A senior accountant has been largely unsuccessful before the AAT in claiming deductions for work-related expenses, including home office, self-education and travel expenses in her 2012 and 2013 tax returns.

The Commissioner disallowed various deductions and imposed an administrative penalty for failure to take reasonable care. The Commissioner partly allowed the taxpayer’s objection and, after the taxpayer initiated Tribunal proceedings, allowed further deductions. The remaining deductions in issue after these concessions totalled $16,000.

Before the AAT, the taxpayer argued that her job required her to work from home most evenings. After resigning from this role in August 2012, the taxpayer said she undertook workshops in order to maintain her status as a certified practising accountant.

The Tribunal found that the taxpayer was not entitled to most of the deductions claimed.

  • The AAT said it was unlikely that the taxpayer undertook regular work from home (other than for 6 weeks in 2012-13 before she resigned), as there was no independent evidence to suggest this.
  • Furthermore, in relation to home occupancy expenses, the AAT said that rent was a private expense that would have been incurred regardless of the taxpayer’s work situation [FJM Note: the ‘incurred regardless’ is not really the test].
  • While the AAT accepted that the taxpayer was committed to continuing her professional development, it said there was no evidence that she attended any workshops.
  • In relation to the purported workshop in Krakow, Poland, the AAT noted that, in addition to a lack of evidence, it seemed that not even the taxpayer’s employer had knowledge of her attendance [FJM Note: this last matter is not crucial]. The Tribunal said it was likely she was simply visiting her father, who lived near Krakow [FJM Note: now, that’s more relevant].
  • The AAT also disallowed claims for bus, taxi and parking fees for local travel in Sydney because she failed to show a nexus between the receipts produced and the workshops she claimed to attend.
  • Various minor expenses were also disallowed because the taxpayer failed to substantiate the claims.

Finally, the Tribunal affirmed the Commissioner’s penalty for failing to take reasonable care, noting that a reasonable person would expect that “professionals, especially those in the accounting profession, would exercise more care in their personal tax returns”. The matter was remitted to the Commissioner to issue amended assessments in accordance with the Tribunal’s reasons.

(Re Bhatti and FCT [2016] AATA 24, AAT, File Nos 2014/6071-6072; 6761-6762, Lazanas SM, 22 January 2016.)

[LTN 182, 18/9/15]