Decision impact statement

Weeks v Commissioner of Taxation

Court citation:
High Court
[2013] HCASL 100
Full Federal Court
[2013] FCAFC 2
(2013) 209 FCR 264
2013 ATC 20-366
88 ATR 368

Venue: Federal Court of Australia
Venue Reference No: High Court of Australia: B12 of 2013; Full Federal Court of Australia: QUD 210 of 2012
Judge Name: High Court of Australia: Hayne & Crennan JJ; Full Federal Court of Australia: Dowsett, Besanko & Robertson JJ
Judgment date: High Court of Australia: 26 June 2013; Full Federal Court of Australia: 25 January 2013
Appeals on foot: No - the taxpayer's application for special leave to appeal refused
Decision Outcome: Favourable to the Commissioner

Impacted Advice

Relevant Rulings/Determinations:

• Not Applicable

Subject References:
genuine redundancy payment
employment termination payment ('ETP')

Précis

Outlines the ATO's response to this case which concerns whether a termination payment is a genuine redundancy payment and, if not, whether there is inconsistency between that outcome and the taxpayer as an employee being excess to requirements.

Brief summary of facts

The taxpayer is a former employee of the Australian Taxation Office who was employed as an ongoing Executive Level 2 APS employee prior to the termination of her employment.

The Public Service Act 1999 (Cth) (Public Service Act) provides:

29(3)

For an ongoing APS employee, the following are the only grounds for termination:

(a)

the employee is excess to the requirements of the Agency;

In October 2009, the taxpayer requested that she be considered for a voluntary termination pursuant to Clause 97 of the ATO (Executive Level 2) Agreement 2009 ("EL2 Agreement").

Clause 97 of the ATO (Executive Level 2) Agency Agreement 2009 (Agency Agreement) provides:

97.1

An EL2 employee whose services can no longer be effectively used in their current job because of changes in technology or work methods or changes in the nature, extent or organisation of the ATO will be given support in considering career alternatives or will be able to leave the ATO with dignity and respect for the contribution they have made in the past.

97.2

These procedures are only to be used where an individual EL2 employee's job is still required and the EL2 employee will be replaced subsequent to action under this clause. Where the actual job is no longer required, the arrangements under clause 98 must be used.

The taxpayer then made an application for a private ruling and the Commissioner issued a private ruling that the payment received on termination was not tax free as a genuine redundancy payment.

The taxpayer lodged an objection against the private ruling and later requested the objection to the ruling be treated as an objection to the assessment as her assessment had since issued.

The Commissioner made an objection decision disallowing the objection.

The taxpayer appealed to the Administrative Appeals Tribunal and it held that the payment was not a genuine redundancy payment.

The taxpayer appealed to the Federal Court and Justice Reeves handed down a decision on 4 April 2012 dismissing the appeal with costs.

The taxpayer then appealed to the Full Federal Court. On 25 January 2013, the Full Federal Court handed down a favourable decision and unanimously dismissed the taxpayer's appeal with costs.

On 22 February 2013, the taxpayer filed a special leave application which was dismissed on 26 June 2013.

Issues decided by the court

The Full Court unanimously dismissed the taxpayer's appeal with costs for the following reasons:

1.

The payment made to the taxpayer in relation to the termination of her employment was not a tax free "genuine redundancy payment" for the purposes of subsection 83-175(1) of the Income Tax Assessment Act 1997 ("ITAA 1997").

2.

There is no inconsistency between the taxpayer as an employee being excess to requirements under paragraph 29(3)(a) of the Public Service Act 1999 and her position not being genuinely redundant under section 83-175 of the ITAA 1997.

ATO view of Decision

The Full Court's decision is consistent with the ATO view.

Administrative Treatment

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

Not applicable

Implications on Law Administration Practice Statements

Not applicable

Legislative References:
Income Tax Assessment Act 1997
s 83
s 175(1)

Public Service Act 1999
s 29(3)(a)

Evidence Act 1995
s 153

Case References:
Dibb v Commissioner of Taxation
[2004] FCAFC 126
(2004) 136 FCR 388
(2004) 55 ATR 786
(2004) 2004 ATC 4555

Waterford v Commonwealth
(1987) 163 CLR 54

Zegarac v Dellios
[2007] FCAFC 58