Deductions for accommodation and food refused
The Federal Court has confirmed that a taxpayer who was employed by a mining company at Port Hedland on a “fly-in fly-out” basis and who was in receipt of a “living-away-from-home allowance” (LAFHA) pursuant to s 30(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) was not entitled to a deduction of some $36,000 for accommodation and food that he claimed against the allowance.
At first instance, the AAT found in Re Hancox and FCT [2012] AATA 836 that the allowance was to be properly characterised as a LAFHA. The AAT found that, as a result, the allowance was subject to FBT in the hands of the taxpayer’s employer and that travel expenses could not be claimed in relation to the allowance. In so finding, the AAT dismissed the taxpayer’s claim that the amount should have been treated as a travel allowance in accordance with Taxation Determination TD 2009/15; the AAT noted that the Determination was not relevant to the case as it only dealt with what are reasonable travel and meal allowance expenses. The AAT also noted that once the allowance was characterised as a LAFHA, it was not assessable under s 15-2 of the ITAA 1997.
Before the Federal Court, the taxpayer argued that the AAT had erred in law in deciding that the expenses of $36,000 were not deductible expenses within s 30(1) of the FBTAA and that “had that decision been made the allowance of $18,000 would not have been characterised as a living-away-from-home allowance and would have been held to be part of the applicant’s income”.
In confirming the decision of the AAT, the Federal Court first confirmed that the allowance was a LAFHA under s 30 of the FBTAA and that under the taxpayer’s enterprise agreement with his employer, the taxpayer was entitled to be provided with board and lodging at no cost to him. The Court then found that the expenditure in relation to accommodation, food and travel was not incurred in the course of gaining or producing assessable income in terms of s 8-1(1)(a) of the ITAA 1997. Likewise, it also found that the “occasion” of the expenditure was not the taxpayer’s income earning activities as a leading hand maintenance electrician, but rather his decision not to live in Port Hedland and to instead continue to live in South Australia and travel into Port Hedland on a “fly-in fly-out” basis.
Finally, in relation to the AAT’s decision to uphold the Commissioner’s 50% shortfall penalty for “recklessness”, the Court stated that the taxpayer’s appeal in relation to the AAT’s finding of “reckless” conduct did not, in the Court’s view, involve an appellable question of law.
Hancox v FCT [2013] FCA 735, www.austlii.edu.au/au/cases/cth/FCA/2013/735.html.
