Plans for a $2000 cap on self-education tax deductions are a backward step that undermines Australia’s ambition to have a highly trained workforce, brokers and actuaries warn.

“Our concern is that we want people fully qualified and accredited at least to diploma standard and preferably beyond,” National Insurance Brokers Association CEO Dallas Booth told insuranceNEWS.com.au.

“The $2000 cap is going to be a real disincentive to people progressing beyond the basic qualifications.”

He says diploma education costs will exceed the cap, limiting access for those without employer funding.

The proposal also runs counter to the promotion of education as a benefit to society, Mr Booth says. “It is the wrong way to go for Australia.”

The tax deduction cap on work-related education will take effect next July 1, under a proposal outlined in a Treasury discussion paper.

Current rules allow some people to claim large deductions for expenses, including a significant private benefit paid for by taxpayers.

The median claim for expenses relating to formal education in 2010/11 was $905, the paper says.

The Actuaries Institute argues the cap will disadvantage people seeking to enter the profession, affect ongoing training and lead to declining standards.

It says many institute members are self-employed or part of small consulting groups, and cannot rely on employers to fund work-related education.

“The introduction of the cap will lead to members not accessing the same level of self-education as they otherwise have done, with some consequential risk of a reduction in standards,” it said in a submission to Treasury.

Actuaries spend about $5000 to $12,000 a year to get their professional qualification, while continuing education costs range from $3000 to $5000 a year, the institute says.

“Supporting rigorous processes to achieve professional qualification and demanding ongoing professional development creates a highly competent and effective workforce, advances Australia’s position in the region and supports our overall long-term economic development.”