A Self Education Tax Question

Discussion in 'Accounting & Tax' started by Leilah, 25th Jun, 2020.

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  1. Leilah

    Leilah Well-Known Member

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    Hi All

    I have a question about self education expenses.

    a. Scenario A: I sit on a ministerial advisory council. The council meets six times a year and members receive a basic fifty dollar sitting fee per meeting.

    I would like to complete the Australian Institute of Company Directors course. This is a course that people who are board members complete, to enhance their skills. I believe that the content of the course is directly relevant to sitting on a government advisory council, i.e. topics include strategic planning skills, financial skills, etc.

    This position pays an income, albeit a small one. Would I be able to claim the $8,000 cost of the company director's course as part of self education expenses for sitting on the council? I would argue that the course is directly relevant to the work I do on that council but would welcome anyone's opinion on this;

    b. Scenario B: Forget the scenario A detailed above: In scenario B I am currently between jobs and thus unemployed. If I were to pay the $8,000 dollars for the course today, while not having a relevant full time job, then get a relevant full time job related to the course in the future, and then participate in completing the course of study with the Australian Institute of Company Directors course, could I claim the cost of the course as a tax deduction? My question is, can you claim the course cost as a self education expense if you paid it before you were employed in the relevant job, but completed the course after commencing the relevant job?

    Thanks in advance,

    Leilah
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    2. If you paid upfront then no I don't think so
     
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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The nexus between cost and income seems to suggest a future role may benefit from the course (eg a Corporations Act regulated entity). I suspect the cost relates to a new future income producing activity rather than of the council. The nature of the course is spevific to Corpoations Act and legal obligations. Its a weel recognised prerequisite for mant boards and ASX listed entities. You could seek a binding private ruling on this.

    In scenario B non-dedutible for the same reason but very clear it is not deductible even if a month later you obtain a job as Co Secretary and register for further modules and pay further costs.
     
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  4. Leilah

    Leilah Well-Known Member

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    Thanks Terry.
     
  5. Leilah

    Leilah Well-Known Member

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    Thanks for this response. Very frustrating as I also sit on two boards as a board member but they are voluntary boards and no income being produced, thus I can't claim the expense of the course in my current situation.
     
  6. Leilah

    Leilah Well-Known Member

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    Another question: what about a link with the property director's course, somehow to property investing if I have a property portfolio and claim it in some way as part of self education for property investing? Maybe linked to learning about strategic direction, being able to read financial documents etc? Or is this a complete stretch? :)
     
  7. Mark F

    Mark F Well-Known Member

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    While tax deductions are nice, if a course is going to handsomely repay its cost through future earnings why not just pay up and worry less about tax deductability? You will still be paying for most of it out of your own pocket.
     
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  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes. A stretch

    Its like Mick the plumber doing a accounting and tax course. Its a new qualification.

    Like many professional its wise to invest in your own intellectual property to assist future opportunities. I'm sure that if you were to undertake the course that this and your experience in honorary positions will open doorways that are financially lucrative. Its laike aaccounting or law degree....In itself that degree just open doors and wont usually be the foundation for an immediate high level role. Bear in mind that many "Board members " are actually poorly paid for the extensive time and responsibility but executive Directors may be hansomely paid. Many companies remunerate board members through generous equity schemes that recognise the shareholder value they can create. A well recognised MBA may also seen expensive but for this type of career choice it may be wise.

    Westpac example of board members and their other involvements : Board of Directors
     
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  9. Leilah

    Leilah Well-Known Member

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    Yes, very wise words Mark, thank you. I do agree, an investment in education is reason enough to spend the money and it's important to not just focus on tax deductibility. I just thought it would be nice to achieve both goals, but as a lawyer I wanted to ensure that this would fall fully within the allowable deductions.

    Many thanks for your guidance.
     
  10. Leilah

    Leilah Well-Known Member

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    Yes, probably a big stretch, lol, but i thought I would see if any one would support me on that one. Obviously not. :) I do note your important words that an investment in education of itself would open doors in the future. I will do the course anyway even though I can't claim it as a tax deduction.

    Many thanks Paul.
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A few forum opinions should not be the basis for sound tax decisions...coming from a lawyer too.

    Tax deductions are never the basis for most investment choices. They just lightly assist. The most practical business principal is that of leverage. eg Spending $30K on a course that produces a long term stream of high income. is better than a single refund of $14k