06 Jun 13 On the "reform" to deductions for education expenses
MEMBER 118 writes:
"On 13 April 2013, the Government announced that it would 'better target' self-education expenses by capping the deduction from 1 July 2014 to $2,000 in an income year, to address concerns that taxpayers are apparently claiming first class airfares and luxury hotel accommodation. This policy intent was confirmed in the 2013-14 Federal Budget on 14 May 2013.
On 31 May 2013, Treasury released a Discussion Paper, which reveals that both formal and informal education will be subject to this annual $2,000 cap. This will include registration fees for conferences, workshops, seminars and training.Although professional membership fees will be excluded from this cap, to maintain our tax agent registration with the Tax Practitioners Board and membership of the professional bodies, we are required to undertake CPD. However, this will be severely affected by the $2,000 cap on attending necessary courses and training etc. The cost of a standard 2-day conference (course fee only) can be around $1,500 or more, so it leaves little scope for other deductible training or conferences to be undertaken in that year.
If an employer pays for training/seminars for its employees, the cap will not apply. However, if the education is provided through a salary packaging arrangement, FBT will apply to annual amounts in excess of $2,000. Critically, although the cap will not apply to training or education expenses incurred by sole practitioners for their employees, the $2,000 limit will apply to sole practitioner employers in respect of their own personal education expenses. Accordingly, this proposed measure discriminates against the personal education of sole practitioners compared with those who have structured their professional practices through a company or a trust. This is because sole traders are subject to the cap in respect of their own education expenses but companies and trusts are not (where it is not salary packaged).
This proposed amendment will discourage further education and skills improvement in this country. This should not be about a revenue grab to restore the Budget. If the concern is claiming first class airfares, the solution is straight-forward - restrict any claims for education expenses (whether formal or informal) to actual course fees and text books/course materials.
Members should be concerned about this and I support The Tax Institute's efforts in continuing to lobby on this issue."
THE TAX INSTITUTE'S TAX COUNSEL, STEPHANIE CAREDES, COMMENTS: "Thank you for recognising The Tax Institute's concerted advocacy efforts which have already been made in relation to the reform to the deduction for education expenses measure. The Tax Institute, together with the Business Law Section of the Law Council of Australia, wrote to the Treasurer and Shadow Treasurer to express our deep concerns regarding this measure in early May. As you may have seen in the media report following the Senior Tax Counsel report above, we also expressed our concerns on this issue in the Australian Financial Review earlier this week.
The Tax Institute is busy preparing a comprehensive response to the Discussion Paper released by Treasury late last week. A copy of the discussion paper can be accessed here. Members interested in this measure and wishing to contribute to the submission should send their comments through to Tax Policy by 17 June 2013."