Deferral of self education cap

On 13 April 2013, Former Federal Treasurer Wayne Swan proposed that tax deductions available in relation to work-related self-education expenses will be subject to an annual deduction limit of $2,000 per person and that the limit would apply from 1 July 2014. Such a change in policy would have a significant impact on the availability of deductions for all professionals including doctors and dentists.

Former Federal Treasurer, Chris Bower, announced a 12 month deferral to the start date to “allow for further consultation on how best to target excessive claims, while ensuring the impact on university enrolments and genuine continuing professional development is minimised”. Although the deferral is only temporary, it allows healthcare practitioners a further 12 months to plan around the self-education cap.

Federal Treasurer Joe Hockey made no secret of his feelings about the subject, calling it ‘poorly thought out’. Mr Hockey said he was aware that the system might have been rorted but also pointed out that education is linked with productivity and has tangible benefits. He promised that he would ensure it was given proper reconsideration when he was in office but nothing else has happened since.

Under current legislation, costs associated with continuing professional development are not considered to meet the definition of self-education and, accordingly, are wholly deductible.  However, the proposed legislation may put this treatment in jeopardy.

William Buck’s Tax Services team continue to follow any news released on the matter.