Fardell and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2010/3760-3761)
Judgment date: 19 October 2011
Date published: 14 December 2012

Summary of decision:
Outlines the ATO's response to this case which concerns whether a linehaul truck driver was entitled to deductions for work related travel expenses in respect of meals.

Overview of facts:
During the relevant income years, the taxpayer was a truck driver employed by Toll Holdings Limited. | Under the relevant awards, the taxpayer was entitled to an allowance when, in a 24 hour period, the taxpayer travelled more than 500 kilometres and the journey involves a principal place of commencement and a principal place of destination. | The taxpayer was not required to sleep away from home in order to receive the allowance. In his income tax returns, the taxpayer returned allowance income and claimed deductions for "work related travel expenses". The taxpayer's claims were based on the Commissioner's reasonable daily rates multiplied by the number of times the taxpayer received the living away from home allowance (LAFHA) in the relevant year. The taxpayer did not provided any written evidence of the deductions said to have been incurred. These deductions were subsequently disallowed by the Commissioner. | Issues decided by the tribunal | 1. Whether the deductions met the requirements of s8-1 ITAA 1997 during the income years? | No, the taxpayer could not demonstrate that he incurred the amounts claimed. | 2. Whether the taxpayer was required to substantiate the deductions with written evidence pursuant to s900-15 ITAA 1997 and Subdivision 900-E ITAA 1997? | Yes, the taxpayer was required to substantiate the deductions. | 3. Whether the requirements for an exception to the substantiation requirements above were satisfied for the purposes of s900-50 for "domestic travel allowance expenses"? | No, the taxpayer was not entitled to rely on an exception for substantiation because he did not receive a travel allowance. | 4. Whether there was any other basis for relief from the substantiation requirements? | No, the taxpayer had no other basis for relief from substantiation. | 5. Whether the taxpayer and/or his tax agent failed to take reasonable care in claiming the deductions liable to a penalty of 25% of the shortfall amount pursuant to s.284-75(1) and s.284-90(1) of Schedule 1 of the Taxation Administration Act 1953 ("TAA")? | Yes, the taxpayer's agent failed to take reasonable care. | 6. If so, whether there is any basis for remission of the penalty pursuant to s.298-20 of Schedule 1 of the TAA? | Yes, the penalty was remitted in full as the imposition of the penalty produced a harsh result.

Issues decided:
1. Whether the deductions met the requirements of s8-1 ITAA 1997 during the income years? No, the taxpayer could not demonstrate that he incurred the amounts claimed. 2. Whether the taxpayer was required to substantiate the deductions with written evidence pursuant to s900-15 ITAA 1997 and Subdivision 900-E ITAA 1997? Yes, the taxpayer was required to substantiate the deductions. 3. Whether the requirements for an exception to the substantiation requirements above were satisfied for the purposes of s900-50 for "domestic travel allowance expenses"? No, the taxpayer was not entitled to rely on an exception for substantiation because he did not receive a travel allowance. 4. Whether there was any other basis for relief from the substantiation requirements? No, the taxpayer had no other basis for relief from substantiation. 5. Whether the taxpayer and/or his tax agent failed to take reasonable care in claiming the deductions liable to a penalty of 25% of the shortfall amount pursuant to s.284-75(1) and s.284-90(1) of Schedule 1 of the Taxation Administration Act 1953 ("TAA")? Yes, the taxpayer's agent failed to take reasonable care. 6. If so, whether there is any basis for remission of the penalty pursuant to s.298-20 of Schedule 1 of the TAA? Yes, the penalty was remitted in full as the imposition of the penalty produced a harsh result.

ATO view of decision:
The decision reflects the application of settled principles to a particular factual situation. The decision does not present any new principle, and does not impact upon any current rulings or published views of the Commissioner. | In relation to the penalty, the Commissioner's view is that remission is considered on a case by case basis and turns on the facts of each individual case.

Administrative treatment:
Implications for ATO Precedential documents (Public Rulings & Determinations etc) | None. | Implications for Law Administration Practice Statements | None.

Legislative references: Income Tax Assessment Act 1997 (Cth) s 8-1 s 900-15 s 900-50 Taxation Administration Act 1953 (Cth) Schedule 1 s 284-75 Schedule 1 s 284-90 Schedule 1 s 298-20
Case references: Commissioner of Taxation v Anstis (2010) 241 CLR 443 [2010] HCA 40 76 ATR 735 2010 ATC 20-221 Dixon v Federal Commissioner of Taxation (2008) 167 FCR 287 [2008] FCAFC 54 2008 ATC 20-015 69 ATR 627 Federal Commissioner of Taxation v Cooper (1991) 26 FCR 177 (1991) 21 ATR 1616 91 ATC 4396 Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 [1990] HCA 3 20 ATR 1370 90 ATC 4088 George v Federal Commissioner of Taxation (1952) 86 CLR 183 [1952] HCA 21 Re McIntosh and Federal Commissioner of Taxation (2001) 47 ATR 1242 [2001] AATA 702 2001 ATC 2272 Roads and Traffic Authority of New South Wales v Commissioner of Taxation (1993) 43 FCR 223 [1993] FCA 314 26 ATR 76 93 ATC 4508
Subject references: Living away from home allowance Connection to employee's earning activities Substantiation requirements Travel allowance or loading Relief from substantiation