Following through with the yet another scheme that was announced in the 2008-09 Federal Budget, the Rudd Government has recently introduced to Parliament legislation that will see the enactment of the Education Tax Refund.

As set out in the budget, the Education Tax Refund will see the current Government invest $4.4 billion over the next four years to fund the all-important continuing education of the next generation of Australians.

Whilst the most recent cut to interest rates has moved to somewhat ease the current financial pressure on families, the new refund provides further relief and also moves to make it easier for parents to purchase the necessary equipment that is required for their children’s academic development.

Families who are eligible to claim the refund will be able to receive a 50 percent discount each year for costs incurred when purchasing nominated education equipment.

The criteria is such that for expenses up to $750 incurred for each child who is undertaking primary school studies, a maximum of $375 refundable tax offset is available each year. Additionally, for each child who is undertaking secondary studies, for expenses up to $1500, a maximum refundable tax offset of $750 is available each year.

The costs of education expenses that are able to be included when claiming the Education Tax Refund include:

  • laptops;
  • home computers and associated costs;
  • home internet connections;
  • printers;
  • education software;
  • trade tools for use at school;
  • school text books; and
  • stationery

Generally speaking, parents who are entitled to receive the Family Tax Benefit Part A for children who are in primary or secondary school as eligible to claim the Education Tax Refund.

Similarly, those parents who would be eligible to receive the Family Tax Benefit Part A except that their child/children receive other government payments or allowances such as Youth Allowance, ABSTUDY living Allowance of Disability Support Pension are also eligible to receive the Education Tax Refund.

The refund will be available for parents to claim through their Income Tax Return on all expenses that are incurred from 1 July 2008. Hence, the first Education Tax Refunds will be claimed after 1 July 2009, when tax returns for the 2008-09 financial year are completed. So, from this date forward all parents who are eligible to claim the offset should retain all receipts for purchases relating to their children’s education so that they can make a claim for the necessary offset amount/s when they are preparing their returns at the end of this financial year.

For those who do not need to lodge a tax return, they can still claim the Education Tax Refund by completing a separate form that will be available from the Australian Tax Office.

This is a general overview of the Government’s new Education Tax Refund. There are various other details regarding the refund that you will need to be aware of if you feel that you may be eligible to claim the offset on your 2008-09 tax return. In particular there are further eligibility criteria that apply to other specific circumstances such as students that are considered independent of their parents, as well as children in shared cared arrangements.

For more information on the Education Tax Refund or for any other tax related queries you might have, contact the tax and accounting experts at The Quinn Group on 1300 QUINNS or click here to submit an online enquiry form.