Students who receive Youth Allowance have won a useful tax break thanks to a High Court ruling last November and a subsequent policy response from the tax office just before Christmas. The tax office said it is considering whether the new tax concession also will apply to students receiving other taxable payments. Examples are Austudy, ABSTUDY living allowances and the Newstart Allowance.

The court ruling was handed down following an appeal by a full-time student enrolled in a teaching degree, against a tax office decision to reject her claim for $920 in deductions for self-education costs incurred in 2005-06. This amount included $692 in depreciation of a computer but not travel costs from home to the place of study, an expense that is rarely if ever deductible.

The court noted that her Youth Allowance was conditional on her being enrolled in a degree, undertaking at least 75% of the normal amount of full-time study and making satisfactory progress. Crucially, it ruled the expenses claimed had been incurred in satisfying these conditions of eligibility and, therefore, in the course of gaining taxable income and so were tax deductible.

The tax office said it would be writing to relevant taxpayers to let them know their tax assessments will be amended to include a $550 tax deduction for education expenses for the financial years 2006-07 to 2009-10. As for future years, it is up to you to make sure you claim the new deductions.