Spencer v CofT – AAT significantly reduced the amount of work-related expenses the taxpayer could deduct

On 3.5.21, the AAT handed down a decision substantially reducing the amount of work related expenses claimed by the taxpayer – business travel, protective clothing and internet/mobile costs.

See below for further details.

[Tax Month – May 2021]

The facts were these.

• The taxpayer was a “Water Services Operator, Service Delivery” employed by the Tasmanian Water & Sewerage Corporation (TasWater).
• His role required him to be in the field attending to tasks such as water and sewerage sampling, undertaking the maintenance and repair of water and sewerage assets and equipment and participating in the on-call roster and responding appropriately to emergency call-out situations.
• The physical requirements of the role included exposure to extreme weather including hot, cold and other conditions.

For the 2017 and 2018 income years, the taxpayer claimed work-related car expenses (using the cents per kilometre method) totalling $13,200, work-related clothing expenses (bamboo socks) of $20 and home internet and mobile phone expenses totalling just over $1,600 (for each year the ATO allowed $50 for home internet expenses and $50 for mobile phone expenses).

The AAT decided as follows.

1. MOTOR VEHICLE EXPENSES – Although the taxpayer was allowed to use his own vehicle for work, the AAT decided that car expenses incurred in voluntarily visiting work sites, outside of the taxpayer’s on-call duties, were not incurred in the course of producing the taxpayer’s assessable income. However, after reviewing the summary of call-outs recorded in the taxpayer’s diaries, the AAT allowed deductions for 2017 and 2018 of $1,530 and $2,706, respectively (total $4,236 in total, compared with a total claimed of $13,200).
2. CLOTHING EXPENSES – The bamboo socks were not deductible as there was no evidence that they were protective in nature. In contrast, the ATO allowed the taxpayer a deduction for gloves and a beanie as he was required to work in cold conditions (2017 – $21.50 & 2018 – $29.75).
3. INTERNET AND MOBILE EXPENSES – The claims for home internet expenses and mobile phone expenses (above the $50 allowed by the ATO) were rejected largely because there were no reliable contemporaneous records.

(Spencer v CofT [2021] AATA 1106, AAT, Rieper M, 3 May 2021.)

[11.5.21; LTN 85, 6/5/21]