Accounting For Psychologists Newsletter #5

Hi Fairuz and Welcome to the November edition of Accounting for Psychologists Newsletter.

I recently attended a very interesting talk by George Takei who became famous on Star Trek and moved on to become an outstanding advocate for human rights.  He finished his lecture with the famous words “Go forth and prosper”, which I’m thinking could be a good catchphrase for Accounting for Psychologists! Any opinions?
Are you planning on studying next year?  I’ve put together some information about self-education tax deductions together with some examples specific to psychologists. 
This month we’ll look at
  • Self-Education tax deductions
  • Keeping your receipts and the ATO app

Important Dates for Tax

Due Date
What’s Due
21 November 2022
Monthly BAS lodgement due date
25 November 2022
Quarterly BAS (July-Sept) due date if you lodge with a tax agent (i.e. us)
21 December 2022
Monthly BAS lodgement due date
21 January 2023
Monthly BAS lodgement due date
28 January 2023
Make quarter 2, 2022–23 super guarantee contributions to funds by this date.
21 February 2023
Lodge and pay January 2023 monthly business activity statement.

Self-Education Tax Deductions

The golden rules of claiming a tax deduction for self-education related expenses:

The self-education must either:   

Maintain or improve the specific skills or knowledge you need to perform your current employment activities
Result in (or is likely to result in) an increase in your income from your current employment activities (reference Visit Website
In addition
  • You must have spent the money yourself and not have been reimbursed
  • You must have a record to prove it. Keep your receipts!
  • You can only claim the study related portion of an expense (e.g. your computer may be for study use as well as private use.  You will need to work out how much you use it for study and how much you use it privately.  Then you can claim the study related portion of the cost of your computer as a tax deduction.)

Expenses you can claim:

Course related expenses

  • Course and tuition fees (including those payable under FEE HELP)
  •  Textbooks
  • Academic journals
  • Student union fees
  • Student services and amenities fees
  • Equipment costing less than $300 e.g., printer, desk
  • Computer or laptop
  • Computer repairs
  • Internet and data usage (excluding connection fees)
  • Phone calls
  • Postage
  • Photocopying
  • Stationery e.g. notebooks, pens, printer ink, paper

Home expenses 

  • Additional running expenses if you have a room set aside for self-education purposes
  • Such as the cost of heating, cooling and lighting and cleaning that room while you are studying in it.  (Note that you cannot claim your mortgage, rent or council rates.) You can use the cents per hour method or the actual cost method to record these. If you’re not sure which method to use, your accountant can advise you.

Travel expenses

  • Accommodation and meals if you are away from home for your study for one night or more
  • Travel from home or work to your place of study – by car or public transport (note if your journey continues from place of education to work or home you cannot claim that part of the journey) 
  • This includes car expenses such as fuel, repairs etc. You can claim using the cents per kilometre method or the logbook method.  If you’re not sure which method to use, your accountant can advise you.

Depreciation expenses

  • Decline in value of depreciating assets costing more than $300 e.g., printer, desk, office chair
  • Computer upgrade

Loan expenses

  • Fees paid on some study loans
  • Interest on a loan to pay tuition fees 
  • Interest on money you borrow to buy a computer
Note: Prior to the 2022-23 tax year the first $250 of education expenses was not deductible, however this was abolished in the recent federal budget.
Self-education deductions can only be claimed if the course relates to your current employment.

What you can't claim

You can't claim a deduction for self-education and study expenses that:
X     don't have a sufficient connection to your current work activities
X     only relate in a general way to your current employment
X     you incur when you are not employed
X     enable you to get new employment or change employment (reference  Visit Website)

Here are some examples based on the questions that psychologists often ask me about self-education deductions:

Example 1: Cara
Cara is a psychologist working for a busy city clinic.  She has decided to continue to work full-time and to study part-time for a Master’s in Psychology.  As this is directly related to Cara’s current employment and it will improve her skills and earning capacity, she will be able to tax deduct her self-education expenses.  After the first three months, Cara realises that she’ll need more time to study.  She continues to work 2 days a week.  As she is still employed as a psychologist Cara can still claim a tax deduction her self-education expenses.  At the start of the second year of her Master's degree Cara decides to dedicate herself to study.  She stops working and studies full-time.  As Cara is no longer “improving the specific skills or knowledge she needs to perform her current employment activities”, she would not be entitled to claim her self-education expenses for the second year.  Note that this would also be the case if Cara were to work part-time in a different job, for example as a receptionist at the psychology firm. 
Example 2: Ian
Ian is a psychologist working in large hospital.  He becomes very interested in drug treatments for mental illnesses and decides to study medicine with the aim of becoming a psychiatrist.  Although psychiatry and psychology are both professions specialising in mental health, this course would not improve Ian’s skills or knowledge for his current employment.  His self-education expenses for his medical degree would not be tax deductable.
Example 3: Alicia
Alicia is a psychologist and one of the owners and directors of ABC Psychology Pty Ltd. Alicia decides to study for an MBA and ABC Psychology Pty Ltd will foot the bill. In this case Alicia is not paying for the studies herself so she cannot tax deduct the tuition costs of her self-education.  However, ABC Psychology Pty Ltd will be able to claim the deduction as training expenses.
If Alicia were paying for the course herself, she would be eligible to claim her self-education expenses connected with the MBA as a tax deduction because the MBA is connected with her current employment.
Example 4: Breana
Breana is a psychologist and one of the owners and directors of ABC Psychology Pty Ltd. She takes a self-development course which covers leadership, self-confidence, communication, and positivity.  Leadership is directly related to her current position as a director.  The other subjects. only relate in a general way to her current employment as a company director.  Breana can apportion and claim 25 % of the costs of she incurs taking the course. 
If you have any questions about self-education expenses and deductions, the team at Sheridans are happy to advise you.

Keep your receipts! The ATO App

As an accountant I don’t mind how you keep your receipts.  Just keep them!
Some people, and some businesses, put them in an A4 envelope for me each month.  Others use Excel spreadsheets, photo albums on their phone or more sophisticated electronic storage.  
The important thing is that you have evidence of the:
  • Date
  • Amount of the expense
  • What goods or services it was for
  • Name of the supplier
The ATO requires you to keep these records for five to seven years either on paper or electronically.
The ATO has made an app, named, surprisingly, the ATO app which is free to download from Google Play or the App Store. The app includes a tool called myDeductions where you can store this information and, I have to say, it’s pretty useful.  It’s got a load of functions and information. 

When you spend money on something tax deductible, enter it into the myDeductions app by snapping a photo of the receipt, writing in the amount and a brief description of it and selecting which category of expense it is.  At the end of the year you can email all of this to me (your tax accountant), or, if you’re brave enough to do your own tax, it can be uploaded to pre-fill your tax return.

The myDeductions tool can also be used to record vehicle expenses and trips.

A word of warning though, be sure to back up the information as it’s only stored on your phone. 
If you’re a sole trader, you can use myDeductions to keep records of your business’ expenses and income.
Besides record keeping, the ATO app also has a few tools.  You can look up a business and find its ABN and whether it is registered for GST.  In addition, there’s a tax withheld calculator where you can check how much tax would be withheld from wages.

You can also login to the ATO app through your My Gov account and check the status of your Superannuation, the status of your HELP loan and follow the progress of your tax return.

You can also see the information your employer sends to the ATO such as your income, the PAYG tax that’s been withheld and super contributions.

The ATO app also does a simple business performance check where the performance of a small business is compared to other small businesses in the same industry in terms of expenses, income and so on.  Unfortunately, it doesn’t yet have examples for psychologists. 
I strongly believe that information shared freely benefits everyone, so if you’d like to share any of this information with your colleagues, family or friends, please do so. 

As always, feel free to contact me or the team if you have any questions. 

Go Forth and Prosper,


My book Sorted. is now available. 

If you’re in Adelaide, be sure to come down to Sheridans at 593 ANZAC Highway to pick up your copy for $15.  Why not book in for a chat and we can catch up on your financial goals?
You can order it online Visit Website
“Sorted” provides practical information and easy to use worksheets and checklists to help you become financially well organised in each of the eight key areas of personal finance:
  • Personal Budgeting
  • Savings
  • Investments
  • Taxation
  • Debt
  • Insurance
  • Retirement
  • Estate Planning
You can download an extract of Chapter 1: Personal Budgeting here: Visit Website