Expenses cap to hit advisers in pocket

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The Federal Government has announced that it will set a cap on how much people can claim on work-related expenses for education, from July 2014.

A cap of $2000 per person is set to save the Government about $520 million. The ATO states that currently, employees can claim expenses for:

  • Any course that maintains or improves a skill or specific knowledge required for your current work activities
  • A course that was leading to, or was likely to lead to, increased income from your current work activities, or
  • There is a direct connection between the course and your current work activities

In a statement, Treasurer Wayne Swan said, “Under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers' expense.''

The Institute of Public Accountants (IPA) has expressed concern that the cap will restrict investment in ongoing education and upgrading of skills. IPA CEO Andrew Conway said it was important for professionals in the sector to update their qualifications to meet eligibility requirements for new regimes that may be implemented, such as the Tax Practitioner Board tax agent registration.  

“Another concern is whether conference expenses will be included as part of self-education and therefore, be subject to the draconian cap of $2,000. Current law allows conference expenses to be deducted under the general deductibility rules rather than the proposed self-education regime which already excludes the first $250 of expenditure.”

The IPA has called for more details from the Government as to how the proposed changes will operate without detrimentally impacting professional skill levels.

“The irony is that the Government is focussing on education while cutting the up skilling and continuous education of professionals who serve the public,” said Mr Conway.