, and you meet any of these conditions:  You are upgrading your qualifications for your current employment  You are improving your skills or knowledge for your current employment  You are employed as a trainee and you are undertaking a course that forms part of that traineeship  You can show that at the time you were working and studying, your study led, or was very likely to lead to an increase in employment income. For work related self-education, you are not eligible under any of the following circumstances:  You are employed in a field related to your studies but the skills you are obtaining are not used or only partially used in your employment duties (general nexus)  Your study is not related to your current employment or is only generally related to your current employment  the course is opening up a new field of employment (Hatchett) Expenses that could be claimed – For examples:     

Student union fees student services fee amenities fees course fees Study materials and books fees

Self-education expenses such as course fees paid to an education provider by the Australian Government under HECS-HELP, in this particular expense the taxpayer cannot claim a deduction. Cost of accommodation and meals associated with day-to-day living expenses area private in nature; therefore they cannot be claimed for deduction. Example : According to the case given below involving a taxpayer contributing during 2014-15 financial year. Disclose the section of the law that has been applied, state if the taxpayer could claim a deduction or not, by giving relevant reasons. A) Taxpayer was in her final year of Medial studies which she completed in December 2014. She paid $6,000 for study materials and course fees. In January 2015, she commenced a business as doctor because she had successfully completed her studies as a full-time student. B) Taxpayer is a doctor and is self-employed. During the year she paid $ 500 to attend a day conference on the latest medical equipments. C) Taxpayer is employed as an admin, doesn’t enjoy his vocation and is currently studying towards a Diploma in trade service. During the year he paid $300 in study materials and fees. D) Taxpayer pursuing taxation at the flinders university and is employed as a tax analyst. During the year the taxpayer paid $5000 for course fees. E) Taxpayer is currently working in a retail industry as a stock purchaser and is made aware that the shop needs HR Manager in the near future. In order to secure one of these HR positions, the taxpayer takes up a course in HR and incurs $1000 as the tuition fees. Solution: Self Education is deductable under section 8-1.Inorder to recognize the deductibility, Expenses and tax payers occupation should be considered. Explanation: Initially tax papers residency status should be taken into account. As in this scenario they have not informed further about taxpayers residency status. Therefore, it has to be assumed that the taxpayer stays in Australia itself. Taxpayer has also got the permanent place of abode in Australia. Concluding that the taxpayer is eligible to pass the entire four specified residency test. Application of law According to Section8-1, if education allows him to attain or earn more income in future, Deduction is allowable for Self education expenses. {Finn (1961) & High field (1982)}.Hence, when we undertake a course to be updated in the field of expertise, in order to earn higher

income in future is a allowable deduction. Therefore undertaking a study in order to be up to date in the field. A) According to this scenario it is mentioned as the study materials and tuition fees. Under section 8-1(2) - Capital in nature- as the payment is made in one time payment, it is nondeductable. b) In this situation, it states around the one day conference on the latest medical equipments. According to section 8-1, it is deductable as he is attending these seminar in his field of expertise , as he has attained the seminar to update the knowledge of newly trending medical equipments and increasing his knowledge as a professional in his area of expertise = $158000. c) The issue states that the expense incurred on studying diploma course in trade service. According to S 5 8-1- Deductable- As it a course pursing by the taxpayer not for the intension of additional income in the field of expertise. As the course is taken as a vacation course, it is non- deductable. = $0 c) The issue states that the expense incurred on studying diploma course in trade service. According to Section 8-1- Deductable- As it a course pursing by the taxpayer not for the intension of additional income in the field of expertise. As the course is taken as a vacation course, it is non- deductable. = $0 d) Under Section8-1, it’s Deductable. As the taxpayer is pursuing a course with an intension of updating his expertise to the work commitments - Deductible. = - $5000 E) According to Section 8-1, it is non- deductable. As the tax payer did not secured the job. Based on certain assumptions- he decided to pursue a course in the HR field. If the taxpayer gets into this job and also if the studies go hand in hand, then the tuition fees can be deductable. =$0...