A taxpayer’s claim for work-related travel deductions in excess of the amounts he incurred has been unsuccessful.
The taxpayer was an employee truck driver who was required to be away from home on most working days. He claimed work-related travel expense deductions for the 2011 and 2012 income years totalling just over $42,000. The deductions were for meals and incidental expenses. In both income years, he received travel allowances from his employer totalling almost $11,000.
After an audit of the taxpayer’s affairs and consideration of his objections to the relevant assessments, the Commissioner allowed deductions of just over $11,500 in total. This amount was effectively based on statements he made on the telephone to ATO officers that he spent about $37 a day on meals and incidentals.
The taxpayer argued that the substantiation exemption in s900-50 of the ITAA 1997 applied so that he was entitled to deductions at least equal to the reasonable amounts published by the Commissioner (in TD 2010/19 and TD 2011/17 respectively), namely $84.90 a day for the 2011 year and $87 a day for the 2012 year.
The AAT disagreed, pointing to TR 2004/6 which states that if a taxpayer claims a deduction for more than the maximum reasonable amount specified in the relevant TD, the whole claim must be substantiated with written evidence, not just the excess over the reasonable amount. The taxpayer did not have the required written evidence. His claim was restricted to the $37 a day he said he spent.
As regards the administrative penalties, the Commissioner had applied a base penalty amount of 50%, having determined that the shortfall was the result of recklessness on the part of the taxpayer’s tax agent. The AAT upheld the penalties commenting that the tax agent’s behaviour “fell significantly short of the standard of care expected of a reasonable registered tax agent”.
(Re Davy and FCT [2017] AATA 376, AAT, Fice SM, 27 March 2017.)
[LTN 59, 29/3/17]