Investing in accredited training is not only a strategic move for workforce capability and individual career progression, it can also offer significant tax advantages under Australian taxation law. Understanding the tax deductibility of training expenses is incredibly useful for both employers and individuals considering further education . Below, we break down the key implications, benefits, and eligibility criteria.
Tax Benefits for Employers
When employers fund accredited training for their employees, these expenses are generally tax-deductible as a business expense under Section 8-1 of the Income Tax Assessment Act 1997. This includes:
- Course fees
- Associated costs such as travel (if directly related to work)
- Learning materials and equipment
- Trainer fees for on-site or tailored delivery
To qualify, the training must be directly related to the employee’s current duties or designed to improve their skills for that role. For example, a construction company paying for staff to complete high-risk work licences, or a retail chain funding an Advance Diploma in Leadership and Management for emerging store managers.
Additional incentives for employers include:
- Payroll tax exemptions or rebates in some states for eligible training (e.g., Queensland and New South Wales offer incentives for apprentices and trainees).
- GST credits where the RTO (Registered Training Organisation) is registered for GST, and the employer is eligible to claim input tax credits. This applies mainly to non-accredited portions of the training or the acquisition of trade tools via the RTO.
Fringe Benefits Tax (FBT) Considerations
Generally, employer-provided education and training will not incur Fringe Benefits Tax (FBT) if it qualifies as an “exempt benefit” under Section 58H of the FBT Act. This exemption applies if the training is related to the employee’s current role or likely future duties within the company.
However, training provided for purely personal reasons—unrelated to the employee’s work—may attract FBT unless it qualifies for other exemptions or concessions.
Tax Benefits for Individuals
Individuals can also claim tax deductions for accredited training courses if they are directly related to their current income-earning activities. This includes:
- Course fees (excluding HECS/HELP repayments)
- Textbooks and stationery
- Internet and phone usage (portion used for study)
- Travel between home and the place of study (not including the first and last legs of daily travel)
Important Eligibility Criteria:
- The course must relate to current employment, not future job prospects.
- The individual must be already earning assessable income in the same occupation or closely related role.
- The training must help maintain or improve existing skills, or be likely to increase income from current work.
For example, a hospitality worker undertaking a Certificate IV in Hospitality to qualify for a promotion to supervisor would likely be eligible. However, someone working in retail studying nursing would not qualify until they gain employment in the healthcare sector.
ATO’s Position on Self-Education
The Australian Taxation Office (ATO) is clear on what it does not allow:
- Deductions for education intended to enable a career change.
- Deductions for courses undertaken before commencing employment.
- Travel expenses for the first leg of a daily commute (e.g., home to study location).
If you’re unsure, the ATO offers a Self-Education Expenses Calculator online to help determine claim eligibility.
Other Considerations and Opportunities
- Low-income earners may not receive a full benefit immediately due to limited taxable income but may carry forward losses in some cases.
- Individuals on HECS-HELP or VET Student Loans should note that loan repayments are not deductible.
- With the push for lifelong learning, the Federal Government has previously proposed tax incentives for re-skilling (especially for displaced workers). While not yet legislated, future policies may further expand deductible training categories.
Summary of the situation
Whether you’re a business upskilling your team or an individual investing in your future, the Australian tax system offers meaningful support for training; provided the course is relevant, necessary, and structured to enhance existing work-related capabilities. As with all deductions, accurate record-keeping and professional advice are key.
Disclaimer: This article is general in nature and not a substitute for personal taxation advice. For tailored advice, please consult a registered tax professional or accountant.