# Youth Allowance - Deductions available



## Julia (16 April 2009)

I just heard the end of an item on ABC Local Radio (Steve Austin Evenings in Qld) where he said there has been a  legal test cast with the ATO in which someone on Youth Allowance has succeeded in claiming as a deduction all text books and any other expenses associated with their education.

I know we have a number of ASF members who are studying and receiving the meagre Youth Allowance, so it might be worth looking into.

Sorry not to have a link to the programme.  The ABC Local Radio website is a complete nightmare - tried for 15 minutes to find a phone number to the programme in the hope of getting a link to the item, but have failed.


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## beamstas (16 April 2009)

There are so many lounge room accountants around. 
Im going to be out of a job soon, it seems every clients mother in laws sisters brother has been advising them of what deductions they can get too. 

Anyway lets clear this one up quickly

People on youth allowance don't pay tax. (in the case that they do pay tax, they will receive the low income earners tax offset which menas they'll get all their tax back anyway)

Deductions reduce your taxable income.

You cannot get more tax back than you paid.

You do the maths 

Brad


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## Julia (16 April 2009)

Thanks Brad.   If I'd thought about it a bit, I'd have realised that.
Sorry for posting something so thoughtlessly.


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## beamstas (16 April 2009)

Julia said:


> Thanks Brad.   If I'd thought about it a bit, I'd have realised that.
> Sorry for posting something so thoughtlessly.




Wasn't aimed at you personally Julia 
Was in a bit of a rush with other stuff, sorry if my post came off blunty
(I could also be wrong too  )

Brad


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## kotim (16 April 2009)

Its a true story, she earnt some other money from part time work and then when the allowance was added to it, it impacted upon tax etc, have a search online and you will find it.  She did win


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## beamstas (16 April 2009)

kotim said:


> Its a true story, she earnt some other money from part time work and then when the allowance was added to it, it impacted upon tax etc, have a search online and you will find it.  She did win




She must have earnt quite alot of money

You get $6000 tax free 

$750 tax offset for low income earners

Therefore she has to earn $6000+($750/0.15) = $11,000

This would mean she would have $750.15 tax payable on $11,001, reducing her tax refund by $750.15-$750 = 0.15

No idea how much income you can earn before you lose the youth allowance though but i'd assume it's not much more than $5000?

Remember; you don't get the cost of a deduction as a refund. the only effect it has is lowering your taxable income by the amount of the deduction. Therefore in reality you only get the tax back that was paid on the deduction. In her case 15%

The line between actually getting youth allowance with a high income and it actually being worth making a claim on such a tiny amount would be very small and a rare occasion

Though it would be nice if this thread helped more people get more money back off the Government 

Brad


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## Julia (16 April 2009)

So it would be a case of considering how much income was lost via the means test ?



> The YA personal income test allows full-time students to have income of $236 per fortnight ($62 per fortnight for other young people) before payments are reduced.  The first $80 of income over these income free areas reduces fortnightly income by 50 cents in the dollar.  Any income beyond this reduces fortnightly allowance by 70 cents in the dollar.  A partner income test also applies.
> 
> A personal assets test applies to independent YA recipients unless their partner receives income support.  Assets of dependent allowees are included in the family assets test.
> [Return to Top]
> ...


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## ShareGuy (17 April 2009)

Yep its true our tax specialist at work notified us about this one today as well, below are the facts from the case:

_There was no dispute about the facts. During the tax year, the applicant was enrolled as a full-time student undertaking a teaching degree at the Australian Catholic University. In her tax return for the tax year, she acknowledged having received $14,946 as wages earned as a party-time sales assistant in the retail chain Katies, as well as the receipt of income from Youth Allowance in the sum of $3,622. The applicant did not declare the receipt of any income from having worked as a teacher. 
It was common ground that the applicant was entitled to deduct from her income costs incurred in the course of her job as a sales assistant. The question in issue is whether she was also entitled, as a recipient of Youth Allowance, to deduct from her income the costs incurred in the course of her study. 
In her tax return for the tax year, the applicant claimed a deduction of $920 for work-related self-education expenses, comprising;
‘Travel expenses other than to university $59.00
Supplies for children during teacher rounds $75.00
Student Administration Fee $80.00
Depreciation – computer $692.00
Textbooks and stationery $264.00
$1,170.00
Less reduction s 82A(1) $250
$920.00’_

The full case can be viewed here http://www.austlii.edu.au/au/cases/cth/FCA/2009/286.html


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## Kez180 (17 April 2009)

http://www.abc.net.au/news/stories/2009/04/16/2544542.htm?section=justin

There is the ABC story...


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## Trevor_S (17 April 2009)

This is not really a youth allowance story per se is it ? more about the ability to obtain a tax deduction for expenses not related to your work or income.

eg I am into phoptogrpahy but am not a professional photographer, so I can't claim my cameras/lenses as expenses against my normal "job" ie semi retired lay-about.  

The way I read this (and it surprises the hell out of me) is that it would appear though that if I was studying an Arts course at Uni, (or photography at TAFE ?) with the intention of becoming a professional photographer (COUGH !), I should be able to claim the gear as a deduction against my other income... perhaps I should enrol, the cost of my gear alone in deductions would be worth $1000's 

Remember she is not a teacher and is claiming expense involved in earning getting her teaching degree.  I guess it's no more asinine then negative gearing on houses, where you offset the loss against your other income.

I am also guessing we shall shortly see a swift change in the tax law to close this loophole


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## prawn_86 (17 April 2009)

Trevor_S said:


> The way I read this (and it surprises the hell out of me) is that it would appear though that if I was studying an Arts course at Uni, (or photography at TAFE ?) with the intention of becoming a professional photographer (COUGH !), I should be able to claim the gear as a deduction against my other income... perhaps I should enrol, the cost of my gear alone in deductions would be worth $1000's
> 
> I am also guessing we shall shortly see a swift change in the tax law to close this loophole




1. Your costs from HECS would far outweigh any potential gain IMO. Mostdegrees are between 4 and 8k per year.

2. I agree, a change in legislation will quickly close this loophole


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## beamstas (17 April 2009)

prawn_86 said:


> 1. Your costs from HECS would far outweigh any potential gain IMO. Mostdegrees are between 4 and 8k per year.
> 
> 2. I agree, a change in legislation will quickly close this loophole




It seemed like the poster was an older person who is semi-retired
The HECS Limit is $40,000 so if you earn under that you don't have to pay

I guess its just a game of balancing scales

My degree is 8k per year


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## tommymac (17 April 2009)

From my brief studies of tax at uni I "thought" it was pretty clear that a deduction for education was only allowed if it were to improve your current employment prospects. (e.g. add to your current qualifications.)

I wonder if this would also relate to people who have lost their job and are on Newstart. Centrelink requires you to apply for 10 jobs per fortnight along with all the other frustrations they put you through. 

I can't think of any expenses now but would there be any expenses incurred that could build up over time?


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## Kez180 (17 April 2009)

Trevor_S said:


> This is not really a youth allowance story per se is it ? more about the ability to obtain a tax deduction for expenses not related to your work or income.
> 
> eg I am into phoptogrpahy but am not a professional photographer, so I can't claim my cameras/lenses as expenses against my normal "job" ie semi retired lay-about.
> 
> ...




No the deduction was against the youth allowance... the deduction was less then the youth allowance amount and as such really has nothing to do with negative gearing...

The significance here is that while her job was not related to her degree, the costs involved in her degree were required for her to be paid youth allowance. 

The tax office had previously stated that no deductions were available against benefits/pensions... This overrules that and opens the door for people to claim costs associated with becoming egible for a benefit...


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## Trevor_S (17 April 2009)

Kez180 said:


> No the deduction was against the youth allowance...




That's not how I read it, 


> to deduct from her* income* the costs incurred in the course of her study.



however I am no tax lawyer.



Kez180 said:


> the deduction was less then the youth allowance amount and as such really has nothing to do with negative gearing...




Sorry, my point was subtle. She is deducting from her income, expenses incurred in another enterprise i.e like negative gearing on property where losses aren't quarantined.



Kez180 said:


> The significance here is that while her job was not related to her degree, the costs involved in her degree were required for her to be paid youth allowance.
> 
> The tax office had previously stated that no deductions were available against benefits/pensions... This overrules that and opens the door for people to claim costs associated with becoming egible for a benefit...




that's not how I read it....as I stated. To me it seems as though she wants to claim expenses incurred that are unrelated to her income (her job at Katies), normally not allowed at all. The ammo for the argument is that in order to get the youth allowance, she has to study and have those expenses, so that may be the caveat, she doesn't appear to be claiming it against the youth allowance per se ?  I can't see why any student, regardless of youth allowance payments, can't try it on and why I suggested that loophole might be closed quickly.  ie I enrol in  TAFE course to study photography, with the intention of becoming a photographer "one day", I spend $15,000 on photography equipment and claim that against my unrelated day jobs income, which is essentially what she seems to be doing ? 'cause if she was on youth allowance only, she would not be paying any tax.


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## Taltan (17 April 2009)

Kez180 and tommymac your both right. The deductions was allowed because of the youth allowance payment, not as a self-education expense. Thus enrolling in a HECS course would not get you a deduction. Furthermore even if someone was earning part-time income as a photographer the deduction would be limited to the amount of income directly earned from photography (assuming total income is under 20k).

I agree the loophole will be closed soon, otherwise every dole recipient with an internet connection will start claiming deductions.


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## Prospector (17 April 2009)

I agree with Taltan et al, the deductions were against the Youth Allowance.  Unless you received Youth Allowance, the deductions wouldnt be allowable.

And every Family A and B recipient could claim for costs associated with raising children! Far out!


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## Largesse (17 April 2009)

Ok lets try to get an example for all us lesser informed out there:

Full time student.
Works Part time, earns 15k pa.
Qualifies for YA, and recieves it during periods of low work, assume payment of 5k pa.

Does this ruling mean student can deduct expenses like books, stationary, travel between work and university?

Layman type responses please


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## Prospector (17 April 2009)

Yes.  Is that layman enough? :

You must be studying to receive Youth Allowance, therefore, anything you have to spend in order to receive Youth Allowance, ie anything you spend in order to study (I wonder if that also includes HECS aka HELP) has, by this decision, now become tax deductible.


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## son of baglimit (17 April 2009)

i can tell you one thing - ring the ATO about this, and its very much NO COMMENT. who you speak to either have no idea (about this or anything) or they are instructed to NOT COMMENT.

expect an appeal (the legal branch of the ATO love spending our tax money on such things) and/or another rewrite of tax laws to clear this ruling.


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## Largesse (17 April 2009)

Prospector said:


> Yes.  Is that layman enough? :
> 
> You must be studying to receive Youth Allowance, therefore, anything you have to spend in order to receive Youth Allowance, ie anything you spend in order to study (I wonder if that also includes HECS aka HELP) has, by this decision, now become tax deductible.





so assuming i'm still studying full time, i can go to officeworks tomorrow and buy myself a new laptop and deduct that from FY08-09 Earnings?

brilliant


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## Prospector (17 April 2009)

Before you go do the spend up, check with an accountant who is up to date!


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## akiness (25 June 2009)

I'm not a financial advisor or anything, but here's my two cents worth:

*She was allowed to claim it because it formed part of her 'assessable income'. I.E. She was paying tax on it.*


 "_When she lodged her tax return for the financial year ending June 2006, she declared $14,946 of earnings from a part-time job as well as $3,622 from Youth Allowance.

     When it came to claiming tax deductions, Ms Anstis included $920 spent on textbooks, a computer, transport and a university administration fees.

     She reasoned that her Youth Allowance was part of her income, so she should be able to claim deductions on relevant costs_"

Therefore, as she was liable to pay tax on her total income of $18,568 (including the Youth Allowance) it seems reasonable that she should be allowed to claim deductions against it; and The Federal Court in Melbourne agreed.

Addresses to this story on ABC Melbourne and the offical ruling can be found here:

abc.net.au/news/stories/2009/04/16/2544542.htm?site=melbourne
law.ato.gov.au/atolaw/view.htm?docid=JUD/2009ATC20-098/00001


It should be noted however, that the ATO has lodged an appeal and until that's sorted they will continue to routinely deny similar claims.


"*Anstis v FCT * 

_On 1 April 2009, the Federal Court handed down its decision in Symone Anstis v. Federal Commissioner of Taxation. Ryan J. held that Ms Anstis, who received a youth allowance as a university student, was entitled to a tax deduction for her education expenses.

The Commissioner has lodged an appeal against the decision. Until this matter is resolved, the Tax Office will continue to apply the view set out in Income Tax Ruling TR 98/9. That is, education expenses are not deductible against various Commonwealth educational assistance schemes._"

.ato.gov.au/individuals/content.asp?doc=/content/00192011.htm


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## ojm (25 June 2009)

The question is, do I claim for my text books, travel to uni, etc., on this financial year. Could get quite a bit back.


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## Krusty the Klown (26 June 2009)

Largesse said:


> so assuming i'm still studying full time, i can go to officeworks tomorrow and buy myself a new laptop and deduct that from FY08-09 Earnings?
> 
> brilliant




You can only claim depreciation expense for your laptop, not the actual purchase cost.



ojm said:


> The question is, do I claim for my text books, travel to uni, etc., on this financial year. Could get quite a bit back.




Only if you claim these as an expense, at this point in time, if they relate to current employment and against non YA or Austudy income. If you have a look at the quote from the ATO saying that they will appeal, they also said they will continue to disallow claims like this.

_The Commissioner has lodged an appeal against the decision. Until this matter is resolved, the Tax Office will continue to apply the view set out in Income Tax Ruling TR 98/9. That is, education expenses are not deductible against various Commonwealth educational assistance schemes."_


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## Prospector (26 June 2009)

akiness said:


> I'm not a financial advisor or anything, but here's my two cents worth:
> *She was allowed to claim it because it formed part of her 'assessable income'. I.E. She was paying tax on it.*




That seems entirely reasonable.  In the Youth Allowance application, there is a question that asks if you want tax taken out of your payments.  So, Youth Allowance is taxed like any other job and is added to your taxable income!

Is that girl studying accounting?  If so, I want to know when she graduates, she is one smart cookie (or has a great accountant do her returns!)


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## prawn_86 (26 June 2009)

If your on YA you should be eligible for the "Education Tax Refund". I got a letter the other day from the gov reminding me about it and telling me how to claim


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## beamstas (26 June 2009)

Largesse said:


> so assuming i'm still studying full time, i can go to officeworks tomorrow and buy myself a new laptop and deduct that from FY08-09 Earnings?
> 
> brilliant




If you bought in april you could claim 3 months of depreciatoin.


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## ojm (26 June 2009)

prawn_86 said:


> If your on YA you should be eligible for the "Education Tax Refund". I got a letter the other day from the gov reminding me about it and telling me how to claim




http://www.educationtaxrefund.gov.au/home/

It appears its only for high school / primary school students though?? Not tertiary?


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## prawn_86 (26 June 2009)

ojm said:


> http://www.educationtaxrefund.gov.au/home/
> 
> It appears its only for high school / primary school students though?? Not tertiary?




Independent student on YA are also eligible:
http://www.educationtaxrefund.gov.au/am-i-eligible/#IndependentStudent

EDIT - actually looks like its only if your in high school, not uni. My bad.


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## Prospector (26 June 2009)

prawn_86 said:


> My bad.




You sound like my son.  Where did that expression come from?


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## Nyden (13 July 2009)

Alright, so it's tax time now. Anyone have any clear-cut indication of whether or not we actually *can* claim deductions against youth allowance payments? Furthermore, would University Fees paid upfront be allowable for this as well?

I really wish I hadn't thrown out text book receipts  As well as receipts for some computer peripherals!

How does one even prove transportation costs? I suppose with attendance being on record, it can be established that either public transportation / driving costs were incurred.

I really wish the ATO would release something on this.


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## jono1887 (13 July 2009)

Nyden said:


> Alright, so it's tax time now. Anyone have any clear-cut indication of whether or not we actually *can* claim deductions against youth allowance payments? Furthermore, would University Fees paid upfront be allowable for this as well?
> 
> I really wish I hadn't thrown out text book receipts  As well as receipts for some computer peripherals!
> 
> ...




Wasn't it established earlier that just because the court ruled that way for a specific case, it doesnt mean that the rules of the ATO will change... It may mean that you will have to defend your case in the courts in necessary.


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