Dale Boccabella

The newly installed Government has declared that the former Government’s $2,000 deduction cap announcement for self education expenses will be abandoned.

This decision has been widely welcomed, no doubt .

Part of the explanation given was that “there was no credible evidence of substantial abuse of this deduction.” 

The former Government observed that some taxpayers are deriving a significant private benefit from their self-education expenditure, and that the general body of taxpayers should not have to carry this. Travel on first class air fares and taxpayers staying in five star accommodation were expressly mentioned.

Further, the former Government did have some basis for arguing that capping can be justified on the “private benefit” aspect. There has been a steady stream of tax cases involving claims for overseas and interstate travel where the taxpayer attaches leisure to his or her attendance at a relevant conference, study tour, etc.The tax tribunals have been generous when it comes to apportioning expenditure on air travel between the deductible conference attendance and the non-deductible leisure pursuit.

The Government has not stated the basis for the advice it has received that there is no “substantial abuse” of the current rules. In any event, “substantial” seems too high a threshold of tolerance when it comes to assertions of deductions being claimed for private benefits.

Dale Boccabella is an Associate Professor of Taxation Law at the Australian School of Business.