We have been covering this tax case with interest from Day One….
FINAL CONCLUSION
The Symone Antis v. FC of T case confirms that education expenses should be allowaed as deductions against Youth Allowance income.
This is a massive win for tertiary students around Australia earning Youth Allowance income!!
From a revenue perspective, the court ruled that Youth Allowance is assessable income as per s 6.5. It doesn’t fall under educational scholarships which is exempt income as per s 6-20.
In fact, it is specifically mentioned in s 51-35 that,
“‘The following payments made to or on behalf of a full time student at a school, college or university are not exempt from income tax under item 2.1A of the table in section 51 10:”
The court also ruled that “the expenditure in question was incurred in the course of gaining or producing the respondent’s assessable income within the first limb of s 8-1″.
It is amazing that the Commissioner was pursuing the case so vigourously considering the facts of the case. Perhaps it is indicative of the overall aggressive tact taken recently by the ATO.
Here’s a quick recap for those who are new to this case…
SUMMARY FOR THOSE WHO MISSED THE CASE RULING
Symone (the taxpayer) is claiming that her education expenses should be tax deductible because being enrolled in a tertiary education is one of the prerequisites for her entitlement to Youth Allowance.
So, she claimed various expenses such as textbooks, depreciation on the computer, travel, etc.
COMMISSIONER’S CASE
The ATO claimed that this was bogus because she incurred these education expenses to finish her teaching degree and eventually qualify as a teacher.
They are arguing that the expenses are not deductible because it wasn’t incurred to derive an income. That is, she was not earning money as a teacher yet at this point in time.
They also rejected the argument that the education expenses was a valid deduction to get Youth Allowance income.
TIMELINE OF EVENTS
Cheers!
Taxabull Team
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