Deduction for Expenses of Self-Education
You may claim deductions for expenses of self-education provided that the prescribed conditions are satisfied. This page will tell you what types of expenses you can claim, the approved education providers, when to submit your claim, the supporting documents you should retain and where to go for more information.
Definition of Expenses of Self-Education
Under salaries tax, you can claim a deduction for expenses of self-education (SEE) (including tuition and the related examination fees) paid for a prescribed course of education. A prescribed course of education is a course undertaken at an education provider specified in the Inland Revenue Ordinance (IRO) to gain or maintain qualifications for use in either current or a planned employment.
Prescribed Course of Education
A prescribed course of education is a course of education provided by an education provider. With effect from the year of assessment 2004/05, a prescribed course of education is extended to cover a training or development course not only provided but also recognised or accredited by the Vocational Training Council, the Construction Industry Training Authority and major trade associations for the regulated professions as specified in Schedule 13 of the IRO.Schedule 13 of the Inland Revenue Ordinance (Chapter 112)
Taxpayers applying for deductions are required to provide details of recognised or accredited courses.
For the expense to be deductible, the course must be undertaken to gain or maintain qualifications for use in any employment, whether current or planned. Examples are:
- 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 attended by an accountant or lawyer.
Payments to a private tutor are not deductible (whether support by receipts or not) because a private tutor is not a specified education provider and the fees paid are not in connection with a prescribed course of education.
Education providers are generally universities, university colleges or technical colleges, government schools or other schools registered or exempted from registration under the Education Ordinance, approved institutes under Section 16C(1) of the Inland Revenue Ordinance and the following institutions specifically approved by the Commissioner of Inland Revenue:
Hong Kong Productivity Council
The Arts School of the Hong Kong Arts Centre
Charmtime Limited – Pang’s Music Therapy Centre
(Only teachers enrolled for the course can claim a tax deduction, but not other students)
The Continuous Learning Centre of the Vocational Training Council
Top Express Consultants Limited – Rigos US CPA Review
Hong Kong Trade Development Council
Phillip Institute of Financial Learning Company Limited
Physical Fitness Association of Hong Kong, China Limited
International Health and Fitness Consultants Limited
Amount of Allowable Deduction
You should claim deductions for the actual amount of SEE in the year you paid them.
The maximum deductible amount is $60,000 for the years of assessment 2009/10 to 2012/13 and is $80,000 for the years of assessment 2013/14 to 2016/17. From the year of assessment 2017/18 onwards, the deduction ceiling for expenses of self-education has been increased from $80,000 to $100,000*. However, if you receive a complete or partial refund of course fees from your employer, the Government (such as under the Continuing Education Fund) or any other person/organisation, you should only claim a deduction for the net amount you pay yourself.
* Legislative amendments are required for implementing the tax measures as proposed by the Financial Secretary in the 2017-18 Budget.
Furthermore, the IRO specifically provides that the same payment cannot be deducted twice.
How and When to Claim
You must claim deductions for SEE for the year of assessment during which the payments were made. Course participants are sometimes required to make payments in one year of assessment, say February 2016, for courses that commence in a subsequent year of assessment, say September 2016. In such cases, the expenses should be claimed for the earlier year of assessment: in this example, 2015/16 instead of 2016/17.
If you have received complete or partial reimbursement of course fees, you can either claim the balance or claim the full amount but treat the reimbursed amount as income. The following examples will help you understand what you have to do.
If Mr L paid $20,000 in course fees during the year of assessment 2015/16 and received a refund of $8,000 from his employer within the same year, the amount of his claim depends on how the reimbursed amount is treated in the employer’s tax return for 2015/16.
In the same situation as Example 1, Mr L received the refund a year later, in the year of assessment 2016/17. He may claim a deduction for $20,000 in his 2015/16 tax return, but he must remember to report the reimbursed sum of $8,000 as income for the year of assessment 2016/17.
To avoid understating his assessable income, Mr L should report the reimbursed sum of $8,000 as his 2016/17 income. Whether or not the sum of $8,000 was reported in the employer's tax return for 2016/17 will not affect his obligation to do so.
You need not attach any documentary evidence to your Tax Return – Individuals (BIR60). However, to substantiate your deduction claim and to prove that the proper amount was deductible, you should retain the receipts for a period of 6 years after the expiration of the year of assessment in which the payments were made. You are required to produce receipts if your case is selected for review.
More information on deductions for SEE is available through the following link.Frequently asked questions on deductions for SEE