Student windfall evaporates as a result of new legislation

Published on 01 Sep 12 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

In Australian taxation law, taxpayers are entitled to claim the costs of self-education as a deduction against their assessable income only if there is a direct nexus between their employment and the area of study. The ATO adopted the view that student taxpayers in receipt of government assistance payments such as Youth Allowance could not deduct the costs of their study against the government payments. This view was challenged in the High Court in the Anstis case, in which the court held that the taxpayer should be allowed to claim the deduction.

The government subsequently introduced legislation which disallows deductions from 1 July 2011 against any government assistance payments received by taxpayers. This article revisits the facts of the decision in the Anstis case. The article traces the history of self-education and government assistance payments before examining the new legislation and drawing some conclusions.

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