Deductions for education expenses : a revamped landscape for taxpayers and their advisers

The Commonwealth Government has announced, by way of a media release and a discussion paper, major reforms to the deductibility of education expenses. The current proposal is that, from 1 July 2014, there will be an unindexed $2,000 cap on the total of the amounts that a taxpayer can deduct as education expenses for an income tax year. There will be a new definition of what constitutes an education expense, which will cover both formal and informal educational activities. It is clear from the discussion paper that the scope of the proposed reforms will cover all forms of education expenses. This article examines the proposed reforms in detail, their likely impact on taxpayers, their interaction with other employment-related expenses, and consequential changes to the fringe benefits tax. The author argues that the reforms will makes 82A of the Income Tax Assessment Act 1936 redundant, and that the section should be repealed