Regardless of whether you’re engaging in work-related study to expand your professional qualifications, working your way through university with a part-time job, or receiving Austudy, you will most likely need to lodge an income tax return at the end of the financial year. Your reasons for studying and the type of income you receive while studying will affect how much tax you pay and the type of deductions you’re eligible for. Here’s all you need to know.
Your tax obligations
If you’re an ‘Australian resident for income tax purposes’ or an international student ‘residing in Australia’ and you earned more than $18,200 in the financial year, you’re required to pay income tax on all your assessable income. In addition, you may also have to pay the 2% Medicare levy if your total taxable income exceeds the threshold. Sources of assessable income include:
- Salary income from full-time or part-time employment
- Investment income
- Government payments such as Austudy, ABSTUDY and Youth Allowance
- Some non-government scholarships, grants, and awards
- Distributions received as a beneficiary of a family trust
If you’re working while studying, your employer will deduct the relevant tax from your income and pay it to the Australian Taxation Office (ATO) in Pay-As-You-Go (PAYG) instalments. That means that if, at the end of the year, your total taxable income is less than $18,200, then the tax held by your employer is usually paid back to you as a tax refund.
Eligibility for tax deductions
You may be eligible for deductions that are deemed to be work-related, and some self-education and personal expenses. The cumulative total of your deductions will reduce your assessable income, and therefore the amount of tax you pay, so knowing what you can and can’t claim is important. Let’s break it down.
You can only claim a deduction for self-education expenses when the course of study will either maintain or improve your knowledge or skills in your current occupation. This is often the case if you’re upgrading your professional qualifications or completing study as part of a traineeship. Eligible self-education costs you can claim include:
- Tuition fees (excluding fees paid under HECS/HELP)
- Equipment needed for a home study, such as stationery and furniture
- Student union or service fees
- Depreciation and repair of any study-related equipment, such as laptops, tablets, and printers
In some cases, the ATO won’t let you claim the first $250 of an expense, depending on the category it falls into. For help calculating your claim, use the self-education expenses calculator.
Work-related and personal expenses
You can claim other work-related expenses you incur regardless of whether the employment is related or unrelated to your studies. These include:
Work-related subscription or union fees
Home office expenses if you’re required to work from home
Work-related phone or internet costs
Travel expenses between offices or worksites
Expenses that are personal and unrelated to your work or study, such as donations or the cost of hiring a tax professional to help you manage you return, are also deductible.
How to complete your tax return
Tax is calculated on your income for the financial year, which runs from July 1 to June 30. If you’re completing your return yourself, you need to lodge it to the ATO by October 31. To complete your return, you’ll need details of all your assessable income, including:
- A PAYG summary from your employer if you work full-time or part-time
- A PAYG summary from Centrelink if you receive a government allowance
- Details of any other income or grants
You’ll also need to show receipts for all the expenses you plan to claim a deduction for, provided they are over $300. Depending on your situation, managing your own taxes when you’re studying can be complex. While it’s possible to lodge the return yourself, it’s always advisable to seek help from a professional tax agent.