The AAT has affirmed the Commissioner’s objection decision concerning a taxpayer’s deduction claim for work-related expenses mainly for travel expenses, but held that the administrative penalty should be remitted to nil.
The taxpayer was a truck driver and worked long shifts. He drove from his home in Adelaide to where he worked in Port Augusta. While he was in Port Augusta, he lived in a motel. For the 2009-10 tax year, the taxpayer’s tax agent filed a tax return disclosing wages of $73,154 and deduction claims for work-related car expenses of $4,710 and other work-related expenses of $28,354 (it is understood this amount included $28,000 for travel expenses, $300 for mobile phone expenses and $54 for work diaries). After an audit, the Commissioner issued an amended assessment reducing the claims for work-related car expenses and other work-related expenses. The Commissioner also imposed an administrative penalty of 25%. The taxpayer objected and the Commissioner allowed, in part, work-related car expenses and travel expenses, but disallowed the objection in relation to the mobile phone expenses. The taxpayer’s objection in relation to the administrative penalty was also disallowed.
The AAT found the remaining work-related travel expenses of $21,751 in dispute were not deductible under s 8-1 of the ITAA 1997. It also found the taxpayer did not receive a bona fide travel allowance within the meaning of “travel allowance” in s 900-30(3) of the ITAA 1997. The Tribunal also found the taxpayer was not entitled to rely on the exception from substantiation in s 900-50. Accepting that the taxpayer no longer wanted to pursue his claim for mobile phone expenses, the AAT said no deduction (or further deduction) was allowable. In relation to the administrative penalty, the AAT said the penalty was “harsh” in the circumstances. In conclusion, the AAT affirmed the objection decision as it applied to the substantive tax liability, but held the administrative penalty should be remitted to nil.
(AAT Case [2013] AATA 471, Re Fox and FCT, AAT, Ref Nos: 2011/4866, 2012/2838, Dunne, SM, 8 July 2013.)
[LTN 131, 10/7/13]