The High Court has upheld earlier decisions of the Federal Court at first instance and the Full Court on appeal that the youth allowance was assessable income. Therefore deductions claimed by a recipient of that allowance in undertaking university study were deductible as they were incurred in earning assessable income namely the youth allowance and were not of a private or domestic nature.

Although at first blush this appears an odd result, in fact it is in accordance with the long established principles applicable to the general deduction section. The expenses were to be found in what was productive of assessable income namely the youth allowance.