Training Course Deductions

October 20, 2015

Training Course Deductions

Sometimes business owners need their employees to develop or grow their expertise and skills in a particular area.

While training courses like seminars and one-day intensives can be a worthwhile investment, there are still a few things employers should consider from a tax point of view.

Although employers can claim deductions for the full costs incurred when providing education to employees, including aspects like travel costs, many owners tend to forget to consider FBT implications.

Paying for employee work-related course fees generally constitutes a fringe benefit and is therefore subject to FBT. However, FBT law allows a full or partial reduction of FBT payable provided that the ‘otherwise deductible’ rule is met. The ‘otherwise deductible rule’ implies that if the employee had incurred the expense themselves, they could claim a deduction for the expense.

An education expense is considered to be hypothetically deductible to the employee depending on the type of course or education studied by the employee. The course must have a satisfactory connection to an employee’s current employment, maintain or improve the skills or knowledge required for the employee’s current role, or result in an increase in the employee’s income.

Employees cannot claim a deduction for education expenses if there is no connection to their current employment, even if it assists them gain new employment.

Specific membership fees and subscriptions paid by an employer are also exempt from FBT (such as subscriptions to a professional journal).

For more information on training course deductions for your tax return, please contact our Newcastle Office, Leenane Templeton Chartered Accountants and Business Advisors on 02 4926 2300

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