Business calls for government to scrap the cap on self-education expenses, but refinement more likely

Business and industry groups have once again called on the federal government to abolish its plan to cap self-education expense deductions, following a gathering in Canberra to discuss the issue.

While the government is unlikely to drop the move entirely, at least one tax expert believes there could be scope for refinement.

Treasurer Chris Bowen has maintained the government’s stance on the new cap is “sensible”, but business groups including the Institute of Company Directors, Universities Australia, the Institute of Chartered Accountants and the Law Council of Australia have all condemned the move.

The meeting drew about 20 different groups into Canberra yesterday, including some as specific as the Australian Nursing Federation, to protest the move.

“There was unanimous support for scrapping the cap,” says CPA Australia policy head Paul Drum, who attended and spoke at the meeting yesterday.

Drum says there is no possible way the cap could simply be lifted to a higher amount, noting degrees such as MBAs often cost more than $60,000.

And while the government says it will continue with the cap, Drum says there is “plenty of scope” to have the cap more confined.

“There is an opportunity that it will be pared back and refined in that context,” he says, pointing out that travel and accommodation related to self-education expense could be one area for attention.

The problem with the cap, according to the 20 groups which attended yesterday’s meeting, is that $2000 barely covers any education at all. Belinda Robinson from Universities Australia said yesterday that in 2010-11 more than 172,000 people claimed over $2000. Most of those came from post-graduate degrees.

“The cap on self-education tax deductions will particularly disadvantage some groups in the community by deterring those seeking to upgrade their skills and education; for example, women returning to the workforce after having children,” Robinson said yesterday in a statement.

“The cap will escalate the cost of education to individuals, including the self-employed, to meet these professional obligations. If unable to be met by the individual, it will create an unaffordable imposition on small business.”

The unanimous call for scrapping the cap is putting more pressure on the government to respond, although as Drum notes, the need to pay for Gonski education reforms means a reversal may be unlikely.

“That’s really why they did it, I don’t think it’s anything deeper than that – and that’s why it sticks in the craw.

“It just doesn’t make sense.”