Training and Education Expenses

Spending money on skills feels like the most obviously legitimate business cost there is. And often it is — but the tax treatment splits sharply depending on who is being trained and what the course is for. The course that grows your current business and the course that prepares you for a different one look identical on the invoice, and are treated very differently in the return.

Training your employees

Training provided to employees in connection with their work — trade tickets, software courses, safety training, leadership programs — is generally deductible to the business. Because paying for an employee's course is a benefit, fringe benefits tax can come into the picture, though genuinely work-related training is commonly covered by exemptions or reductions — the point is to confirm the position rather than assume FBT never applies. Training for people who are not employees of the business, such as a family member who helps out informally, does not get the same treatment.

Education for the owner

For the owner, the question is connection: does the course maintain or improve skills you use in the business as it operates now, or is it reasonably expected to lift the income of that same business? If yes, the cost is generally deductible — the advanced course in your own trade, the pricing workshop, the software certification for a tool you already sell services in.

The common misconception sits one step further out. A course that prepares you for a new business, a different occupation or an income stream you do not yet have is generally not deductible, no matter how sensible the plan is commercially. The connection has to be with the income you earn now, not the income you hope to earn later. This is the single most frequent surprise we see in this category.

The records worth keeping

• The invoice and proof of payment for the course, conference or program.
• The course outline or agenda — it is the document that shows what the training actually covered, and it is rarely available two years later if it was not saved at the time.
• A short note linking the course to the current business, written when you book it. One paragraph is enough.
• Travel records if you travelled to attend, kept to the same standard as any other business trip. Like other business records, these are generally kept for 5 years.

What we commonly see go wrong

• The future-business course — property courses, trading courses and new-venture programs claimed against an unrelated existing business.
• Conferences that are mostly holiday, with the private portion never carved out.
• Coaching and mentoring packages with vague descriptions and no documentation of what they covered or how they related to the business.
• Courses paid for family members who are not employees, claimed as staff training.

A worked example

As an illustration: the owner of a bookkeeping practice pays for two courses in the same year — an advanced payroll certification, and a property development program. The payroll course maintains and improves skills used in the practice today; it is generally deductible. The property program is preparation for a possible future venture that does not yet exist; it is generally not deductible, even though the same person paid for both from the same account with the same commercial seriousness. Coding both to training at the time creates a problem that only surfaces when someone asks the question later.

When to get help

If a significant course sits anywhere near the line — new skills versus new business, mixed conference travel, coaching packages, or training with a possible FBT angle for staff — it is worth a short conversation before the year ends rather than a debate after lodgement. The answer usually takes minutes when the course outline and the business activities are both on the table.

Can I claim a course that helps me start a new business?

Generally no. Self-education is deductible where it connects to the income you earn now — maintaining or improving skills used in your current business. A course preparing you for a future or different business generally fails that connection, even if it is a sound commercial plan.

Is training I pay for my employees subject to FBT?

Paying for an employee's course is a benefit, so FBT can be relevant, but genuinely work-related training is commonly covered by exemptions or reductions. The cost of the training itself is generally deductible to the business. Confirm the FBT position rather than assuming — it depends on the facts.

What records should I keep for training expenses?

The invoice, proof of payment, the course outline or agenda, and a short note made at the time explaining how the course relates to your current business. If travel was involved, keep the travel records too. These generally need to be kept for 5 years.