TRAVEL EXPENSE AND TRANSPORT OF BULKY TOOLS CLAIM DENIED

The Administrative Appeals Tribunal (AAT) has affirmed the Commissioner’s decision to refuse a taxpayer’s deduction claim for certain work-related travel expenses.

Background

During the relevant year, the taxpayer worked as a first-class “sheet metal worker” and he was required to drive to the Alcoa Alumina Refinery at Wagerup WA, which was located 57.5 kms from his home, on a daily basis. He was also required to drive to the Alcoa Alumina Refinery at Oakley WA (near Pinjara), which was located 20.5 kms from his home, on one occasion.

The taxpayer drove his own vehicle and he was paid, according to payslips, a “travel allowance” and “overtime meal allowance” by his employer. For his 2012 income tax return, the taxpayer disclosed a taxable income of $102,277 after claiming various deductions for work-related travel, work-related clothing expenses, other work-related expenses, donations and the cost of managing his tax affairs, totalling $18,331. The Commissioner allowed the taxpayer’s claim for union fees, donations, the cost of managing his tax affairs, tools and overtime meals, but refused the other claims, thereby increasing the taxpayer’s taxable income to $118,756. The Commissioner also imposed 50% shortfall penalty for “recklessness”, totalling $3,255.

Before the AAT, the taxpayer conceded claims for overtime meals, work socks, work clothing, sun protection and mobile phone expenses. The Commissioner also conceded the claim for laundry expenses and that the penalty should be remitted in full. Therefore, the only issue before the AAT was whether the taxpayer was entitled to a deduction for work-related travel expenses. It was not in dispute between the parties that if the AAT allowed the deduction, the maximum deduction available was $5,444, and not $14,901 as previously claimed by the taxpayer.

The taxpayer argued that he was required by his employer to provide his own tools, that the tools were too bulky or awkward to be transported to work other than by car, and that the fact the occupation’s enterprise agreement provides reimbursement for tools stored at work that are lost during breaking and entering gave “rise to the doubt that the employer fully believed in their security”. Accordingly, a key issue was whether the employer provided a “secure” storage locker, which was a question of fact.

Decision

The AAT refused the taxpayer’s claim, finding the travel was private in nature. It found the taxpayer was not required by his employer to carry his bulky tools and equipment from home to work. In this regard, the AAT noted the ATO had contacted the taxpayer’s employer to verify details. It further noted the taxpayer’s own admission, that it was his own personal choice to transport his tools (various hand tools) out of security concerns, which the AAT said was “not supported by objective evidence”. Accordingly, the AAT affirmed the Commissioner’s decision, but allowed for the laundry expenses and remission of penalties in full as conceded by the Commissioner.

Re Reany and FCT [2016] AATA 672, www.austlii.edu.au/au/cases/cth/AATA/2016/672.html.

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