Numerous work-related expense claims disallowed
The AAT has denied a taxpayer’s deductions for work-related travel, clothing, self-education and rental property expenses, and upheld the ATO’s 50% administrative penalty on the tax shortfall for recklessness.
The taxpayer, who was previously employed by the Department of Finance, made deduction claims totalling $116,068 and $140,581 for the 2013 and 2014 income year respectively.
Following an audit, the ATO issued Notices of Amended Assessments, drastically reducing the deduction claims.
The taxpayer was largely unsuccessful in objecting to the amended assessments, and applied to the AAT for a review of the Commissioner’s decision to deny claims for the following deductions:
The Tribunal Member affirmed the Commissioner’s decision to deny all of the deductions still in dispute at the AAT. Specifically:
The Tribunal Member also upheld the Commissioner’s decision to apply a 50% administrative penalties for recklessness, finding the penalties were well justified.
The taxpayer’s tax agent, who had been a tax agent for more than 15 years, was largely responsible for submitting deductions that were clearly not permissible under the law. The Tribunal Member noted the agent’s conduct in claiming the deductions, which he either knew or ought to have known were impermissible, was both “reckless and inexcusable”.
Ref: Watts v FCT  AATA 2030