Hannavy and Commissioner of Taxation

[2001] AATA 370

DECISION AND REASONS FOR DECISION [2001] AATA 370

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No QS2001/3

sitting as the SMALL TAXATION CLAIMS TRIBUNAL       )          
           Re      CHARLES HANNAVY      
  Applicant
           And    COMMISSIONER OF TAXATION          
  Respondent

DECISION

Tribunal       Mr. D.W. Muller, Senior Member

Date2 May 2001    

PlaceCoolangatta

Decision      The Tribunal affirms the objection decision under review.     
  ..............(Signed)................................
  D.W. MULLER
  SENIOR MEMBER

CATCHWORDS
TAXATION – whether lump sum payment for long service leave can be split between two tax years
Case K67 78 ATC 664
Case V163 88 ATC 1081

REASONS FOR DECISION

Mr. D.W. Muller, Senior Member             

1. This is an application to review a decision to refuse to split a lump sum payment made for annual leave and long service leave, between two taxation years.

2. On 7 April 2000 the applicant was paid $18,721.48 by his employer for 21 weeks wages.  The wages constituted a combination of annual and long service leave.

3. The said payment had the effect of raising the applicant's assessed taxable income for the tax year ending 30 June 2000, to $55,306.  If he had not received his wages in advance, he would have had a taxable income of about $48,000 for the tax year in question.

4. The results of having a taxable income in excess of $50,000 were two fold.  The first was that the applicant paid tax at the highest marginal rate for many thousands of dollars, when he would not otherwise have done so.  The other was that he had to pay the Medicare levy of $500 which he otherwise would not have had to do.

5. The applicant submitted that the lump sum should have been apportioned between the two tax years ending 30 June 2000 and 2001.

6. Whilst the Tribunal sympathises with the applicant, the taxation legislation has been consistently applied in holding that employees are assessable upon the amounts actually received by them in a particular year of income (irrespective of whether some part could be said to relate to another year of income). See Case K67 78 ATC 664 at 665. See also Case V163 88 ATC 1081.

7. The Tribunal affirms the decision under review.

   I certify that the 7 preceding paragraphs are a true copy of the reasons for the decision herein of Mr. D.W. Muller, Senior Member

   Signed:         .....................................................................................
              R. Hayes, Associate

   Date/s of Hearing  2 May 2001
   Date of Decision  2 May 2001
   Applicant  Mr. C. Hannavy, himself
   Respondent  Mr. P. Flintoft, departmental advocate