Ask LH: Why Can’t I Claim HECS-HELP Fees As A Tax Deduction?

Hi Lifehacker, I’ve just discovered that I cannot claim HECS-HELP repayments as a tax deduction. This makes no sense to me. If I pay my course fees up front I can claim them as a self-education expense, but if I repay them to the government I can’t? What gives? Thanks, Educate Me

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Dear EM,

The Australian Taxation Office (ATO) is indeed quite clear on this point: you can’t claim HECS-HELP fees as a self-education expense when you start paying them back.

Whether you can claim fees paid up-front actually depends on the kind of course you do. If it’s a full-fee course, then you can claim those costs as a self-education expense if they relate to your work. However, if you take a Commonwealth supported place and pay your HECS-HELP up-front (which attracts a discount), you can’t claim that as an education expense either. (As a full-time student, the chances are you won’t be paying much tax in any case.)

The core logic appears to be this: since your course is being subsidised by taxpayers, it’s not reasonable for you to also reduce your taxable income when you pay it back. It’s not consistent — but that’s true of many other tax rules as well. Such is life.

There are contentious government proposals to change how HECS-HELP fees are calculated, but those don’t include any provision to change their tax-deductible status.


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