Re Banks and FCT – Truck driver loses claim for work-related travel expenses above the maximum reasonable amount that can be claimed without formal substantiation per TD 2010/19 and TD 2011/17
The AAT has upheld the Commissioner’s objection decision that had reduced a truck driver’s claims for work-related travel expenses on the basis that he did not satisfy the exception for substantiating domestic travel allowance expenses. He did not satisfy the exception because in each of the relevant years (2011 and 2012), the amount he claimed was above the reasonable amount determined by the Commissioner.
In his 2011 and 2012 tax returns, the taxpayer claimed work-related travel expenses of $24,888 and $21,636, respectively. In those income years, the taxpayer also claimed deductions for work-related car expenses; work-related clothing expenses; other work-related expenses; interest deductions; gifts or donations; and expenses in managing his tax affairs. The Commissioner audited the taxpayer and issued amended assessments disallowing a number of the taxpayer’s claimed deductions, resulting in a shortfall amount (tax plus penalties) of $19,342.74, which the taxpayer was required to pay. The Commissioner partially allowed the taxpayer’s objection and the taxpayer applied to the AAT for it to review the objection decision.
The Tribunal found that the Commissioner’s objection decision, to allow the taxpayer’s deduction for work-related travel expenses in the 2011 income year at $11,990, and $12,980 in the 2012 income year, was the correct decision. Those amounts were based on a figure, which is slightly less than the maximum reasonable amount applying Table 6 of TD 2010/19 and TD 2011/17. The Tribunal said that there being no documentary evidence before it to substantiate the taxpayer’s claims in each income year, the Commissioner’s reasonable estimate of $110 per overnight trip should be applied.
The Tribunal also found the taxpayer was not entitled to rely on the exception to the general substantiation rule regarding his work-related travel expenses. That was because his claimed work-related travel expenses exceeded what the Commissioner considered to be a reasonable amount of the total losses or outgoings the taxpayer claimed for travel covered by the bona fide travel allowance given to him by his employer. Therefore, the taxpayer was required to substantiate his work-related travel expenses which he was unable to do to the satisfaction of the Tribunal which found his oral evidence to be “unsatisfactory”.
The Tribunal also found that the exceptions to administrative penalty liability did not apply to the taxpayer because both he and his tax agent did not take reasonable care in making statements in his income tax returns. Further, the taxpayer did not give his agent all of the relevant taxation information, the Tribunal said.
The Tribunal therefore upheld the Commissioner’s objection decision. (Re Banks and FCT [2017] AATA 468, AAT, Fice SM, AAT File Nos: 2015/1934, 2015/1935, 11 April 2017.)
[LTN 71, 18/4/17]