UNIVERSITY undergraduates will be able to claim educational expenses as a tax deduction after a former student had a landmark win against the Tax Office in the Federal Court recently.
A former Australian Catholic University student, was successful in her bid to claim $920 as self-education expenses after fighting the Australian Tax Office through a number of jurisdictions over the past three years.
While studying as a primary teacher full-time, Ms Anstis worked as a part-time sales assistant for retail chain Katies, where she earned $14,946. She also received a Youth Allowance of $3622 during the 2006 income year.
In a bold move she claimed education expenses including travel costs, supplies for children during teaching rounds, student administration fees and depreciation of her computer.
The Tax Office rejected the claim, so Ms Anstis and her father, Michael, who is a qualified solicitor but does not work as a lawyer, fought them.
The full bench of the Federal Court upheld an earlier decision that because the former student had to be enrolled in a full-time course of study to get her assessable income of Youth Allowance, any costs incurred in the course of studying should be deductible.
Tax experts say hundreds of thousands of university students who receive Youth Allowance could benefit from the ruling, but they will need to generate a taxable income above $15,000.
About 440,000 students receive Youth Allowance or Austudy, according to government figures. Many of these students would earn enough with the addition of part-time work to have a tax liability, according to Dale Boccabella from the Australian School of Business at the University of NSW.
He said items including computer depreciation, stationery or textbooks could now be claimed as a deduction. In the past, the Tax Office had made it clear it would not allow educational expenses to be claimed against welfare payments.
Professor Boccabella said the precedent could also allow company cadets undertaking undergraduate studies to claim self-education expenses because the case puts the focus on the relationship between expenses and the conditions for getting the welfare payment.
"The decision raises the spectre of taxpayers negatively gearing Youth Allowance income,'' he said. "The decision further complicates tax administration in the area of self-education expenses, an area that is already riddled with difficulties."
A spokeswoman for the Tax Office said it was assessing the decision before making any comment.
Please contact us with your specific tax needs on (02) 4731-1405 A Grade Tax Accountants in Penrith your local Taxation Accountant.
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