CASE Z12
Members:RA Balmford SM
Tribunal:
Administrative Appeals Tribunal
RA Balmford (Senior Member)
This is an application for review of a decision of a delegate of the respondent made on 15 March 1991 disallowing an objection by the applicant to the inclusion in the respondent's assessment of her taxable income for the year ending 30 June 1988 of an amount of $5,617 being travel expenses claimed as an allowable deduction under section 51 of the Income Tax Assessment Act 1936 (``the Act'').
2. The applicant requested that the decision on the objection be referred to this Tribunal and that request was complied with by the respondent. By virtue of section 223(1) of the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986 and sub-section 189(2) of the Act that referral of the decision on the applicant's objection is deemed to constitute the making by the applicant of an application to the Tribunal for review of the decision.
3. The applicant was represented by her accountant and the respondent was represented by an officer of his department. The Tribunal had before it the documents lodged by the respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 and numbered T1 to T8, together with other materials lodged at the hearing. The applicant did not attend or give evidence.
4. The relevant provisions of the Act appear in Subdivision F of Part III, Division 3 headed ``Substantiation of Certain Expenses'', and at the relevant time read as follows:
``82KT(1) In this Subdivision, unless the contrary intention appears-
...
`travel allowance' means an allowance paid by an employer to an employee for the purpose of enabling the employee to incur, in respect of travel away from the employee's ordinary place of residence undertaken in the course of performing duties as an employee of the employer, outgoings in respect of accommodation, in respect of the purchase of food and drink, and in respect of expenditure incidental to the travel;
ATC 164
`travel diary' in relation to particular travel undertaken by a taxpayer, means a diary or similar document in which the taxpayer has made, as mentioned in subsection 82KZ(2), entries relating to activities engaged in by the taxpayer while undertaking the travel;
`travel expense' means an outgoing incurred by a person in respect of-
- (a) travel by the person outside Australia; or
- (b) travel by the person within Australia that involves the person being away from the person's ordinary place of residence for a continuous period including more than 5 nights,
but does not include a car expense or an eligible expense in relation to a travel allowance...''
``82KZ(1) Subject to this Subdivision, a deduction is not allowable under this Act in respect of an expense incurred by a taxpayer, being-
- ...
- (b)... a travel expense,
unless:
- ...
- (ii) documentary evidence of the expense is obtained by or on behalf of the taxpayer; or
- ...
82KZ(2) Subject to this Subdivision, a deduction is not allowable under this Act in respect of an expense incurred by a taxpayer, being-
- ...
- (b) a travel expense,
unless, in relation to each activity engaged in by the taxpayer-
- (c) while undertaking the travel to which the expense relates; and
- (d) in the course of producing assessable income of the taxpayer,
the taxpayer makes in the English language in a diary or similar document, before, at the time of, or as soon as reasonably practicable after, the conclusion of the activity, an entry setting out particulars of-
- (e) the date on which the entry was made;
- (f) the place where the activity was undertaken;
- (g) the date and approximate time when the activity commenced;
- (h) the duration of the activity; and
- (j) the nature of the activity.
82KZ(3) Where a taxpayer-
- (a) while undertaking travel, engages in an activity in the course of producing assessable income of the taxpayer; and
- (b) does not make as mentioned in sub- section (2) an entry relating to the activity, being an entry of the kind referred to in that sub-section,
then, for the purpose of determining-
- (c) whether a deduction is allowable to the taxpayer under this Act in respect of a travel expense, or an eligible expense in relation to a travel allowance, being an expense that relates to the travel; and
- (d) if a deduction is so allowable, the amount of the deduction,
the activity referred to in paragraph (a) shall be deemed not to have been engaged in by the taxpayer in the course of producing assessable income of the taxpayer.
82KZ(4) Where-
- (a) the amount of-
- ...
- (ii) a travel allowance that was paid or is payable to a taxpayer (in this sub-section also referred to as the `relevant taxpayer') and relates solely to travel by the taxpayer within Australia,
- (whether or not the allowance was paid or is payable under an industrial instrument) is, in the opinion of the Commissioner, reasonable having regard to the total of the amounts of the outgoings that it would be reasonable for a taxpayer to whom the allowance was paid or is payable to incur-
- ...
- (iv) if sub-paragraph (ii) applies - in respect of the travel to which the allowance relates, in respect of accommodation, the purchase of food and drink, and expenditure incidental to the travel; and
ATC 165
- (b) the total of the amounts of the eligible expenses in relation to the allowance incurred by the relevant taxpayer and claimed by the relevant taxpayer as deductions in respect of the year of income in which the expenses were incurred does not exceed the amount of the allowance,
this section and section 82KZA do not apply, and shall be deemed never to have applied, in relation to the relevant taxpayer in relation to any of the expenses referred to in paragraph (b).''
5. The facts in this matter are not in dispute, and on the basis of documents before the Tribunal I make the findings set out in the following nine paragraphs.
6. The applicant is a senior lecturer in a university in Victoria. She attended field studies and conferences in the United States and Europe from April to July 1987; in Sydney in February 1988; in the United States in March to April 1988 and in Hong Kong in May to June 1988. She received what were described in her return as ``travel grants'' from the university in respect of all of the overseas travel save that in March-April 1988, but in no case did the grant cover all of the expenses claimed. The applicant kept no ``travel diary'' as defined in sub-section 82KT(1) of the Act.
7. In her taxation return for the 1986-87 financial year the applicant listed the expenses relevant to the conferences in the calendar years 1986 and 1987. She claimed deductions of certain expenses (net of the ``travel grants'') of those conferences. In respect of the conferences from April to July 1987, she claimed in that financial year a deduction calculated on a time basis as being 71 per cent of net expenses, and noted ``29% to be claimed 1987/88''.
8. In her 1987-88 return she claimed as a deduction an amount being, as foreshadowed, 29 per cent of the net April-July expenses and the expenses, as set out (also net of the ``travel grant''), of the field study in the United States and the Hong Kong conference. Those amounts were:
29% of 1986-87 expenditure, including July 1987
U.S. and Europe April-July 1987 Fares Melbourne-Melbourne 2,147
Accommodation San Francisco 150
Conference Registration Baltimore 83
Fares San Francisco-San Francisco 323
Accommodation etcetera 1,250
Stanford Accommodation etcetera 5,400
Hire Car 620
Arizona fares 167
London Accommodation etcetera 2,700
Dublin Conference Registration 120
Brunel Conference Registration 25
Exeter Conference Registration 30
Bristol Conference Registration 35
Fares 67
Insurance 214
------
13,331
Less travel grant 3,860
------
9,471
Less 71% claimed 1986-87 6,724
29% claimed 1987-88 2,747
------
1987-88 expenditure
Conference Sydney
fares 342
accommodation and living expenses 350 692
9. The applicant's 1988 return was selected for a desk audit, and she was requested to produce documentary evidence in respect of the amounts claimed for conferences and field studies, in terms of section 82KZA. As a result, deductions totalling $4,052 were allowed, and an amount of $5,617 disallowed, comprising the whole amount of $2,747 specified in the 1987 return, being expenses incurred after 30 June 1987, and $2,870 of the expenses specified in the 1988 return.
10. Those expenses totalling $5,617 were all incurred in the 1987-88 financial year. There was no audit of the applicant's 1987 return and no question is before me as to the deductibility of any amount claimed in respect of that year. No documentary evidence in terms of sub- section 82KZ(1), or travel diary in terms of sub- section 82KZ(2), relating to any of the expenses in question before me was produced to the respondent in the course of the desk audit. Similarly, no such evidence was produced to the Tribunal at the hearing of this matter.
11. It is not clear whether any of the ``travel grants'' paid by the university constituted a ``travel allowance'' in terms of section 82KT. However, as the grants related only to travel outside Australia, and the amount claimed in each case exceeded the amount of the relevant grant, sub-section 82KZ(4) would not have any operation in this matter.
12. The applicant's representative produced a letter from the head of the applicant's department as to her scholarly status and the work which she engaged in when the expenses were incurred, and a similar letter from her colleague at Stanford. He submitted that she was a respectable academic. None of these matters are relevant to compliance with section 82KZ.
13. He also referred to the discretion conferred on the Commissioner by section 82KZAA of the Act to relieve a taxpayer, in certain circumstances, from the requirement of substantiation. However that provision, which was introduced with effect from 8 January 1991, has no effect in respect of an application for review in relation to a period before that date (see sub-section 82KZAA(3)).
14. Having considered the matter, I find that the applicant has not discharged the burden imposed by section 190(b) of the Act of proving that the assessment is excessive. Accordingly, the objection decision under review will be affirmed.
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