5. What are expenses of self-education? Can I claim a deduction for tax purposes if I undertake a course related to my employment?
Under sections 12(1) and 12(6) of the Inland Revenue Ordinance, self-education expenses are expenses paid for fees (including tuition and examination fees) in connection with a prescribed course of education conducted by , or examination fees paid for examinations held by, a specified institution (or education provider) for the purpose of gaining or maintaining qualifications for use in any employment. The amount of deduction per year must not exceed $80,000.
Doing self-study is not undertaking “a prescribed course of education”. Hence, expenses incurred in connection with self-study, such as on the purchase of books, cannot be claimed. However, the scope of self-education expenses is extended to cover fees for qualified examinations set by professional bodies without requiring the taxpayers to undertake a prescribed course of education. Examples of these professions include certified public accountants, surveyors or architects, etc.
Fees that have been reimbursed or are reimbursable by an employer, the Government or any other person cannot be deducted.
What is a “prescribed course of education”?
A “prescribed course of education” (as defined under section 12(6) of the Inland Revenue Ordinance) is a course undertaken at a specified institution (or education provider) to gain or maintain qualifications for use in the current employment, or a planned new employment. In other words, the course must be related either to the present job or a job in the future.
For examples , course fees in the following situations may be qualified for deductions:
- a management course taken by a business executive;
- a commercial or computer course taken by a secretary or clerk;
- a vocational training course taken by a technician;
- a continuing professional development seminar taken by an accountant or a lawyer.
Starting from the year of assessment 2004/05, a prescribed course of education also covers a training or development course not necessarily provided by, but recognized or accredited by the Vocational Training Council, the Construction Industry Training Council, and the major trade associations for the regulated professions as specified in Schedule 13 of the Inland Revenue Ordinance. Taxpayers applying for the deduction are required to provide a confirmation letter from one of those relevant institutions confirming that the course taken is recognized or accredited by them.
What are specified education providers?
In general, they include:
- any university, university college or technical college either in Hong Kong or overseas;
- any technical institute, industrial training centre, vocational training centre or skills centre in Hong Kong ;
- any Government school or other school registered or exempted from registration under the Education Ordinance;
- any institution approved by the Commissioner of Inland Revenue;
- any trade, professional or business association providing a training or development course.