Sonic and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered an appeal by Mr. Sonic against decisions of the Commissioner of Taxation concerning his income tax assessment for the year ended 30 June 2014. The dispute primarily involved the deductibility of work-related expenses, specifically motor vehicle expenses and the purchase of tools and toolboxes, as well as issues relating to an administrative penalty. The Commissioner conceded that Mr. Sonic was entitled to a deduction for work-related motor vehicle expenses totalling $3,850, leaving the deductibility of other work-related expenses and the penalty as the central matters for determination.

The Tribunal was required to determine whether Mr. Sonic had discharged the onus of proving that his claimed deduction of $24,802 for tools and toolboxes was excessive and what the correct deduction should be. Additionally, the Tribunal had to consider the Commissioner's decisions regarding administrative penalties, specifically whether Mr. Sonic had failed to take reasonable care and whether the penalty should be remitted.

The Tribunal found that Mr. Sonic had failed to discharge the burden of proof under section 14ZZK(b)(i) of the *Taxation Administration Act 1953* regarding the claimed deduction for tools and toolboxes. The Tribunal was not satisfied that Mr. Sonic had purchased tools and toolboxes to the claimed amount, noting the unusual circumstances of the alleged cash transaction for $24,750 from a private individual, which Mr. Sonic claimed was funded by gambling winnings. The Tribunal also agreed with the Commissioner's decisions concerning the administrative penalties, finding no basis to exercise discretion to remit any part of the penalty, as no submissions were made by Mr. Sonic in support of remission.

Consequently, the Tribunal set aside the Commissioner's objection decision in relation to the amended assessment for the year ended 30 June 2014 and remitted the matter to the Commissioner to issue an assessment reflecting the conceded deduction for motor vehicle expenses of $3,850. The Tribunal affirmed the Commissioner's objection decision relating to the assessment of the administrative penalty.