Hamilton and Commissioner of Taxation (Taxation)
[2017] AATA 734
•26 May 2017
Hamilton and Commissioner of Taxation (Taxation) [2017] AATA 734 (26 May 2017)
Division:TAXATION & COMMERCIAL DIVISION
File Number: 2016/1941
Re:Adam Hamilton
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:Deputy President I R Molloy
Date:26 May 2017
Place:Brisbane
The Tribunal affirms the objection decision under review.
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Deputy President I R Molloy
CATCHWORDS
TAXATION – allowable deductions – work related expenses – whether entitled to deductions for financial year
LEGISLATION
Income Tax Assessment Act 1997
SECONDARY MATERIALS
Taxation Ruling 2004/06
Taxation Determination 2012/17
REASONS FOR DECISION
Deputy President I R Molloy
26 May 2017
INTRODUCTION
The applicant, Adam Hamilton, was employed as a pipe fitter by Bechtel Construction (Australia) Pty Ltd at its site on Curtis Island, off Gladstone, from August 2012 to August 2016.
His employment was subject to the Bechtel Queensland LNG Projects Union Greenfield Agreement (“the Bechtel FWA”) signed on or about 1 June 2009.
The present application was lodged on 12 April 2016. It is for review of an objection decision made on 4 March 2016.
ISSUES
The dispute concerns Mr Hamilton’s entitlement to deductions for the financial year ended 30 June 2013.
The disputed deductions fall into three categories:
(1) Tool expenses;
(2)Mobile telephone expenses; and
(3) Overtime meal expenses.
There was also a dispute concerning a claim for travel expenses. This claim, however, was expressly abandoned at the hearing.
Deductible expenses
Section 8-1 of the Income Tax Assessment Act 1997 (“ITAA 1997”) provides relevantly:
(1)You can deduct from your assessable income any loss or outgoing to the extent that:
(a)it is incurred in gaining or producing your assessable income;…
Sub-division 900-B of the ITAA 1997 sets out the requirements to substantiate a claim for a work expense. Section 900-15 provides relevantly:
(1)To deduct a work expense:
(a)it must qualify as a deduction under some provision of this Act outside this Division; and
(b)you need to substantiate it by getting written evidence.
Tool expenses
Mr Hamilton was disallowed a claim of $945 for tool expenses. The Bechtel Code of Conduct refers to tools supplied by the company.
Mr Hamilton, who gave oral evidence, said that he and other tradespeople were not restricted to using tools provided by Bechtel. He said he had a tool bag which he took with him on the ferry between the mainland and the island. I accept this evidence.
Unfortunately, however, I am not satisfied that Mr Hamilton has made out a claim for tool expenses in the relevant financial year. He was quite unable to explain how the claim for $945 was arrived at. He admitted he thought his claim was barely a quarter of that amount, about $240.
Mr Hamilton was taken to credit card statements which included charges incurred at Bunnings hardware. These charges were circled on the credit card statements, although not by Mr Hamilton, and had been advanced in support of his claim for tool expenses.
There was no indication, however, what these charges were for. No receipts were produced to support or explain any of the purchases. Mr Hamilton made an attempt to explain some of them but it was apparent he really had no idea.
Amongst other things, he could not explain a credit entry from Bunnings, or what he could have been purchasing resulting in a charge on Christmas Day. My impression was he was just guessing at what the Bunnings charges might have been for.
Mr Hamilton also referred, in vague terms, to an online purchase he thought he had made. There was no documentation at all in respect of this. The effect of this evidence was further to undermine any claim based on the Bunnings charges.
In the end, I am not satisfied that Mr Hamilton has a claim for any expenses for tools in the relevant year.
Mobile phone expenses
Bechtel’s Code of Conduct prohibited employees from bringing mobile phones, particularly with cameras, onto the work-site.
Mr Hamilton said that he had approval, in the relevant year, to have a mobile phone on site.
He also said that, until about April 2014, mobile phones were regularly brought onto site, even by employees who did not have approval.
Mr Hamilton said he used his mobile phone on site “all the time”. He said the site was large and undeveloped when he started there.
In a statutory declaration made on 1 December 2015 he said he continually used his phone “for work purposes to communicate with work groups, arrange tools and equipment, speak to supervision, organise cranes and transport.”
The Commissioner has allowed $50 for some “minor use”. The disputed amount is $519.
The only evidence in support of Mr Hamilton’s claim are Telstra accounts. The accounts are in a family-member’s name, not Mr Hamilton’s name, although this is not decisive against him. His evidence was the phone number on the accounts was his number.
There is, however, no break-down on the accounts showing calls or other usage. There is nothing to say where any calls were made from, their time, or duration. Mr Hamilton said he thought the original accounts would have included this detail, but that what he produced was all he could obtain.
Having heard and observed Mr Hamilton’s evidence on this, I am not satisfied, in the absence of documentary detail of the type referred to, that he has made out a claim for mobile phone expenses exceeding the amount allowed by the Commissioner.
Overtime meal expenses
Mr Hamilton was paid a meal allowance of $10.20 per day. Specifically, the Bechtel FWA provided:
An employee shall receive a $10.20 meal allowance where the employee is required to work two hours or more overtime after the ordinary ceasing time, Monday to Friday.
Mr Hamilton claimed $4,986 for overtime meals, approximately $27.00 per day. The Commissioner allowed $1,876 being $10.20. The amount in dispute is therefore $3,110.
Mr Hamilton said he spent between $20 and $35 daily on overtime meals. His evidence on this, as on other matters, was vague.
He said he sometimes bought meals at night, and sometimes in the morning. He said he sometimes took them home with him. He agreed that meals could not be bought on the island.
Mr Hamilton did not produce any documentary evidence to support his claim. He said he paid cash. It is surprising, nonetheless, that he could not produce a single receipt.
Having regard to Mr Hamilton’s evidence on this, and other matters, I am not satisfied that he did incur expenses for overtime meals as he claims.
On behalf of Mr Hamilton reliance was placed on Taxation Ruling 2004/6 (“TR 2004/6”) which, relevantly, in respect of overtime meal expenses, provides an exception to the requirement under Subdivision 900-B of the ITAA 1997 to obtain and retain written evidence to substantiate a claim.
For each income year, the Commissioner of Taxation publishes amounts that are considered to be reasonable for the purposes of the substantiation exception. By Taxation Determination 2012/17 (“TD 2012/17”), for the 2012-13 income year, the Commissioner set the reasonable amount for overtime meal expenses at $27.10.
Whilst TR 2004/6 provides an exception to the requirement, under Subdivision 900-B of the ITAA 1997, to obtain and keep written evidence of an expense, still an expense must be incurred before a claim can be made.
A taxpayer who relies on TR 2004/6 (and publications such as TD 2012/17) may still be required to show that the expense claimed was actually incurred.
I am not satisfied, as I have said, that Mr Hamilton did incur the overtime meal expenses as he claims.
CONCLUSION
The objection decision is affirmed.
I certify that the preceding 37 (thirty -seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President I R Molloy
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Associate
Dated: 26 May 2017
Date of hearing: 19 May 2017 Advocate for the Applicant: Mr Robert Lamont
Corporate AccountantsCounsel for the Respondent:
Mr Vincent Brennan
ATO – Review and Dispute Resolution Group
Key Legal Topics
Areas of Law
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Tax Law
Legal Concepts
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Statutory Construction
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