Last week, the AAT confirmed that taxpayer Cameron Lambourne, an electronics technician with the Australian Navy, was not entitled to over $10,000 in work-related deductions.
Among the claims, Mr Lambourne had sought to claim $1,655 in work-related clothing that he had purchased from a store specialising in naval maritime uniform.
Mr Lambourne did not provide individual invoice amounts nor details of items purchased as he had relied on the fact that he had an account with the store.
The store, however, went into liquidation and was not able to provide an itemised description of each purchase that he made.
In affirming the ATO’s decision to deny the claim, the AAT noted that in the absence of details, it was impossible to determine whether a nexus exists between the expenditure and gaining or producing of income.
Mr Lambourne had also sought to claim close to $6,000 in other work-related expenses, with the ATO adjusting it down to $209 after an audit.
The amount of these expenses being disputed narrowed to $1,688 at the hearing, with the bulk of it centred around gym equipment that Mr Lambourne had purchased for the ship in his role as a military fitness leader.
The ATO argued that the gym equipment was not a requirement by the Navy, and that “out of the generosity of his own heart, [Mr Lambourne] purchased the equipment to the advantage of not only himself, but also the other crew members”.
While accepting that the gym equipment was used by Mr Lambourne in carrying out his duties, the tribunal was not satisfied there was a nexus between the expenses incurred and the gaining of his assessable income.
“The fact that a loss or outgoing has a relationship to a taxpayer’s employment or the carrying out of their duties is not enough,” said AAT member Deborah Mitchell.
“There is no evidence before the Tribunal that [Mr Lambourne] would not have continued to be paid in relation to his duties (be that his salary or allowances) if he had not purchased and supplied these items.
“While there is little doubt these items may have assisted the [Mr Lambourne] to better perform his duties, he was provided with the equipment that his employer considered was required to perform his duties.
“The Tribunal considers [Mr Lambourne’s] expenditure in relation to these items was more akin to providing a benefit to the Navy and his fellow sailors rather than being incurred in the course of producing his assessable income.”
The tribunal also affirmed the 25 per cent administrative penalty imposed on Mr Lambourne.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.