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03 Dec 12 Payment was not a travel allowance but LAFHA - Hancox

The AAT has upheld the Commissioner's assessment of the taxpayer, including a penalty for recklessness.

From July 2009 to June 2010 the taxpayer was employed by Downer EDI Engineering Power Pty Ltd to leave his home and stay at a work camp for 16 weeks and temporary accommodation for 36 weeks. His employer flew him out of Port Hedland, every four weeks, mainly to Perth, and Port Hedland was never his home.

The taxpayer's PAYG payment summary for the 2009/2010 tax year showed an allowance of $38 and reportable fringe benefits of $6,197. During the 2009/2010 tax year, he received a living-away-from-home allowance (LAFHA) of $21,785.71 ($500 per week) and was reimbursed for travel of $3,261.70. The reimbursement of $3,261.70 was included in the taxpayer’s reportable fringe benefits of $6,197.

In his 2009/2010 taxation return the taxpayer included an allowance of $18,038, a deduction for work related travel expenses of $36,124 and a deduction for other work related expenses of $4,260. The travel expenses related to the taxpayer's travel between Adelaide (his home base) and Perth.

The taxpayer's contention that the LAFHA was a travel allowance was rejected. Accordingly, the amount of the allowance included in assessable income was reduced from $18,038 to $38. However, the claim for work related travel expenses was reduced from $36,124 to nil, on the basis that they were outgoings of a private or domestic nature or are incurred in relation to gaining or producing the applicant’s non-assessable non-exempt income. Finally, the AAT held that the tax shortfall penalty of 50 % was clearly appropriate.

Hancox and FCT [2012] AATA 836 (AAT, Dunne SM, 27 November 2012)


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