Abbott Proposes Bigger Increase To Education Tax Refund

by Mary Swire, Tax-News.com, Hong Kong

23 July 2010

Tony Abbott, the Australian Liberal party leader, has said that a prospective Coalition government would improve and expand the existing Education Tax Refund (ETR) to provide further help to families with the cost of their children’s education.

His announcement comes only a few days after Prime Minister Julia Gillard had herself disclosed that, if the government is re-elected in the upcoming elections, it would expand the ETR so that school uniforms could be included, in addition to the existing education expenses included in the scheme, such as the cost of books, stationery and computer items.

The annual amount of the ETR is currently 50% of eligible education expenses, up to AUD390 (USD344) for primary school students and up to AUD780 for secondary school students. Eligible families are those who receive Family Tax Benefit, so that the ETR is available for 1.3m families and around 2.7m students.

Over the two-years from its introduction in 2011-12, the government expects to pay an additional AUD220m by including school uniforms in the refund.

The Liberal party now proposes to spend a further AUD760 million during that period, by increasing the amount of the rebate for primary and secondary students, as well as significantly expanding the type of expenses that can be claimed.

The ETR would rise to up to AUD500 per year per child in primary school, and to up to AUD1,000 per year for secondary school students. The types of expenses to which the refund would apply would also be expanded to include, for example, school fees, special education costs for children with disabilities, tutoring costs and sporting fees and equipment. The expanded rebate would commence on January 1, 2011.

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