Watts and Commissioner of Taxation (Taxation)

This matter came before Dr T Nicoletti, Senior Member, of the Administrative Appeals Tribunal concerning a review of the Commissioner of Taxation's objection decision. The applicant sought to challenge amended assessments for the 2013 and 2014 financial years, which disallowed certain claimed deductions and imposed administrative penalties for failure to take reasonable care. The core of the dispute revolved around the applicant's claims for work-related travel expenses, specifically a "travel allowance gap" and other associated expenses.

The primary legal issues before the Tribunal were whether the applicant had discharged her onus under section 14ZZK of the *Taxation Administration Act 1953* (Cth) to prove that the Commissioner's assessments were excessive, and what the correct assessments should be. This involved determining the deductibility of the claimed work-related travel expenses, particularly the applicant's method of calculating deductions based on the difference between her employer-provided travel allowance and the Commissioner's Reasonable Rates, and whether such a deduction was permissible under taxation law.

The Tribunal found that the applicant's claimed deductions for the "travel allowance gap" were not permissible. The applicant had claimed the difference between the travel allowance received and the Commissioner's Reasonable Rates, even though the allowance was paid as a reimbursement for expenses incurred. The Tribunal noted that Taxation Ruling TR 2004/6 permits deductions up to the Commissioner's Reasonable Rates for travel allowances, but only to the extent of expenses actually incurred. The applicant's taxation agent conceded that the applicant was effectively claiming a deduction for an expense she had not incurred, which is contrary to taxation law. The Tribunal also rejected the applicant's argument that a similar claim had been allowed in a prior financial year, as no evidence was presented to substantiate this assertion.

The Tribunal affirmed the Commissioner's objection decision. The applicant failed to discharge her onus to prove that the assessments were excessive. Consequently, the amended assessments and the imposed administrative penalties were upheld.