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Widening the availability of deductions under Australian taxation law


In the recent High Court decision in FCT v Anstis, the court was required to determine whether a taxpayer who was in receipt of a government-provided youth allowance could claim against the allowance a deduction for certain self-education expenses. In finding for the taxpayer, the court overturned a long-held view of the Australian Taxation Office and, in doing so, clarified a fundamental aspect of Australian taxation law: what makes a loss or an outgoing deductible against a taxpayer's assessable income? In this article, the author analyses the case in detail, setting out the three principal issues, with the Commissioner's view on each and the High Court's response. In the author's view, the full impact of the decision remains to be seen, that is, whether it will be applied to other situations where the occasion of the expenditure is to be found in what the taxpayer does to establish and retain a statutory entitlement to income. If it appears likely to have a significant impact on revenue, the legislature may have to intervene.

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Daniel Khoury
Daniel is a former Senior Lecturer in Law, Department of Business Law and Taxation, Monash University. - Current at 01 March 2011
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