Changing Careers: Are Education Expenses Tax-Deductible?

Changing careers can be thrilling. However, many people wonder whether the costs associated with this shift are tax-deductible. If you're investing in education for a new job, it’s easy to think you can deduct those expenses on your tax return. However, the ATO makes it clear that there’s a significant difference between upskilling for your current job and retraining for a new one. Understanding this difference is crucial during tax season.

Let’s dive deeper into the rules so you won’t risk a denied claim from the ATO.

ATO’s Take: Current Job vs. New Career

According to the ATO, you can only claim self-education expenses if the course you’re enrolled in:

• Maintains or enhances the skills for your current job.

• Is directly related to activities that generate your current income.

  
  

This means that if you're pursuing studies for a job in a different field, those costs are unlikely to be claimable. Even if the course improves your future earnings or makes you more marketable, it won’t qualify for deductions.

Key Question to Consider

The key question is: Are you enrolled in this course to improve your current job performance or to transition to a new career altogether?

What You Can Claim (If You're Upskilling in the Same Career)

When your course relates directly to your current employment, you may be able to claim the following expenses:

• Course or tuition fees (provided you aren't reimbursed)

• Textbooks and stationery

• Internet and phone usage for study purposes

• Depreciation on equipment, such as laptops

• Travel expenses between your workplace and your educational institution

  
  

Important Reminder

However, keep in mind: You cannot claim repayments for HECS-HELP or FEE-HELP loans. This is a common misconception and can lead to confusion.

Real-World Case Study: Claim or No Claim?

✅ Anna: Studying a Master of Marketing

• Current role: Marketing executive at an eCommerce company

• Course: Master’s in Marketing and Digital Strategy

• Outcome: Claim approved. The course directly aligns with her current job role.

  
  

❌ James: Studying Nursing to Change Careers

• Current role: Retail manager

• Course: Bachelor of Nursing

• Outcome: Claim denied. It’s focused on a career change, not on enhancing his existing job.

  
  

Options for Career Changers

While courses aimed at new careers typically aren’t deductible, there are still legitimate ways to optimize your tax situation:

• Keep thorough records of all other work-related deductions. This includes tools, items for your home office, and uniforms.

• Track travel costs if they are directly related to work duties.

• Consult with a trusted tax advisor, like Precent, to explore whether any of your transition costs—such as resume services or career coaching—might fall into a deductible category.

  
  

Additional Resources for Career Transition

Transitioning careers can feel daunting, but numerous resources are available. You can access workshops, online courses, or professional workshops that cater to career changers. These options can equip you with the necessary skills and knowledge to navigate your new path successfully.

Consider exploring educational grants or scholarships that support professionals seeking career transitions. These can alleviate some financial burdens and translate into valuable skills for your new career.

In Summary

If you’re changing careers, it’s crucial to recognize that your study-related expenses likely won't qualify as deductions. The ATO strictly permits claims that connect directly to your current position—not a future one.

Yet, there are still paths available to you. With the right guidance, you can effectively reduce your taxable income in a legal and strategic way.