Self Education Tax Reform Response

Reforms to Deductions for Education Expenses Discussion Paper

Australians enjoy some of the best health outcomes and longest lives in the world, thanks to the high quality of our healthcare system and the medical practitioners that work in it. Investment in work? related education therefore is an investment in our nation’s health first and foremost.

The Committee of Presidents of Medical Colleges (CPMC) is concerned that a cap of $2,000 on tax deductions for work?related education expenses will adversely affect the training and continuing professional development (CPD) of all doctors and compromise patient safety and the quality of care. This ‘reform’ will hit rural and remote doctors, and those in private practice, hard, putting them at risk of professional isolation and their patients at risk of a lower quality of care. And importantly, our trainees – the future of healthcare in Australia – will be put under considerable and possibly unbearable financial strain. We call for an urgent re?consideration of this proposal.

The CPMC is the peak body representing the specialist medical colleges in Australia and has 15 member organizations (the Australian and Australasian specialist medical colleges). Its mission is ‘to promote the highest quality of medical care and the best of health for the Australian community by coordinated and collective advocacy and collaboration’. CPMC is pleased to provide the following responses to the questions outlined in the ‘Reforms to Deductions for Education Expenses’ discussion paper:

Questions

1. In your industry or field, are there studies or courses that are compulsory and must be completed in order to meet licence requirements?

In order to become a registered medical specialist in Australia, medical practitioners must complete the training program of one of the 15 specialist medical colleges that are accredited by the Australian Medical Council. These programs are 4 to 8 years?long and are at the level of a ‘professional doctorate’.

In order to remain a registered medical specialist in Australia, medical practitioners must meet or exceed the minimum requirements for continuing professional development (CPD) mandated by the Medical Board of Australia, whose code ‘Good Medical Practice’ document requires for doctors that ‘development of [their] knowledge, skills and professional behaviour must continue throughout [their] working life’ (page 15 of GMP).

a. What is the highest amount of the expense?

In relation to specialist medical training, the total expense may exceed $20,000 in one year for some programs. Many colleges make these fees publically available (e.g. Australian and New Zealand College of Anaesthetists http://www.anzca.edu.au/training/fees).

In relation to specialists in practice, the highest amount of the expense to fulfil mandatory CPD requirements is difficult for CPMC to estimate. The expense will vary according to the location of the specialist, the nature of his/her practice, the availability of suitable CPD activities locally or in Australia and the extent to which the minimum requirement for CPD is exceeded by specialists in the pursuit of improved quality and safety of patient care.

b. What is the nature of these courses?

In relation to specialist medical training, courses include the training program itself, skills?based programs (such as in communication, advanced life support, crisis management and surgical skills) and pre?examination preparation courses. In addition, some training programs require candidates to undertake further university?based education as part of specialist training. Trainees incur annual trainee fees and specific fees for courses, assessments and attendance at CPD events.

In relation to specialists in training, the Medical Board of Australia mandates ‘participation in a range of activities to meet individual learning needs including practice?based reflective elements, such as clinical audit, peer?review or performance appraisal, as well as participation in activities that enhance knowledge such as courses, conferences and on?line learning’. The purpose of this CPD is ‘to maintain, develop, update and enhance their knowledge, skills and performance to ensure that they deliver appropriate and safe care’.* CPD activities therefore commonly include lectures, small group discussions, skills based courses, hospital/practice visits, peer review meetings and audits, reading and on?line education.

* Medical Board of Australia Continuing Professional Development Registration Standard 2010

2. Is training undertaken in your industry predominantly held in Australia or overseas? Can you provide examples?

In relation to specialist training, all training to attain the relevant Fellowship can be undertaken in Australia and/or New Zealand, although trainees in some programs have the option of undertaking part of their training overseas. College fees do not usually vary according the current domicile of the trainee.

In relation to specialists in practice, a wide range of CPD activities are available in Australia in all specialities. However, in order to meet CPD requirements for some subspecialties and to remain up? to?date with the latest in medical discovery and innovation, some specialists must travel overseas. It should be noted that some specialists take the opportunity to provide volunteer medical services in low income countries on the same trip.

Overseas travel is also important where the nature of the specialisation is such that there are a relatively small number of practitioners domestically and therefore regular contact with overseas colleagues is crucial to becoming informed of ‘state of the art’ developments and practices. More generally, the networking opportunities available at conferences, whether domestic or international, contributes to professional development by providing a collegiate forum for doctors to discuss issues and problems with their colleagues in a manner that cannot be replicated by simply reading journals or learning online.

In addition, it should be noted that Australia is a large country and that rural and remote practitioners may incur travel expenses equivalent to international airfares just to attend a CPD event in a capital city. Unfortunately this also applies to residents of Perth if they need to attend events on the east coast. The Commonwealth Government has recognised the difficulty that rural and remote doctors face in accessing suitable CPD activities at an affordable price through its Rural Health Continuing Education (RHCE) program. Rural and remote practitioners cannot access all the high?quality peer? reviewed education that they need online or by reading. The opportunity to spend time with colleagues away from their workplace is a crucial aspect of retention of doctors in the bush.

Medical specialists, whether in training or in practice, often undertake further university?based training that is not required for registration (licensure). Leadership by doctors qualified in research, teaching, public health and management is vital to the continuing improvement of health services, training programs and patient care. The costs of these courses nearly always exceed the proposed cap and often greatly exceed it. Occasionally appropriate university?based courses may only be available overseas.

3. In employment relationships, are employees largely obliged to incur work?related education expenses themselves or are they employer provided? Do you anticipate this changing in response to this measure?

Work?related education expenses for specialists in training and in practice are sometimes reimbursed by the doctor’s employer, depending on the jurisdiction in which they work. For example, in the Victorian public hospital system, specialists are provided with a continuing medical education allowance as part of their employment contract on a pro rata basis. These allowances frequently to do not cover all the education expenses incurred and, in some hospitals, visiting medical officers are excluded from these arrangements.

4. Are you aware of examples where education expense deductions can be claimed under the current arrangements, even where significant private benefits are enjoyed?

As with any system, occasional participants may utilize the system for private benefit. CPMC believes that the vast majority of practitioners, who undertake work?related education in order to improve patient care and the health of the nation, should not be penalised as a result of the activities of a few.

5. Are there any lessons for Australia in the experiences of other countries with restrictions on education expenses deductions?

Australia has a world?class health care system that provides high quality and safe medical care for our patients. CPMC believes that this has occurred in part through the comprehensive training and CPD undertaken by doctors, and in part through further education and study leading to discovery and innovation, all supported by the Australian taxation system. CPMC has no specific examples to offer, but would not like to see Australian doctors become more narrow in their focus and more limited with respect to their training and CPD activities.

6. Should the $250 no?claim threshold under section 82A of the ITAA 1936 be removed when the $2,000 cap is introduced?

Yes. It adds unnecessary complexity, it affects a significant number of taxpayers (thereby reducing their benefit) and the financial consequences of abolishing it are small.

7. How should this be prioritised?

CPMC does not support the current proposal to cap education expenses at $2,000. Removal of the $250 no?claim threshold would be of high priority if the current proposal is implemented.

8. What types of assets that relate to an education activity are placed into a low?value pool or similar small business pool?

CPMC has no comment on this question.

9. What are the advantages/disadvantages of the ‘reasonable estimation’ method proposed above?

CPMC has no comment on this question.

10. Is the use of low?value pools under these circumstances appropriate?

CPMC has no comment on this question.

11. Are there any unintended consequences from the proposed reforms?

Yes.

In relation to specialists in the training, the proposed reforms may:

  • result in trainees delaying entry to training while they pay off medical school debts and save for training fees
  • adversely affect the medical training pipeline and the provision of an adequate specialist medical workforce
  • impair broad engagement of trainees with the profession and with life?long learning, because it may discourage attendance at medical education events during training
  • particularly disadvantage trainees in rural and remote settings, and those outside the public hospital system

In relation to specialists in practice, the proposed reforms may:

  • result in doctors undertaking the minimum amount of CPD to meet registration requirements and limiting their activity to less expensive but less effective CPD options (simulation based training, although expensive, is much more effective that didactic forms of teaching)
  • reduce the accessing of the most up?to?date information and skills (sometimes only available overseas)
  • result in fewer doctors seeking qualifications in research, teaching, public health and management, that is vital to the continuing improvement of health services, training programs and patient care
  • particularly disadvantage specialists in rural and remote settings, and those outside the public hospital system.

In relation to the quality and level of medical research activity in Australia, the proposed reforms, by skewing CPD activities away from participation in academic conferences which provide significant opportunities for research collaboration, discourages doctors from being more engaged in research. This contradicts one of the key recommendations of the McKeon Review of Health and Medical Research in Australia, which is to build up professional health research capacity by embedding research into health professional training and accreditation.Medical practitioners seek to ensure that they align their continuing professional development and training with best practice wherever this occurs, and often these courses are necessary to enable the practitioner to upskill to fill workforce shortages or relieve pressures in rural and remote areas

Specialist medical practitioners in Australia require ongoing access to a comprehensive range of professional development options, as do all other health and related professions where skill is reliant upon continual engagement with highly specialised education and these costs are incurred in the best interests of their commitment to maintaining a world’s best health and ageing system.

12. What practical aspects of the proposed reforms need further consideration?

CPMC does not support the underlying premise that the National Plan for School Improvement should be in part funded by a cap on work?related education expenses. The legitimate work?related education expenses of all specialists in training and specialists in practice exceed the $2,000 cap, and those doctors with lower incomes (trainees and rural/remote practitioners) are among those with the highest compulsory expenses. We strongly suggest that whole plan needs further consideration with respect to its unintended consequences.

13. Are there any interactions with other areas of the tax law that need to be addressed?

CPMC has no comment on this question.

14. Do you consider that further amendments will be required to the tax law outside of those already mentioned in the discussion paper?

CPMC has no comment on this question.

15. Are there alternative approaches that you would like to see considered? How would they work in practice and are there any precedents in Australia or other jurisdictions?

Australian taxation law contains clear guidelines for the claiming of work?related travel expenses. Tightening of these rules or increased audit to confirm legitimate deductions is an alternative to capping deductions that does not penalise those doctors who seek to improve patient care through training and continuing professional development.