The Government announced in the 2011-12 Budget that it would disallow deductions against government assistance payments following the High Court decision in FCT v Anstis [2010] HCA 40.
Treasury on Fri 20.1.2012, released draft amendments seeking to amend the ITAA 1997 to disallow deductions against taxable government assistance payments that are eligible for a rebatable benefit. Government assistance payments that are eligible for the beneficiary rebate include, but are not be limited to: Austudy living allowance; ABSTUDY living allowance; Newstart Allowance; Youth Allowance (Student); and Youth Allowance (Jobseeker).
DATE OF EFFECT: The amendment is proposed to have effect from 1 July 2011.
COMMENTS are due by 17 February 2012.
[LTN 13, 20/1]
26‑19 Rebatable benefits
(1) You cannot deduct under this Act a loss or outgoing to the extent that the loss or outgoing is incurred in gaining or producing a rebatable benefit (within the meaning of section 160AAA of the Income Tax Assessment Act 1936).
(2) To the extent that you use property in gaining or producing a rebatable benefit, your use of the property is taken not to be for the *purpose of producing assessable income if subsection (1) would stop you deducting a loss or outgoing if you incurred it in the income year in gaining or producing the rebatable benefit.
Note: Under some provisions of this Act, in order to deduct an amount for your property, you must have used the property for the purpose of producing assessable income.
[Extract from Draft]