Williamson and Commissioner of Taxation

[2006] AATA 1507

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 1507

ADMINISTRATIVE APPEALS TRIBUNAL)
  )       No. NT2006/142
TAXATION APPEALS DIVISION                )

Re      DAVID WILLIAMSON

Applicant

AndCOMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal  Senior Member M D Allen

Date of Decision                 8 December 2006

Date of Written Reasons   19 December 2006

Place  Sydney

DecisionFOR the reasons given orally at the conclusion of the hearing in this matter, the Decision under Review is affirmed.

(Sgd) M.D. ALLEN
  ..................................................

Senior Member

CATCHWORDS

TAXATION - whether travel expenses incurred by the Applicant during the year ended 30 June 2005 in travelling between his home and his work are tax deductible – whether the administrative penalties imposed should be remitted – travel expenses from home to work are not tax deductible – the Tribunal found that the circumstances were in no way special or unusual – the decision under review is affirmed.

Income Tax Assessment Act 1997 – sections 51(1), 251M
Taxation Administration Act 1953

Commissioner of Taxation v Payne (2001) HCA 3
Lunney v Commissioner of Taxation (1958) 100 CLR 478
Commissioner of Taxation v Edwards (1994) 28 ATR 87
Ryvitch v Federal Commissioner of Taxation (2002) ATC 2196

REASONS FOR DECISION

8 December 2006   Senior Member M D Allen

1. At the conclusion of the hearing of the above matter the terms of the decision intended to be made and the reasons therefor were stated orally.  After service upon the Applicant and Respondent of a copy of the decision that was in fact made, the Respondent pursuant to sub-section 43(2A) of the Administrative Appeals Act 1975, requested the Tribunal to furnish to the Respondent a statement in writing of the reasons of the Tribunal for its decision.

2. The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service.  Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reasons for the said decision.

3. The said transcript is annexed thereunto and furnished to the Applicant and to the Respondent as it is the reasons for the Tribunal’s decision.

I certify that this and the preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen

Signed:      [Amanda Aitken]            .....................................................................................

Associate

Date of Hearing  8 December 2006            
Date of Decision  8 December 2006

Representative for the Applicant      A. Schwartz & Co.

Solicitor for the Respondent              ATO Legal Services

DRAFT DECISION   [11.05am]
ADMINISTRATIVE APPEALS TRIBUNAL
Matter No N2006/142
By MR ALLEN, Senior Member
WILLIAMSON and COMMISSIONER OF TAXATION
SYDNEY, FRIDAY, 8 DECEMBER 2006

MR ALLEN:   By application made 2 June 2006, the applicant sought review of an objection decision by the respondent, following the rejection of a claim by the applicant regarding travel, being motor vehicle expenses, and the imposition of a penalty on the basis that the applicant had made a false or misleading statement in his return.

The parties are to be congratulated in that they managed to come to a Statement of Agreed Facts.  The facts are within a relatively small compass.  That is to say, the applicant was offered a position in Canberra at a considerably increased salary and he took up that position.  His family remained in Sydney as it was impractical for the applicant and his family to move to Canberra immediately, although that was their intention.

It would appear that for other domestic reasons, the proposed move to Canberra did not take place and the applicant resumed employment in Sydney.  However, during the relevant period, the applicant’s family, as stated, remained in Sydney while he commuted to Canberra for the purposes of his employment.  In his income tax return for the year end of 30 June 2005, which return was lodged electronically, he claimed work related car expenses in the sum of $13,237, with a code B, indicating that he had used the log book method of calculation.

He was subsequently asked for further and better particulars as to that claimed deduction, and the respondent then disallowed the objection as it was of a private or domestic nature.  That is to say, it was simply the applicant travelling between his place of residence in Sydney – that is to say, the place where his family resided and to a rented premises in Canberra where he resided during the week while he carried out his employment.

To my point it is a very straightforward set of circumstances, and the applicant says in a statutory declaration which became Exhibit A2 in these proceedings, that the claim was made after consulting his tax agent and the tax agent stated that it was a grey area. To say that the question was a grey area is somewhat puzzling to me, for as was pointed out by the High Court in Commissioner of Taxation v Payne (2001) HCA 3, at paragraph 12 of the majority decision:

The application of subsection 51(1) of the Income Tax Assessment Act, to expenses incurred in travelling between a taxpayer’s place of residence and a place where income is derived has long been regarded as settled.  Such expenses are not deductible.  In the leading decision on that question in this court, Lunney v Commissioner of Taxation, Dixon CJ said that the question had then been accepted as settled for the last two generations.

In passing I note that the applicant’s tax agent who presented his case here, and also submitted a statutory declaration, has made the statement that he had consulted the Australian Tax Handbook.  I have had recourse to the Australian Tax Handbook, published by Butterworths for the year 1994 but in any event I doubt if 1995 or 2005 would be different.

So as late as 1994, the Handbook was saying travel expenses from home to work are generally not an allowable deduction.  The leading case which decided this was the decision of the Full Court of the High Court in Lunney v FCT.  It seems to me that there is much established authority for the proposition that such expenses are not deductible.  There was then a penalty imposed pursuant to paragraph 284(75)(1) of the Act, and relief is sought from that penalty.

The provisions of penalties under the Tax Administration Act are potentially severe in that the penalty is imposed upon the taxpayer notwithstanding that he has sought advice from a tax agent.  Suffice it to say that the taxpayers remedy is then, pursuant to section 251M of the Income Tax Assessment Act, which provides that a taxpayer may recover from a registered tax agent any additional tax or interest which the taxpayer has become liable to pay through the negligence of the tax agent.

The argument on behalf of the applicant has been that the case of Commissioner of Taxation v Edwards provides a basis for the deduction of expenses such as those incurred by the applicant in special or unusual circumstances.  I cannot agree that the circumstances pertaining to this applicant are in any way special or unusual.  It is, I would venture to suggest, a very common situation that a person has his place of residence in one city or town, and is forced to commute to another place in order to pursue their occupation.

The very long standing authority of the High Court in Lunney’s case cannot be overturned by side-wind such as Edwards. It seems to me that when one has regard to all the facts, the situation is really very similar to that referred to by Senior Member Pasco in Ryvitch v Federal Commissioner of Taxation (2002) ATC 2196, where the Senior Member then said:

It would have been expected that some greater degree of caution should have been exercised in making the claims that were made. There were clear doubts on the basis of the agreement. In view of these clear doubts, it is reasonable to have expected that either a private ruling under part 4AA of the Taxation Administration Act should have been sought or a matter raised for the attention of the respondent pursuant to subsection 169A(2) of the Income Tax Assessment Act 36.

It seems to me, therefore, that in the particular circumstances of this case, there exists no ground for the amelioration in any way, of the penalty imposed.  The decision under review is therefore affirmed.

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