Rafferty and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal (AAT) considered a dispute between Ms. Rafferty (the Applicant) and the Commissioner of Taxation (the Respondent). The Applicant sought a review of the Respondent's decision to disallow her claimed deductions for work-related car expenses totalling $22,147.00 for the income year ending 30 June 2013. This disallowance resulted in an amended assessment and an administrative penalty of 25% of the tax shortfall, imposed on the basis that the Applicant failed to take reasonable care in preparing her tax return. The Applicant contended that the car expenses were deductible because she was required to transport bulky tools and equipment, specifically safety and protective clothing supplied by her employer, to and from work.

The primary legal issue before the Tribunal was whether the Applicant's claimed car expenses were deductible under section 8-1 of the Income Tax Assessment Act 1997. This section permits deductions for losses and outgoings incurred in gaining or producing assessable income, provided they are not of a capital, private, or domestic nature. Additionally, the Tribunal had to determine if the administrative penalty for failing to take reasonable care was correctly imposed and if there were grounds for its remission. The Applicant bore the burden of proving that the assessment was excessive or incorrect, as stipulated by section 14ZZK of the Taxation Administration Act 1953.

The Tribunal found that the Applicant had not satisfied the burden of proof required under section 14ZZK. While the Applicant asserted the need to carry bulky equipment, the Tribunal concluded that the items in question, described as safety and protective clothing and equipment supplied by her employer, did not constitute "bulky tools and equipment" in a manner that would render the car expenses deductible under section 8-1. The Tribunal determined that the penalty was correctly imposed and calculated, and no basis for remission was established. Consequently, the Tribunal confirmed the Respondent's decision under review.