Guide to Tax Deductibility for Leadership Courses

In today's competitive tech landscape, investing in employee development through management training isn't just good business practice—it can also provide significant tax advantages for innovative companies and their staff making the investment.

This article explores how innovative companies in Australia or their staff can leverage tax deductions for management courses while helping ensure compliance with Australian Taxation Office (ATO) regulations.

The ATO generally allows businesses to deduct ordinary and necessary expenses related to operating their business, including employee training and education costs.

For tech companies, this presents a valuable opportunity to develop leadership capabilities while optimising tax positions under Australian tax law.

For leadership courses to qualify as tax-deductible business expenses, they typically must:

1. Maintain or improve skills required for current positions – Training that enhances existing job skills or helps employees adapt to new technologies or management methodologies generally qualifies.
2. Meet business necessity requirements – The training should have a clear connection to the employee's current role or a reasonably anticipated future role within the company.
3. Not qualify the employee for a new trade or profession – If the training would prepare the employee for an entirely different career field, it may not be deductible.

Tech organisations can seek to claim deductions while developing management talent including External training programs such as management courses at universities, professional development institutes, or online programs (like Scalable Leaders).

Expenses you may be able to deduct include:

• Course / membership fees
• Required materials
• Travel expenses (if applicable)
• Accommodation costs (for multi-day programs)

Depending on your carbon footprint goals, in-person events requiring travel and accommodation may have significant downsides in other parts of your accounting.

To substantiate deductions for management training, companies should maintain:

• Detailed records of all training expenditures (e.g. invoices)
• Course descriptions demonstrating business relevance
• Documentation connecting the training to specific business objectives (e.g. growth, engagement, retention, inclusion)
• Employee attendance records
• Evidence of completion

Scalable Leaders provides employers with full access to attendance records and evidence of completion.

With distributed teams now more commonplace, companies might be able to consider claiming management training delivered virtually, including online course subscriptions, virtual coaching sessions and remote team leadership development.

While leadership training is generally deductible, companies should be aware of common issues that may trigger ATO scrutiny:

Education Leading to New Role Qualification

Courses that upskill an employee for a fundamentally different role may not be deductible. For example:

• A software developer taking courses to become a licensed financial advisor
• A network administrator studying for a medical degree

However, a project manager taking a program like Scalable Leaders to become a more effective manager might be deductible as it builds upon existing technical knowledge and helps them to perform their current role.

Excessive or Lavish Expenses

The ATO may challenge deductions for training programs that appear unreasonably expensive or include significant entertainment elements.

Australian tax authorities scrutinise expenses that could be considered private in nature or primarily providing personal benefits. Focus on substantive management development rather than luxurious retreats or excessive amenities to ensure deductibility.

In the instance where an employee pays for their own leadership training there are a different set of considerations when seeking to claim in their own personal tax return.

Australian professionals can claim self-education expenses if they satisfy ONE of the core criteria below:

• The course maintains or improves skills used in current income-earning activities.
• The study leads to (or is likely to lead to) an income increasefrom current employment.

For example, a Head of Engineering earning $220,000, eligible expenses might include course fees, books, stationery, office equipment, and internet usage related to the course.

You don't need to tick all boxes – meeting just one criterion establishes the required "sufficient connection" to your employment. The "increase in income" can include future promotion prospects or enhanced earning potential within your current field, not just immediate pay rises.

Note that deductions are claimed in the personal tax return as a work-related expense. Important Update: From 1 July 2022, the $250 reduction amount for self- education expenses has been eliminated. You can now claim all allowable self- education expenses without any reduction.

The following table provides a quick reference guide for employees on when education expenses can and cannot be claimed as tax deductions:

When applying these guidelines, professionals should consider the ATO's primary test:

Does the education expense have a sufficient connection to the employee's current income-earning activities?

If yes, and the expenses aren't reimbursed by the employer, the employee likely has a valid deduction.

For our Head of Engineering example, advanced leadership courses typically satisfy deductibility requirements when they enhance their ability to lead technical teams in their current organisation rather than prepare them for an entirely different career.

When considering which positions in a scaleup would likely qualify for leadership course tax deductions, the key factor is whether the leadership training directly relates to and benefits their current role.

The table below provides general guidance on typical tech scaleup positions and their relative ability to claim.

The distinction often comes down to:

1. Leadership responsibilities in current role: Positions with team management or decision-making authority can typically justify leadership training
2. Career trajectory within field: Positions on a leadership track within their current discipline are more likely to qualify
3. Application to current duties: The ability to apply leadership skills immediately in current position
4. Seniority level: More senior positions generally have an easier time justifying leadership development

Remember that individual circumstances may vary, and the connection between the specific course content and the employee's current duties is crucial for tax deductibility.

Employees claiming self-education expenses must maintain receipts for all expenses over $10.

They also need course enrolment and completion documentation, alongside evidence of the connection between the course and current employment.

Records of time spent using home office equipment for study should also be kept if seeking to claim home office costs.

Members can get attendance and completion records through Scalable Leaders, which makes the above a breeze.

Investing in a leadership program for relevant staff on the management track represents both a strategic business decision and a tax deduction opportunity.

By understanding deductibility requirements and maintaining proper documentation, innovative companies can develop stronger leadership while claiming the tax deduction.

Important Note: Tax laws change frequently. The $250 reduction for self-education expenses was eliminated in July 2022, and various tax incentives and rates are subject to regular updates. Always verify current regulations with the ATO or consult with a qualified tax professional.

For specific guidance regarding your circumstances, consult with qualified tax accountants like the team at Fullstack who understand both tax and the unique dynamics of the tech industry.

Disclaimer: This article provides general information about Australian tax law and should not be construed as tax, legal, or professional advice. Australian tax laws and ATO regulations change frequently.

This guide was last updated in June 2025.

Book a tax consultation with Fullstack for personalised tax advice on your situation here.