WTPG and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2015/6427)
Judgment date: 30 November 2016
Date published: 23 February 2017

Summary of decision:
Outlines the ATO's response to this case, which concerns whether travel expenses incurred by a person for their spouse to accompany them to a work related conference as their carer are deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), denied under section 26-30 of the ITAA 1997, and whether the Commissioner's decision breached the Disability Discrimination Act 1992.

Overview of facts:
During the income year ending 30 June 2014, the Applicant paid for his wife to travel with him to London so that she could be his personal carer while he attended two work-related conferences. The Applicant suffers from medical conditions that mean he is unable to walk any distance without assistance and cannot stand for any length of time. | The Applicant's employer was aware of his disabilities but did not provide him with a carer or assistant to travel with him. None of the employer's other staff members were willing to accompany him to act as his carer. | The Applicant's wife acted as his carer both on the flights to and from the United Kingdom and during his time there. During that time, she helped him to dress, assisted him with his personal hygiene, showering and toilet needs and supported him when he was walking and standing. Her assistance was necessary to enable the Applicant to travel to, and attend, both conferences. The Applicant's wife did not perform any tasks relating to the duties he performed in the course of employment. She was not employed by the Applicant's employer and did not receive any payment for the assistance that she gave him. | The Applicant sought a private ruling on whether the travel expenses, being his wife's airfares amounting to $9,767.52, were deductible for the 2014 year. The Commissioner made a private ruling that the travel expenses were not deductible. | The Applicant objected to the private ruling and the Commissioner agreed to treat the objection as an objection to the Applicant's assessment (which had been issued) and disallowed it in full. The Applicant applied to the Tribunal for review of that objection decision primarily on the ground that it constitutes discrimination under the Disability Discrimination Act 1992. | It is noted that the Tribunal decision refers to the objection decision relating to the private ruling. However this is not considered to affect the decision, as the facts relied on by the Tribunal were agreed by the parties. | Issues decided by the court | The issues before the Tribunal were whether: • the travel expenses were deductible in the 2014 year under section 8-1 of the ITAA 1997 • section 26-30 of the ITAA 1997 operates to deny the Applicant a deduction for travel expenses • the Commissioner's objection decision was in breach of the Disability Discrimination Act 1992. | • the travel expenses were deductible in the 2014 year under section 8-1 of the ITAA 1997 • section 26-30 of the ITAA 1997 operates to deny the Applicant a deduction for travel expenses • the Commissioner's objection decision was in breach of the Disability Discrimination Act 1992. | Application of section 8-1 of ITAA 1997 | The Tribunal concluded that the travel expenses were not deductible, as paragraph 8-1(1)(a) of the ITAA 1997 was not satisfied. The Tribunal found that the expenses were incurred in the course of enabling the Applicant to undertake his duties rather than in the course of his undertaking those duties. The Tribunal noted that the Applicant did not pay his wife's expenses so that she could carry out tasks associated with his employment so that he could be said to have incurred the expenditure in the course of gaining his assessable income. | Although the Tribunal did not need to then consider whether the travel expenses were of a private or domestic nature under paragraph 8-1(1)(b) of the ITAA 1997, the Tribunal concluded that the principles in Re Frisch and the Federal Commissioner of Taxation [2008] AATA 462, (2008) 72 ALJR 1 applied in the present case. The nature of the personal assistance required by the Applicant equated with the expenses being of a private or domestic nature. | Application of section 26-30 of ITAA 1997 | The Tribunal was not required to make a finding on the operation of section 26-30 of the ITAA 1997, as it had concluded that the travel expenses were not deductible under section 8-1 of ITAA 1997. However, the Tribunal considered that section 26-30 of the ITAA 1997 imposes a blanket prohibition upon claiming a relative's travel expenses as a deduction, but it is a prohibition that is ameliorated if the relative performed substantial duties as the taxpayer's employer's employee or as the taxpayer's employee and it is reasonable to conclude that the relative would have accompanied the taxpayer even without the personal relationship between them. | Discrimination under the Disability Discrimination Act 1992: | The Tribunal also held that that the Commissioner's objection decision was not in breach of the Disability Discrimination Act 1992. There was no discrimination within the meaning of that Act in the Commissioner's application of section 8-1 of the ITAA 1997.

Issues decided:
The issues before the Tribunal were whether: • the travel expenses were deductible in the 2014 year under section 8-1 of the ITAA 1997 • section 26-30 of the ITAA 1997 operates to deny the Applicant a deduction for travel expenses • the Commissioner's objection decision was in breach of the Disability Discrimination Act 1992. • the travel expenses were deductible in the 2014 year under section 8-1 of the ITAA 1997 • section 26-30 of the ITAA 1997 operates to deny the Applicant a deduction for travel expenses • the Commissioner's objection decision was in breach of the Disability Discrimination Act 1992. | Application of section 8-1 of ITAA 1997: The Tribunal concluded that the travel expenses were not deductible, as paragraph 8-1(1)(a) of the ITAA 1997 was not satisfied. The Tribunal found that the expenses were incurred in the course of enabling the Applicant to undertake his duties rather than in the course of his undertaking those duties. The Tribunal noted that the Applicant did not pay his wife's expenses so that she could carry out tasks associated with his employment so that he could be said to have incurred the expenditure in the course of gaining his assessable income. Although the Tribunal did not need to then consider whether the travel expenses were of a private or domestic nature under paragraph 8-1(1)(b) of the ITAA 1997, the Tribunal concluded that the principles in Re Frisch and the Federal Commissioner of Taxation [2008] AATA 462, (2008) 72 ALJR 1 applied in the present case. The nature of the personal assistance required by the Applicant equated with the expenses being of a private or domestic nature. | Application of section 26-30 of ITAA 1997: The Tribunal was not required to make a finding on the operation of section 26-30 of the ITAA 1997, as it had concluded that the travel expenses were not deductible under section 8-1 of ITAA 1997. However, the Tribunal considered that section 26-30 of the ITAA 1997 imposes a blanket prohibition upon claiming a relative's travel expenses as a deduction, but it is a prohibition that is ameliorated if the relative performed substantial duties as the taxpayer's employer's employee or as the taxpayer's employee and it is reasonable to conclude that the relative would have accompanied the taxpayer even without the personal relationship between them. Discrimination under the Disability Discrimination Act 1992: The Tribunal also held that that the Commissioner's objection decision was not in breach of the Disability Discrimination Act 1992. There was no discrimination within the meaning of that Act in the Commissioner's application of section 8-1 of the ITAA 1997.

ATO view of decision:
The Tribunal's reasoning is consistent with the Commissioner's view on the deductibility of travel expenses under section 8-1 of the ITAA 1997, and the operation of section 26-30 of the ITAA 1997. | The Commissioner considers that the Tribunal's decision that that there was no discrimination within the meaning of the Disability Discrimination Act 1992 in the Commissioner's application of section 8-1 is correct.

Administrative treatment:
Implications for impacted ATO precedential documents (Public Rulings and Determinations) | None. | Implications for impacted Law Administration Practice Statements | None.

Legislative references: Income Tax Assessment Act 1997 8-1 26-30 Income Tax Assessment Act 1936 51 Disability Discrimination Act 1992 5 6 29 47
Case references: Abbott v Transport Accident Commission [1991] 2 VR 116 Commissioner of Taxation v Finn [1961] HCA 61 (1961) 106 CLR 60 Commissioner of Taxation v Payne [2001] HCA 3 (2001) 202 CLR 93 177 ALR 270 (2001) 75 ALJR 442 46 ATR 228 2001 ATC 4027 Federal Commissioner of Taxation v Anstis [2010] HCA 40 (2010) 241 CLR 443 272 ALR 1 76 ATR 735 85 ALJR 122 2010 ATC 20-221 Federal Commissioner of Taxation v Maddalena (1971) 2 ATR 541 45 ALJR 426 71 ATC 4161 Fortescue Metals Group Limited v The Commonwealth of Australia [2013] HCA 34 (2013) 250 CLR 548 300 ALR 26 87 ALJR 935 89 ATR 1 Lodge v Commissioner of Taxation [1972] HCA 49 (1972) 128 CLR 171 3 ATR 254 46 ALJR 575 72 ATC 4174 Lunney v Federal Commissioner of Taxation [1958] HCA 5 (1958) 100 CLR 478 (1958) 11 ATD 404 Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28 (1998) 194 CLR 355 72 ALJR 841 153 ALR 490 Purvis v New South Wales [2003] HCA 62 (2003) 217 CLR 92 202 ALR 133 78 ALJR 1 77 ALD 570 Re Frisch and Federal Commissioner of Taxation [2008] AATA 462 (2008) 72 ATR 551 2008 ATC 10-031 Re Gilbert and Federal Commissioner of Taxation (1982) 82 ATC 141 (1982) 25 CTBR (NS) 715 Saraswati v The Queen [1991] HCA 21 (1991) 172 CLR 1 100 ALR 193 65 ALJR 402