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The Full Federal Court (Finn, Sundberg and Edmonds JJ) has dismissed the Commissioner's appeal from the decision of Ryan J who (in upholding the taxpayer's appeal from the decision of the AAT) had allowed the taxpayer, as a recipient of (assessable) Youth Allowance, a deduction under s 8-1 ITAA 1997 for self-education expenses in an amount of $920: see Anstis v FCT [2009] FCA 286 (Federal Court, Ryan J, 1 April 2009).

The Court described the Commissioner's oral submissions thus (at para 33):

"...the [taxpayer]’s activities as a student in fulfilling the requirements for payment of Youth Allowance were qualifying activities – qualifying oneself to earn assessable income; they were not, themselves, activities productive of assessable income; rather they were akin to the activity of travelling from home to work to put oneself in a position, as in Lunney, to earn assessable income; expenditure incurred in the course of carrying out these qualifying activities was therefore not incurred in the course of producing assessable income but at ‘a point too soon’: Maddalena."

In rejecting these submissions and, in particular, the submission that the expenditure was incurred prior to the commencement of the activity which was productive of the Youth Allowance income, the Court said (at para 42):

"Which brings us to the Commissioner’s oral submissions and, in particular, his submission at [33] above that the activities of the [taxpayer] as a student were qualifying activities and the expenditure she incurred had the same character; the expenditure qualified her to gain or produce assessable income but the expenditure was not incurred ‘in the course of’ that gain or production. As we observed in [34] above, we have no problem with this submission by reference to the income the respondent would earn in the future once she qualified as a teacher. But by reference to the Youth Allowance income, it is an exercise in semantics. It would mean that if a person was engaged to undertake an activity (not constituting a business) on condition that he or she would only be paid if he or she carried it out in a particular manner and completed the activities within say, a month, any non-capital expenditure he or she incurred in assisting him or her to complete the activity in accordance with those conditions would not be deductible because his or her activities and the expenditure were qualifying in character and not incurred in the course of gaining or producing assessable income; in other words, the expenditure was incurred ‘too soon’. That cannot be right."

The Commissioner's appeal was dismissed: FCT v Anstis [2009] FCAFC 154 (Full Federal Court; Finn, Sundberg and Edmonds JJ; 4 November 2009).

For a copy of the decision, go here


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