| A recent Federal Court decision in Antsis v The | | | | maintain the taxpayer's skill and knowledge." |
| Commissioner of Taxation was an unexpected | | | | Following arguments by both sides, Justice Ryan, |
| win for the taxpayer and a loss for the Tax | | | | of the Full Federal Court, agreed that there was a |
| Office. | | | | nexus between the Youth Allowance income and |
| The taxpayer was a full time student completing | | | | the self-education expenditure: |
| a teaching degree. During the 2005-06 tax year | | | | "The outlay of fees to enrol in a course to qualify |
| the taxpayer derived assessable income of | | | | for Youth Allowance and incurring other expenses |
| $14,946 working as a part time sales assistant | | | | to satisfy the activity test and so preserve the |
| and $3,622 from Youth Allowance. The taxpayer | | | | qualification is not akin to the travelling expenses |
| claimed expenses of $1,170 consisting of travel, | | | | discussed in cases like Lunney. The claimed |
| administration fees, stationery and depreciation of | | | | expenses in this case were not outlaid to put the |
| a computer. | | | | applicant in a position to receive Youth Allowance, |
| In order to be eligible for the Youth Allowance the | | | | rather, they were incurred as a necessary |
| taxpayer was required to satisfy certain | | | | incident of pursuing a particular course of study." |
| conditions, which were: (a) The person must be | | | | Later in the judgement, Justice Ryan went on to |
| enrolled in a course at an educational institution; (b) | | | | conclude: |
| must be studying at least 75% of the normal full | | | | "The derivation on income in the form of Youth |
| time program, and (c) must be making progress | | | | Allowance is one of the alternative ways in which |
| towards completing the course. It was also | | | | the occasion of the outgoing is to be found in |
| mentioned that no income was derived from | | | | what is productive of the assessable income." |
| working as a teacher. | | | | In regard to the taxpayer's motivation to studying |
| At the hearing, the applicant was represented by | | | | and incurring expenditure, the taxpayer conceded |
| her father, Mr M Antsis, a legal practitioner. Mr | | | | that the primary purpose for undertaking the |
| Antsis argued, in essence, that the applicant had | | | | course was to become a teacher. However. The |
| expended money on her education in order to | | | | taxpayer stated that while the primary purpose |
| ensure that she continued to make satisfactory | | | | of undertaking study was not to gain Youth |
| progress towards completing her teaching course | | | | Allowance, the primary purpose of the self |
| and remained eligible to receive assessable income | | | | education expenditure was to meet the |
| in the form of Youth Allowance. Therefore, it was | | | | satisfactory progress requirement. Mr Antsis went |
| submitted, the applicant was entitled to a tax | | | | on to argue that the connection of the |
| deduction pursuant to s 8-1 of the Income Tax | | | | expenditure to future teaching income does not |
| Assessment Act. | | | | deny the fact that the expenditure was also |
| The Commissioner of Taxation argued that:" - the | | | | relevant to gaining the youth allowance, which |
| expenditure incurred by the taxpayer was not | | | | itself represented a form of assessable income. |
| "relevant and incidental to" the receipt of the | | | | Following on from this Justice Ryan concluded that |
| Youth Allowance income; - the primary motive of | | | | "The taxpayer's ultimate purpose or motive in |
| the taxpayer in undertaking study activities was | | | | undertaking their course was to acquire a |
| to gain employment in the future as a teacher; - | | | | qualification leading to future employment as a |
| the expenditure was incurred by the taxpayer at | | | | Teacher is irrelevant to the characterisation of |
| a "point too soon" to the derivation of assessable | | | | the expenditure. It is sufficient to say that the |
| income as a qualified teacher and - as the youth | | | | expenditure was incurred as a necessary incident |
| allowance was a fixed payment from the | | | | of deriving Youth Allowance. |
| Government, the expenditure incurred by the | | | | Full facts of the case can be found on the ATO |
| taxpayer could not be seen as being incurred with | | | | Website at ato.gov.au, Antsis v Federal |
| the prospect of increasing the income earning | | | | Commissioner of Taxation 2009 ATC 20-098 or |
| capacity of the taxpayer or to improve or | | | | on my Blog. |