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A new tax deduction to help individuals upskill or retrain is neither effective nor affordable, says Chartered Accountants Australia and New Zealand.
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CA ANZ takes aim at proposed tax deduction
08 February 2021
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The professional body’s stance comes as the government considers introducing a new tax deduction for education and training expenses outside an individual’s current job, in a bid to encourage people to continually upgrade or diversify their skills to boost their employability.
CA ANZ notes that while it’s supportive of helping workers upskill or retrain for multiple careers over their lifetime, a new deduction would not be the most effective or efficient way of doing so.
It believes instead that upfront support for the cost of courses would be more beneficial, and help taxpayers who are earning low or insufficient income who would otherwise not benefit from a new tax deduction.
“Providing a tax deduction for education and training provides limited or no benefits to those who need to attain skills or retrain due to educational disadvantage, occupational disruption, unemployment, underemployment, and those working in undervalued or lowly paid occupations,” said CA ANZ in its submission to the Treasury.
“The most effective mechanism to encourage Australians to retrain and reskill is to provide financial support upfront for the cost of the courses, whether the support is via government funding to the education provider to allow free or low-fee training places or a direct grant to the individual to assist with the cost of the course fees.”
CA ANZ also believes the proposed deduction could prove to be costly in the long run.
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“With the federal budget 2020–21 revealing a $213.7 billion deficit, and net debt predicted to peak at $966 billion by June 2024, a new tax deduction for education and training expenses for upskilling or reskilling also raises affordability issues at a time when the ATO is already concerned about overclaimed personal deductions,” CA ANZ said.
CA ANZ’s submission comes as both CPA Australia and The Tax Institute have also raised doubts on the proposed tax deduction, arguing that it would not benefit those who need it most.
The Institute of Public Accountants, however, believes the new deduction could help fill a gap in the tax system, noting that there are already various education and training schemes available to unemployed and low-income earners but nothing to help workers who are looking to change careers.
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