Government vetoes cap on self-education expenses

The federal government has announced it will not be going ahead with the controversial plan to cap tax deductible self-education.

Announced by the Labor government as part of the previous Budget, the plan was to cap self-education expenses at $2000 per Australian resident per annum.

This would mean that any expense incurred for self-education after June 2013 and over $2000, such as training and educational courses and textbooks, would no longer be tax deductible.

“The highest number of self-education claims over $2000 (ie, 80%) come from people earning less than $80,000 per annum,” said Treasurer Joe Hockey in a statement.

“We have been advised that there is no credible evidence of substantial abuse of this deduction. If credible evidence of systematic abuse emerges, then the government will revisit this issue.”

The Coalition has retained Labor’s proposed change to the R&D tax concession, which excludes businesses with incomes over $20 billion.

The announcement was made as part of a package dealing with 92 unlegislated tax and superannuation policy proposals and the legislation is expected to be passed by 1 July 2014.