Tag: deductions

Deductions for education expenses against Youth Allowance

The ongoing battle over educations expense deductions claimed by Youth Allowance recipients continues.
The High Court heard the commissioner’s appeal against the decision of the Full Federal Court in FCT v Anstis (2009) 73 ATR 483 ON Thursday 29 Juy. According to the ATO, the High Court ‘is expected to announce its decision later in 2010 or in 2011’. The ATO has said that until this matter is resolved it will continue to apply its view set out in TR 98/9, that education expenses are not deductible against various commonwealth educational assistance schemes.

Earlier developments in this tale can be found here

2010-11 ATO audit focus – Individuals

Over the last few years the ATO has found that sending letters to targeted occupations substantially reduces the claims made by that group. In June 2009 they wrote to over 178,000 taxpayers in seven occupations including:

  • concreters;
  • construction and plumbers assistants;
  • electricians;
  • sales and marketing managers;
  • sales representatives;
  • university lecturers and tutors; and
  • truck drivers

advising them of their obligations for the year ended 30 June 2009. On average, targeted taxpayers decreased their claims by 7.6%, with a total work-related expenses claim change of $40.3 million.

This year they will focus on:

  • occupations with a pattern of large and/or rising claims or with issues identified from our intelligence
  • returns which do not fit the pattern or norm for a particular occupation across the community, and
  • returns lodged by tax agents that are significantly outside the norm for their average claim for their clients.

Due to previous claim patterns and behaviours, the ATO will be specifically focussing on people employed as:

  • engineers
  • mechanics, and
  • teachers.

The most common mistakes by people in these occupations include:

  • insufficient documentation available to support motor vehicle and travel expenses
  • incorrectly claiming motor vehicle expenses on the basis that they are carrying bulky equipment
  • incorrectly claiming travel or motor vehicle expenses when they are required to travel from home to work more than once per day, and
  • incorrectly claiming home office, mobile phone and internet expenses.



Sportsperson management fees – High Court decision & ATO response

The ongoing fight over the Australian tax Office’s decision to refuse tax deductions for fees paid by sportsperson to their managers was finally decided by the Australian High Court  in June and now the ATO his issued its response. 
 
For the background to this see our earlier articles at tax-office-loses-2-court-cases-on-sportsperson-fees-appeals and sportsperson-management-fees-tax-deduction .

The Courts decision was that the taxpayers’ appeals were allowed. The fees were deductible. Now the ATO has release a Decision Impact Statement .

The tax office had argued that the footballers were employees and that the fees paid for the negotiation of the playing contracts were incurred only to obtain new employment contracts and had no connection with the course of the taxpayers earning income from their non-playing businesses.
However The High Court unanimously held in both cases that the fees were deductible as being incurred by the taxpayers in the course of gaining or producing assessable income from carrying on a business of commercially exploiting their sporting prowess and associated celebrity.

The Tax Office will now amend Taxation Ruling TR 2000/5 to clarify that it does not apply to employees whose employment activities form part of the carrying on of a business. That is, it accepts the fees are deductible, but only for those whose activities extend beyond mere employment and can be regarded as carrying on a business.