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The Federal Court (Jagot J) has dismissed an appeal by the taxpayer from the decision of the AAT in RepairCo and FCT [2014] AATA 414.

The AAT held that assessments for two years issued by the Commissioner, each labelled "Notice of amended assessment" were in fact original assessments and therefore not out of time. The AAT further held that the Commissioner had correctly disallowed, as deductions, payments claimed to be made by the taxpayer to an "employee welfare fund", on the basis that s 8-1 ITAA 1997 was not satisfied.

Most of the money actually contributed to the fund was returned to the taxpayer two months after it was made, rather than being used for any employee welfare purposes. The AAT held that the payments were made not for the purpose of gaining or producing the taxpayer’s assessable income but for the purpose of generating tax deductions.

The claims for the deductions resulted in the taxpayer recording a loss in each of the two years. The ATO issued documents headed "[Income year] Company/Fund Assessment for ATO use only”, showing “Taxable Income $0”.

Jagot J agreed with the AAT's finding that the assessments were original, not amended assessments, citing the High Court decision in FCT v Ryan [2000] HCA 4. In that case, the High Court held that where no tax has been determined to be payable for a tax year, there has been no assessment made for that year.

Jagot J then stated, at para 65:

"The only potential deficiency is that the notices identify themselves as amended assessments. This has nothing to do with the function of the notices to bring to the attention of the appellant that the assessments to which the notices relate are an assessment of the appellant to tax. The defect, if properly termed that, is one of form only. It cannot affect the validity of the notices."

Jagot J also held that the AAT had correctly identified the principles applicable to deductibility under s 8-1, and that the taxpayer's appeal from that decision involved no question of law, but merely an attempt to have the Federal Court come to a different conclusion on the facts to that of the AAT. The taxpayer's claims for deductions were dismissed.

Allan J Heasman Pty Ltd v FCT [2014] FCA 1282 (Federal Court, Jagot J, 28 November 2014).

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