Government reconsidering controversial move to cap self-education expenses

The federal government may be rethinking its controversial move to cap self-education tax deductions at just $2000, a move which caused furore among small businesses and entrepreneurs.

The initial announcement was met with a barrage of criticism from education personnel, business groups and individuals who use the deductions to help increase their skills and training.

The Australian Financial Review reported this morning federal Treasurer Wayne Swan will conduct a public consultation process before introducing any new regulations, a move to be announced during Tuesday night’s budget.

Swan announced the proposal in April, but as SmartCompany reported, businesses felt it would stop workers being able to learn new skills and harm the ability of businesses to invest in workers.

Swan said the capped tax deductions would save the government an estimated $520 million a year, as part of its education reforms.

He argued individuals with access to “unlimited” deductions could “enjoy significant benefits at taxpayers’ expense” such as first-class airfares, five-star accommodation and expensive courses.

Deductions can be claimed for expenses such as course fees, books and travel and accommodation costs.

Executive Director of the Council of Small Businesses of Australia, Peter Strong, told SmartCompany he’s received a number of calls from irate members over the proposed change.

“This will cost people a lot more and make people less likely to try and up-skill,” he says.

“There are also women who are at home and may want to get an education so they can go back to work.”

“It could be doing a technology course or a food course, some of these can cost $5000. It’s also a cycle issue for the unemployed who manage to find work, they may want to up-skill to find a new job – this is important and they need to be supported to be able to do that,” he says.

Strong says considering the recent focus which has been given to up-skilling workers and investing in staff training, the government should be funding more education initiatives.

The Treasurer’s office was contacted by SmartCompany, but no response was received prior to publication.

SmartCompany‘s original story on the issue sparked anger from a number of readers, with many saying the proposal is “out of touch”, with many courses and conferences costing over $2000.

Australian universities have also expressed concern over the move.

Universities Australian chairman Sandra Harding said in a speech to the Canberra Press Club yesterday the change will affect all workers considering up-skilling who are not supported by government funding.

“The fear is that this cap will deter fee-paying students – people such as nurses, teachers, engineers, and medical practitioners – from undertaking the post-graduate and in-service study they need to keep their knowledge up to date.”

“Universities are bracing for an impact on full-fee postgraduate participation rates as students re-evaluate the affordability of this further study,” she said.

If this cap on tax deductions goes ahead, it will become one of multiple factors announced by the government to hit universities, including cuts to student support.

Harding says Universities Australia predicts the total loss to universities and students from the recently announced funding cuts will equate to $1 billion per annum by 2017.



Notify of
Inline Feedbacks
View all comments
SmartCompany Plus

Sign in

To connect a sign in method the email must match the one on your SmartCompany Plus account.
Or use your email
Forgot your password?

Want some assistance?

Contact us on: or call the hotline: +61 (03) 8623 9900.