A Big Bad Tax on Learning
Few recent issues have united the profession as much as the proposed $2000 cap on tax deductions for ongoing professional education expenses.
The Treasury has released a discussion paper on the change, which inspires no confidence that it has any insight into the consequences that a $2000 cap would have.
The discussion paper’s title, Reform to deductions for education expenses, illustrates just how devalued the word ‘reform’ has become.
While often thought of as meaning a change for the better, it must now be added to the lexicon of weasel words, because the changes outlined are clearly a change for the worse.
The discussion paper acknowledges that, “Many professionals and employees are required to undertake further training to ensure their knowledge remains up to date.”
For doctors, this is an essential requirement of continuing registration as a medical practitioner.
The first four pages of the discussion paper are devoted to the current tax treatment of education expenses – these will be well known to your accountant. The principles of apportionment that should prevent rorting are clear.
The tax deductibility of education expenses has also been tested in the courts.
The discussion paper implies that a reason for the $2000 cap is to override these precedents.
However, parts of the discussion document are unclear.
For example, it says that expenses for travel from home to a place of education and back will count towards the $2000 cap. But, in section 51, it suggests travel expenses will be among a range of deductions that will not be affected by the tax change, “provided they meet the necessary tests”.
It is hard to think of a rationale for other essential work-related travel expenses being tax deductable while those related to essential continuing education are not.
The fringe benefits implications are also unclear.
In section 62 the paper states, “The government will ensure FBT will not apply to training or reimbursement by an employer, except where part of a salary packaging arrangement.” Yet in section 68 it suggests that the, “otherwise deductable rule may no longer apply to education expenses in excess of the $2000 cap.” What does the ‘may’ mean in this context – does it apply or not?
The discussion paper tries to justify the cap on equity grounds.
Yet it appears employers will be able to claim a deduction for expenses incurred in educating employees while self-employed medical practitioners will not.
For health, the policy settings seem all wrong. The implication is that we should simply do the minimum required to satisfy CPD requirements.
It is a policy aimed at mediocrity rather than excellence and innovation.
It is a policy that fails to recognise the diversity of need for continuing education.
Medical practitioners working in rural Australia necessarily incur greater expenses in maintaining their CPD because of greater travel expenses.
Doctors working in highly specialised areas are unlikely to find the exposure to new developments and techniques in Australia and must necessarily travel for this, often to Europe or the USA.
They incur a loss of income while away, so these visits are generally as short as possible. A five-day return trip to Europe in a cold, wet March to attend a conference or seminar for 12-hour days may be someone’s idea of fun, but it’s certainly no holiday.
I work in intensive care. Some of the innovations I have brought back to my work place after educational events overseas include the use of continuous positive airway pressure for adults and arteriovenous haemofiltration for acute renal failure.
I was happy to share these innovations with my colleagues and our patients. Would they have gained access to these life saving treatments as soon in a culture that discouraged self-education? I doubt it.
The $2000 cap on education expenses is a big bad tax on learning.
It is also a big bad tax on development and innovation in healthcare.
The proposal says a lot about a culture of mediocrity within government with respect to education.
It will be bad for doctors and worse for health consumers.
The AMA has made a detailed response to the discussion paper.
You too can respond. Simply send an email to email@example.com. Let them know what you really think.
Other actions that every member can take are to write to their Member of Parliament or make an appointment to see them, sign on to the ‘Scrap the Cap’ petition (http://www.scrapthecap.com.au/) and share your story about how the cap will affect your work and the service you provide to your patients (http://www.scrapthecap.com.au/tell-your-story/).