Deductions for study and job seeking expenses now available

Written on the 7 June 2011 by Australian Taxation Office

A recent high court decision means that you may now be able to claim a tax deduction for study and job seeking expenses. (Commissioner of Taxation v. Anstis - 11 November 2010)

The decision affects taxpayers who receive or have received:

• Austudy, ABSTUDY and Youth allowance payments to undertake study and have incurred study expenses
• Newstart allowance and Youth allowance job seeker and have incurred expenses in actively seeking paid work.

Austudy and ABSTUDY recipients

In the same way the ATO did for Youth allowance recipients who studied, they are now writing to those who had previously lodged income tax returns for eligible Austudy and ABSTUDY clients. The ATO will automatically amend their tax assessments for the 2007, 2008, 2009 and 2010 income tax years to include a tax deduction of $550 for study expenses for each year they are eligible.

Deductions can be claimed for the 2011 year for study expenses incurred by Austudy, ABSTUDY and Youth allowance recipients.

Newstart allowance recipients and Youth allowance job seekers

If you are a Newstart allowance recipient or a Youth allowance job seeker, you may be entitled to a deduction for expenses incurred in actively seeking paid work.

Eligible taxpayers are those who:

• received Newstart allowance or Youth allowance to seek paid work during the year
• have included the allowance as income in their tax return
• incurred expenses during the year seeking paid work (this includes costs they incurred in meeting the requirements of an Employment Pathway Plan), and
• have written evidence to support their claim for the expenses.

Eligible taxpayers can claim deductions for the 2011 year when they lodge their tax return.

Eligible taxpayers can also request amendments for the 2007, 2008, 2009 and/or 2010 years.

The ATO will be monitoring claims and may ask clients to provide the evidence they have to support the expenses claimed.

Budget announcement

In the 2011 Budget, the Government announced its intention to change the law to prevent deductions being claimed against all government assistance payments from 1 July 2011.

This includes claims for:

• study expenses by those who receive Youth allowance, Austudy and ABSTUDY
• job search expenses by Newstart allowance recipients and Youth allowance job seekers.

At this time, the legislation has not been introduced into Parliament.

Further information

For more information, or to have someone look at your specific situation please do not hesitate to contact us.