Deductible Education Costs – Youth Allowance

A recent full Federal Court decision has confirmed the opportunity for students to claim their costs of study as a tax deduction, where those students receive the youth allowance.

The case involved a student that was in full time university studies.  The student had a part time job to help support herself through her studies as well as received a youth allowance from the Federal Government.

In the student’s tax return, the student claimed costs associated with her university text books and stationery, student administration fees, depreciation on her computer used to help her study and some travel costs incurred, for travel between university and her part time job.  The Tax Office knocked back these deductions, arguing the costs were not incurred by the student to produce her taxable income, or were more to assist her to complete her degree to gain future employment.

The taxpayer disagreed with the Tax Office’s views and the matter was brought before the Court.  In the Full Federal Court (being an appeal by the Tax Office to a single Federal Court judge’s decision previously for the taxpayer), the Court once again sided with the student.

The Court took into account that the Youth Allowance that the student received was fully taxable to the student.  Further, that the student had to pass a number of conditions to be eligible to receive the taxable youth allowance.  Part of these conditions included that the student had to be enrolled in a full time course of eligible study, and continue to be in that full time study whilst receiving the taxable youth allowance.  The Court then agreed with the student’s arguments that in order to continue to be enrolled in her university course, the student would need to incur certain costs to help her with her studies, so that she could successfully pass her subjects and continue to be enrolled in her university course, and therefore continue to receive the taxable youth allowance.

So chalk one up for the taxpayer.

Tags: ,

Comments are closed.