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Decision Impact Statement

Kaley and Commissioner of Taxation

Venue: Administrative Appeals Tribunal
Venue Reference No: 2010/5064-5065
Judge Name: Deputy President P E Hack SC
Judgment date: 8 July 2011
Appeals on foot: No.
Decision Outcome: Partly Adverse

Administrative Treatment (Implication on current Public Rulings and Determinations)

Relevant Rulings/Determinations:

Subject References:
income tax
allowable deductions
applicant claiming deductions for work-related expenses
objection decision under review varied in part

Précis

Outlines the ATO's response to this case which concerned the deductibility of a number of work related and business related expenses by an architect who claimed to be carrying on a business while employed.

Brief Summary of Facts

The Taxpayer is an architect who, during the 2007 and 2008 income years, was employed on a full time basis. In each of the 2007 and 2008 income years the Taxpayer made claims to deduct expenses said by him to have been incurred by him in connection with his profession. The Commissioner rejected the claims and issued amended assessments for the 2007 and 2008 income years. Penalties were imposed at a rate of 50% on the basis of recklessness. The Taxpayer sought a review of the Commissioner's decision.

Issues decided by the Tribunal

1.

  Whether the Applicant was entitled to claim work related deductions.

 Other than the amounts conceded by the Commissioner, the Taxpayer was not entitled to his work related deductions but for one amount for professional registration.

2.

  Whether the Applicant was carrying on a business to entitle him to claim the 2008 expenses as business deductions.

 The Tribunal was not satisfied the Taxpayer was carrying on a business during the 2008 income year.

3.

  Whether an ex gratia payment of $1,000 payment was assessable income.

 The payment was not assessable income.

4.

  Whether penalties were correctly imposed.

 Other than the 2007 income year, where the Commissioner conceded the penalty should not be imposed, no basis was shown for remission of the 2008 penalty.

ATO view of Decision

In the Commissioner's view, the decision reflects the application of settled principles to the particular factual situation. The decision does not impact upon any current rulings or published views of the Commissioner.

Administrative Treatment

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

None.

Implications for Law Administration Practice Statements

None.

Your comments

We invite you to advise us if you feel this decision has consequences we have not identified, or if a precedential decision such as a Public Ruling or an ATO ID requires reconsideration or amendment. Please forward your comments to the contact officer by the due date.

Date Issued:	9 December 2011
Due Date:	3 February 2012
Contact officer:	Louise Clarke
Email address:	louise.clarke@ato.gov.au
Telephone:	(02) 6216 2943
Facsimile:	(02) 6216 1247
Address:	ATO, Narellan St, Canberra, ACT

Legislative References:
Income Tax Assessment Act 1997 (Cth)
8-1
28-12
900-115

Case References:
Ferguson v. Federal Commissioner of Taxation
[1979] FCA 29
(1979) 37 FLR 310
9 ATR 873
79 ATC 4261