I’m doing a master’s, it’s clearly related to my job so should be tax deductible.
I am using HECS-HELP but am not paying it off using pre tax deductions from my wages but in a lump sum at the end of the financial year (keeps more money in my home loan offset account for longer that way)
Can I claim it as a tax deduction? Says you can’t claim HECS but is that only if you’re paying it off via pre tax contributions?
The key with tax deductions and tuition fees is that the REPAYMENT of any HELP debt is not deductible.
However, when you borrow an amount under the HELP scheme you still incur an expense which may be deductible.
But, incurring amounts in relation to HECS-HELP loans is also expressly made not deductible. This is because HECS-HELP courses are already largely government funded, no further tax deduction is provided.
However, many full-fee courses, particularly postgraduate subjects are actually under FEE-HELP rather than HECS-HELP. As such, there is no prohibition on claiming the initial incurring of the debt as a deduction. However, you need to consider the general conditions for claiming any self-education expenses and establish that it helps you with your skills knowledge in your current job or is likely to result in you increasing your income in your current job. It can’t be to let you qualify to do a completely different job.
Back to the main point. Confirm whether it’s HECS-HELP or FEE-HELP. If it’s a FEE-HELP course and you can claim the deduction, you claim it in the year when you incur the debt, not when you repay it.
This is actually quite generous as you can get deductions years before you repay the debt (or even if your never repay it!)
Probably should refer to this for some general guidance.
Speaking of HECS repayments - how do you know when you’re done paying it off? Does the ATO or your employer stop taking the payments? Or is it one of those conversations at the end of the FY and get a surprise?
Like the guy who runs a recruiting company and used the instant asset writeoff to buy himself a dodge Ram and a Maserati. I’m glad to be funding 25% of those business purchases.
I’d definitely keep tabs on it and make sure you tell your employer ASAP. My missus got like 10k paid at end of tax time, would have been great to do other things with that money during the year instead.