Private ruling: Substantiation relief
Published: May 2015
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Will the Commissioner provide substantiation relief for the expenses claimed? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 900-195. | Income Tax Assessment Act 1997 Section 900-205.

Reasons for decision: Summary: A deduction is only allowable if an expense: • is actually incurred, • meets the deductibility tests, and • satisfies the substantiation rules. | Detailed Reasoning - Substantiation: Division 900 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out the substantiation rules that apply to work expenses, car expenses and business travel expenses. Subdivision 900-H of the ITAA 1997 provides relief from the effects of failing to substantiate in certain circumstances. The Commissioner's discretion to review failure to substantiate is outlined in section 900-195 of the ITAA 1997. Not doing something in relation to substantiation does not affect your right to a deduction if the nature and quality of the evidence you have to substantiate your claim satisfies the Commissioner that you incurred the expense and that you are entitled to deduct the amount you claim. However, subsection 900-205(4) of the ITAA 1997 states that if a lost or destroyed document was written evidence, you must try to get a substitute document that meets all the original requirements. If it is not reasonably possible to succeed, your deduction is not affected by your failure to produce the document. Taxation Ruling TR 97/24 Income tax: relief from the effects of failing to substantiate provides guidance on circumstances in which relief from the effects of failing to substantiate may apply. A bona fide attempt should be made to comply with the record keeping requirements. In your specific circumstances, the Commissioner accepts that you have done your best to comply with the substantiation requirements and that it is not reasonably possible for you to obtain replacement documents for all the written evidence that was lost. Therefore the Commissioner will grant relief in your specific circumstances and will not disallow your deductions based on lack of substantiation.

Relevant facts: You have been transferred overseas for work. | During the move, numerous items, personal possessions and clothing were damaged or lost including all your tax records and receipts for past years. | You made a claim with the removalist company. | The only evidence to substantiate your expenses are spreadsheets that record all your expenses claimed as well as bank statements that you can obtain.