The ATO recently announced measures to assist with the costs of education for eligible families and independent students which will apply from 1 July 2008. The measures entitle eligible taxpayers to claim a tax offset equivalent to 50% of eligible education expenses up to the following limits:

» $750 for each eligible child in primary school (i.e. tax offset up to $375)
» $1,500 for each eligible child in secondary school (i.e. tax offset up to $750)

If your expenses exceed these maximum levels, they can be carried forward to the next financial year and claimed, provided eligibility criteria are met.

Eligibility
To be eligible for the Education Tax Refund you must:

» Incur eligible education expenses for a child and
» The child must be in primary or secondary school and
» You receive family tax benefit (FTB) Part A for the child or
» You were eligible to receive FTB Part A except you received a payment that prohibited you from receiving it (i.e. child maintenance payment) or
» Your child ceased full time education during the year and received sufficient income to stop you receiving FTB Part A

Independent students attending secondary school or a secondary course of education provided at TAFE or similar institution may also be eligible.

You do not need to be eligible for the full year.

Where payments received prohibit FTB Part A from being paid, parents need a written agreement stating what percentage of the ETR they will each claim. In the absence of a written agreement you will be entitled to 50%.

Where expenses are used by more than one eligible child, the expenses can be shared. For instance a $3,000 computer can be spread across two eligible secondary school children (i.e. $1,500 each) to claim the maximum amount twice, provided they both have access to and use the expense item.

Eligible education expenses include:
» Laptops, home computers and associated costs
» Printers, disability aids, USB flash drives
» Home internet connections
» Educational software
» Textbooks and other learning materials
» Prescribed trade tools

Expenses that are not eligible include:
» School fees
» Uniforms
» Excursions, camps, and associated travel expenses
» Tutoring costs
» Sporting equipment
» Musical instruments
» Transport
» Building levies/donations
» Membership fees

You can not claim the ETR for educational expenses if:
» It is an allowable tax deduction or subject to another tax offset
» You received or are entitled to receive payment or property as reimbursement for the expense under a Commonwealth Government or legislative prescribed benefit, grant or subsidy.

More information can be found at www.ato.gov.au or by contacting our office. There may be strategies that can be implemented to reduce your family’s income to below the threshold that the Family Tax Benefit Part A will be payable to yourself. If you would like to investigate this, please contact us.