McKenzie and Commissioner of Taxation (Taxation)

The case of *McKenzie and Commissioner of Taxation (Taxation)* concerned an application for merits review by Mr. McKenzie against the Commissioner's disallowance of his objection to income tax assessments. Mr. McKenzie sought to deduct relocation expenses totalling $8,598.82 incurred in moving from Canberra to Perth, claiming they were work-related. The Commissioner had disallowed these deductions, leading to Mr. McKenzie's objection and subsequent application to the Tribunal.

The primary legal issue before the Tribunal was whether Mr. McKenzie was entitled to deductions pursuant to section 8-1 of the *Income Tax Assessment Act 1997* for his relocation expenses. This required determining whether the expenditure was incurred in gaining or producing assessable income, and conversely, whether it was of a private or domestic nature. Mr. McKenzie contended that his mental health deteriorated due to workplace issues, leading to a court order for him to relocate to Perth, making the expenses mandatory and therefore deductible. The Commissioner argued that a sufficient nexus between the expenditure and the production of assessable income was not established, and that the expenses were private or domestic in nature.

The Tribunal found that while Mr. McKenzie felt the Department's handling of his case was central to his claim, this was irrelevant to the question of tax deductibility. The onus was on Mr. McKenzie, pursuant to section 14ZZK of the *Taxation Administration Act 1953*, to prove that his relocation expenses were deductible. The Tribunal held that such expenses relate to the activity of getting to work rather than the activity of working, and that the distinction between a mandatory and involuntary transfer did not alter this principle. Consequently, Mr. McKenzie failed to meet the burden of proof.

The Tribunal affirmed the Commissioner's reviewable decision of 8 February 2018, disallowing the deduction of Mr. McKenzie's relocation expenses.