A media release from the Treasurer, Wayne Swan, today announces the Government’s intention to limit tax deductibility for education expenses to $2,000 per person per annum.
The limit is to apply for outgoings incurred from 1 July 2014.
The Treasuer explians the mischief as follows:
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.
The Treasurer’s “education expenses” include:
formal qualifications and associated tuition fees, textbooks, stationery and travel expenses and also conferences, seminars and self-organised study tours.
While this statement implies that the cap is directed at “formal qualifications”, as opposed to training and professional development, the Treasurer’s position is murky because the Media release indicates that the measure may be intended to extend to training:
This is a targeted reform and the majority of those with self-education expenses will not be affected by this change.
According to the most recent ATO data, the typical claim for formal qualifications is less than half the proposed cap at $905. For other expenses, such as conferences, seminars and workshops, including those held locally, the typical claim is only a few hundred dollars, remaining well below the cap.
Currently employers are not liable for fringe benefits tax for education and training they provide to their employees – this treatment will be retained, unless an employee salary sacrifices to obtain these benefits. This is in recognition of the need to encourage employers to continue to invest in the skills of their workers.
The Government will consult closely with employees and employers to better target this concession while still supporting essential training.
One hopes consultation will be broader than employee and employer associations. Continuing professional education is a requirement for many occupations.
The proposal seems to have, at its core, a notion that outgoings incurred to acquire or maintain knowledge for use in income producing activities is a private benefit. But this notion has been rejected by the High Court … most recently in Commissioner of Taxation v Anstis [2010] HCA 40. What an unfortunate choice of language Minister.
In response to the Anstis decision, the Government amended the law to disallow deductions incurred in relation to government assistance payments. This measure was enacted with effect for assessments for the 2011-12 income year and later income years.
As I am now more than 60 years of age, I often get a sense of déjà vu about amendments to the tax law. So, could someone put my tortured brain at rest and tell me whether we have seen a proposal to limit overseas travel expenses for conferences before.