The government will go ahead with its plan to cap tax deductions for self-education expenses at just $2000, it revealed in tonight’s budget.
The change is one of two significant tweaks to the education payments system, with discounts applying to up-front and voluntary HELP payments to be scrapped.
Currently, students with HELP debts can receive discounts of 10% if they choose to pay fees up-front, or receive a 5% bonus on voluntary payments made worth $500 or more. Both these initiatives will be removed.
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The decision to cap deductions for self-education expenses at just $2000 is sure to be controversial – business groups opposed the move when it was originally announced in April.
The government will raise $514.3 million through capping the expenses over the next four years. The new cap will begin from July 1, 2014.
Business and training groups have already said capping the expenses will stop employers from being able to offer staff new training initiatives. There were reports last week the government would end up reversing the move, but the budget papers now state the change is locked-in.
The announcement is sure to raise the ire of small business groups. Many business owners also use these deductions for short courses and industry-based training sessions.
This change comes alongside the HELP discount cuts, which are set to raise $276.6 million over four years.
The money from the cuts will be directed towards new funding for schools.