June 27, 2022

Budget tax proposal could boost MBAs

“It’s better for governments not to prescribe future demand. It’s inconsistent with the idea of letting the market decide.”

Individuals can deduct the cost of education or a training expense related to their current employment, but not future employment, under existing tax law.

Treasury acknowledges the current system acts as a disincentive for people to retrain to support their future employment.

“The government would like to broaden this deduction and will consult on the design to ensure the deduction is effectively targeted to future employment and skills needs,” the Treasurer said.

Professor Rosa said it could mean a person who wanted to study an MBA, which is one of the most expensive courses available, but was working in a field unrelated to management, would be able to deduct the cost of their fees.

“There are some people who make a choice to upskill. It would be a far better way to let them make the career decision.”

The government is under fire from some universities for changing the structure of course fees to reflect the availability of jobs with universities saying the government was not good at picking winners.

Academic director of executive MBA programs at Melbourne Business School, Vivek Chaudhri, said Australia has been at the forefront of valuing the investment in education at a public level.

“You want to encourage people to invest in themselves. It’s a positive step in recognising skill and education.

Vivek Chaudhri, academic director of the Executive MBA programs at Melbourne Business School: “You want to encourage people to invest in themselves.” 

It did not necessarily mean there would be a flood of people into MBAs but there were many possibilities, including short courses in leadership, brand management, leadership, supply chain strategy etc.

The changes being raised by the Treasury relate only to people who are in employment and earning an income, which could be subject to tax deductions.

Higher education expert at the Mitchell Institute at Victoria University, Peter Hurley, said retraining and reskilling incurs a cost which normally falls on a student.

“This policy seems to mean that people can undertake a course in an area different to their current job and claim the costs as a deduction, making it easier to consider a career change.”

“To date, most of the emphasis has been on keeping people in the jobs they already had. This idea is aimed at making it easier for employers and employees to transition into different jobs or industries.

“It will certainly be welcome by the education sector because it encourages more people to enrol in courses to either reskill or upskill.”

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