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ATO Accepts Student Deduction Ruling

Mary Swire, Tax-News.com, Hong Kong

20 December 2010


Bill Shorten, Australian Assistant Treasurer, announced on December 17 that the government will not amend the tax law retrospectively to deny deductions against Youth Allowance for prior years following the High Court decision in Commissioner of Taxation v Anstis.

Earlier the Australian Taxation Office released its Decision Impact Statement on the High Court decision in Commissioner of Taxation v Anstis. The Decision Impact Statement explains the Commissioner's position in relation to the High Court decision and how the law will be administered as a consequence of the decision to allow Youth Allowance recipients in full-time study to claim a tax deduction for their education expenses.

“In this Statement, the Tax Office has indicated that it accepts educational expenses such as textbook costs and depreciating a computer used for study purposes as allowable deductions against Youth Allowance," Mr Shorten said.

“The Tax Office will allow an automatic deduction of AUD550 from the 2006-07 to the 2009-10 income years for eligible taxpayers and potentially higher claims for those eligible taxpayers who can prove their expenses. The ATO estimates the average refund taxpayers will receive in their pocket will be AUD90 for each year and more if receipts can be provided."

“The Australian Tax Office will be working hard to ensure that affected individuals will receive their deductions. This is expected to result in around 460,000 tax refunds for affected individuals who received Youth Allowance while in full-time study and paid tax in any of the 2006-07 to 2009-10 financial years."

“The government will not be playing Christmas Grinch for those taxpayers that can benefit from the Tax Office's decision to allow an automatic deduction and for those taxpayers that can substantiate their claims,” he said.

In terms of deductibility against youth allowance for the current and future income years, this will be considered by the government in the New Year.

TAGS: individuals | tax | law | Australia | education

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