Company Director's Education Expenses

[trakka]

Hi

I am currently looking for a Perth based Accountant - I have put a post in the referrals section.

In the meantime, I was hoping someone could answer a quick question. If a Director of a Company undertakes Professional Development courses etc or even university study in an area which will help the business can it be claimed as a business expense through the company? Or do I pay for it myself and be able to claim through my tax return? I know that relevance is a factor.

Thanks

Tracy

[CruzAccountant]

Hi

It's one of those grey areas, but generally the study will need to have "sufficient connection" to your income activity if you claim it in your personal return. You can't claim education expenses for a new income earning activity. Be aware of the self education threshhold as well.

Also, bear in mind that HELP/HECS isn't deductible (business or individual)

Through the company as a director, you'll still need to argue a similar thing. There has to be a sufficient connection between the education expenses and the business.

Richard

[Phalanx]

Hi Tracy,

If the course you are doing is required by the work you are currently doing to produce income then the course fees is fully tax deductible. If the company is paying this fees for you in a capacity of an employer then this amount is tax deductible in company's books.

If you are paying this fees out of your pocket then it deductible in your tax return. One thing that you have to check whether the course you are doing attracts GST or not. If the course is subject to GST and your company is registered for GST then it would be better to claim expenses under the company name rather than personal name. As you cannot claim GST under your personal name.

The most important thing is that make sure that you start this course after the business starts producing income so that there is a connection between the income and expense.

If you start course before company starts producing income then this expense becomes capital in nature.

I hope the above helps in answering your question.

Please let me know if you have any more queries.

Happy to help!

Regards

Manoj

[trakka]

Thank you for your replies.

So if I have an internet based company that relies heavily on technology I should be able to claim the units of my degree that will build my skills in programming, net marketing etc etc. At the moment I am outsourcing it all, but I am hoping that I will be able to do some of it myself in the future to save the business money.

Or can I claim the units in a business degree that are relevant to being a Director of Company - ie. Accounting, HR etc etc.

That is once the business in making an income - not profit??

My studies are not through an Australian University - so there is no HECS/GST involved.

[CruzAccountant]

Yes, income not profit.

You're right, Education is generally GST Free.

Is the degree an IT degree? This topic is a fairly grey area of tax. There was a case in 2008 where a hotel worker was disallowed a deduction for a hospitality management course.