Decision impact statement

Fardell and Commissioner of Taxation

Court Citation(s):
[2011] AATA 725
2011 ATC 10-208
(2011) 85 ATR 812

Venue: Administrative Appeals Tribunal
Venue Reference No: 2010/3760-3761
Judge Name: SM Frost, DP Block
Judgment date: 19 October 2011
Appeals on foot: Appeal was discontinued.
Decision Outcome: Partly Adverse

Impacted Advice

Relevant Rulings/Determinations:

• N/A

Subject References:
Living away from home allowance
Connection to employee's earning activities
Substantiation requirements
Travel allowance or loading
Relief from substantiation

Précis

Outlines the ATO's response to this case which concerns whether a linehaul truck driver was entitled to deductions for work related travel expenses in respect of meals.

Brief summary of facts

During the relevant income years, the taxpayer was a truck driver employed by Toll Holdings Limited.

Under the relevant awards, the taxpayer was entitled to an allowance when, in a 24 hour period, the taxpayer travelled more than 500 kilometres and the journey involves a principal place of commencement and a principal place of destination.

The taxpayer was not required to sleep away from home in order to receive the allowance. In his income tax returns, the taxpayer returned allowance income and claimed deductions for "work related travel expenses". The taxpayer's claims were based on the Commissioner's reasonable daily rates multiplied by the number of times the taxpayer received the living away from home allowance (LAFHA) in the relevant year. The taxpayer did not provided any written evidence of the deductions said to have been incurred. These deductions were subsequently disallowed by the Commissioner.

Issues decided by the tribunal

1. Whether the deductions met the requirements of s8-1 ITAA 1997 during the income years?

No, the taxpayer could not demonstrate that he incurred the amounts claimed.

2. Whether the taxpayer was required to substantiate the deductions with written evidence pursuant to s900-15 ITAA 1997 and Subdivision 900-E ITAA 1997?

Yes, the taxpayer was required to substantiate the deductions.

3. Whether the requirements for an exception to the substantiation requirements above were satisfied for the purposes of s900-50 for "domestic travel allowance expenses"?

No, the taxpayer was not entitled to rely on an exception for substantiation because he did not receive a travel allowance.

4. Whether there was any other basis for relief from the substantiation requirements?

No, the taxpayer had no other basis for relief from substantiation.

5. Whether the taxpayer and/or his tax agent failed to take reasonable care in claiming the deductions liable to a penalty of 25% of the shortfall amount pursuant to s.284-75(1) and s.284-90(1) of Schedule 1 of the Taxation Administration Act 1953 ("TAA")?

Yes, the taxpayer's agent failed to take reasonable care.

6. If so, whether there is any basis for remission of the penalty pursuant to s.298-20 of Schedule 1 of the TAA?

Yes, the penalty was remitted in full as the imposition of the penalty produced a harsh result.

Tax Office view of Decision

The decision reflects the application of settled principles to a particular factual situation. The decision does not present any new principle, and does not impact upon any current rulings or published views of the Commissioner.

In relation to the penalty, the Commissioner's view is that remission is considered on a case by case basis and turns on the facts of each individual case.

Administrative Treatment

Implications for ATO Precedential documents (Public Rulings & Determinations etc)

None.

Implications for Law Administration Practice Statements

None.

Legislative References:
Income Tax Assessment Act 1997 (Cth)
s 8-1
s 900-15
s 900-50

Taxation Administration Act 1953 (Cth)
Schedule 1 s 284-75
Schedule 1 s 284-90
Schedule 1 s 298-20

Case References:
Commissioner of Taxation v Anstis
(2010) 241 CLR 443
[2010] HCA 40
76 ATR 735
2010 ATC 20-221

Dixon v Federal Commissioner of Taxation
(2008) 167 FCR 287
[2008] FCAFC 54
2008 ATC 20-015
69 ATR 627

Federal Commissioner of Taxation v Cooper
(1991) 26 FCR 177
(1991) 21 ATR 1616
91 ATC 4396

Federal Commissioner of Taxation v Dalco
(1990) 168 CLR 614
[1990] HCA 3
20 ATR 1370
90 ATC 4088

George v Federal Commissioner of Taxation
(1952) 86 CLR 183
[1952] HCA 21

Re McIntosh and Federal Commissioner of Taxation
(2001) 47 ATR 1242
[2001] AATA 702
2001 ATC 2272

Roads and Traffic Authority of New South Wales v Commissioner of Taxation
(1993) 43 FCR 223
[1993] FCA 314
26 ATR 76
93 ATC 4508