Kander and Commissioner of Taxation (Taxation)

This matter concerned an application by Ms Kander for review of decisions by the Commissioner of Taxation disallowing objections against her income tax assessments for the 2013 and 2014 income years. The dispute centred on whether certain amounts directed by Ms Kander to be paid to her superannuation fund by her employer, Westpac, should be treated as part of her ordinary income or as fringe benefits. The Administrative Appeals Tribunal was required to determine if Ms Kander had discharged her burden of proving that these amounts were not included in her salary under the contract or arrangement with Westpac.

The Tribunal was required to determine whether the amounts Ms Kander directed Westpac to contribute to her superannuation fund constituted ordinary income derived by her, or if they were fringe benefits. This involved considering the nature of the arrangement between Ms Kander and Westpac, particularly whether the contributions were made under a salary sacrifice arrangement or as post-tax employee nominated contributions. The Tribunal also had to assess whether the amounts were applied or dealt with on Ms Kander's behalf or as she directed, which would render them ordinary income under section 6-5(4) of the Income Tax Assessment Act 1997 (Cth).

The Tribunal found that Ms Kander had not discharged her burden of proof. Evidence showed that Ms Kander used Westpac's "Peoplexpress" portal to initiate contributions, selecting the "Superannuation" option under a section for managing payroll deductions, specifically choosing "Employee Nominated Contributions (Post-tax) – DB". This process included a review screen before finalisation, and her payslips and the super fund's statements consistently described these as "post-tax" or "after-tax" contributions. The Tribunal applied the principle that if an employee directs their employer to deal with an amount of salary in a particular way on their behalf, that amount is nevertheless ordinary income derived by the employee. The Tribunal concluded that the arrangement was not a salary sacrifice arrangement for pre-tax contributions, but rather a direction for post-tax contributions from her salary.

The Tribunal affirmed the Commissioner's decisions, finding that the amounts in question were properly taxed as part of Ms Kander's ordinary income.