CGWT and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered the dispute between CGWT (the Applicant) and the Commissioner of Taxation (the Respondent) concerning the deductibility of certain expenses claimed by the Applicant in her income tax return. The Applicant sought to claim deductions for various expenditures, including phone, internet, and electricity charges, as well as expenses related to attending events and therapeutic treatments. The core of the dispute revolved around whether these expenses were incurred in gaining or producing assessable income, or were necessarily incurred in carrying on a business for the purpose of gaining assessable income, and the appropriate apportionment of expenses with a private purpose.

The Tribunal was required to determine the extent to which the Applicant's claimed expenses were deductible. Specifically, it needed to assess the nexus between the claimed losses or outgoings and the earning of assessable income, and to consider the appropriate apportionment of expenditures that served both private and employment-related purposes, such as phone, internet, and electricity charges. The Tribunal also had to consider whether the Applicant's claim for therapeutic treatments was supported by evidence of a direction from a legally qualified medical practitioner.

The Tribunal accepted that the Applicant had incurred the asserted expenditures, with the exception of some top-up claims and kilometre-based motor vehicle claims. However, it found that the evidence supporting the nexus between these expenditures and the earning of income, particularly for phone, internet, and electricity charges, was limited to the Applicant's uncorroborated testimony, which was at times contradicted or improbable. Despite this, the Tribunal acknowledged concessions made by the Commissioner regarding certain aspects of the Applicant's claim. The Tribunal also considered evidence from the Applicant's former manager, Mr. N, who testified that lecturers were expected to stay abreast of industry developments by attending events and that the Applicant had used her experiences from attending events, such as the London Olympics and a sailing festival, to create class content.

The Tribunal set aside the Commissioner's decision and allowed the Applicant's objection to the extent conceded by the Respondent. It also allowed a further deduction of $680 for mobile phone and internet costs and remitted the assessment back to the Commissioner for amendment, with a consequential reduction in any applicable penalty.