course material

1. TAL305 Taxation Law
Answer:
Letter Of Advice: Private And Confidential
Tax Consultants
Add:
Date:
Dear Reader
With respect to our recent conversation and meetings we are requesting you to kindly see
below our advice in regard to the three important cases that was wished by you.
Scope:
The ultimate scope of this letter is to provide you advice regarding the decision unfolded in
three below stated cases. These are as follows;
Weeks v. Federal Commissioner of Taxation - (25 January 2013)
Sanctuary Lakes Pty Ltd v. Federal Commissioner of Taxation - (24 May 2013)
Walker v. Federal Commissioner of Taxation - (14 March 2017)
The reader must note that the letter simply ignores any kind of tax consequences that
would happen given that there is any kind of surplus in assets of taxpayers. The pertinent
evidences as well as assumption on which the information is based is simply attached in the
summary of advice. On finding that any of the facts or assumption is not in accordance with
the understanding of readers, please feel free to reach us directly for the reason that this
may make an impact on the assistance that is given. The current letter of advice is simply
based on the essential tax laws, case law references and rulings because we understand its
use in the decided cases.
Summary Of Advice:

2. We have also summarized below our view in regard to every one of the cases that is drawn
above. We have attached a comprehensive conversation regarding the issues related to our
guidance for your examination. We are recommending you strongly to read the
conversation in respect with the assistance given.
Case Introduction: Weeks V. Federal Commissioner Of Taxation - (25 January 2013)
The case involved an executive level employee named Ms Weeks that worked in ATO. After
the negotiations between Ms Weeks and senior office of ATO, she was given an offer of
redundancy. The redundancy offer was accepted by Ms Weeks and subsequently her
employment with ATO got terminated based on the grounds that she was in excess of
requirements of ATO under “sec 29 (3) (a) of Public Service Act 1999”.
After the employment termination, MS weeks got a termination payment and noticed that
ATO had deducted a tax of 16.5% from her payment based on the fact that it was an
Employment Termination Payment. As per Ms Weeks she deemed her termination payment
as “genuine redundancy payment” within “sec 83-175 of ITAA 1997” and should be treated
as tax free (Ato.gov.au 2022). Ms Weeks consequently sought a private ruling from
commissioner and when the ruling failed to meet her satisfaction level, an objection against
the commissioner was lodged. The objection against commissioner lodged by Ms Weeks
was not successful and later sought merits review of that decision in AAT which eventually
became unsuccessful.
Outline Of Sections Of Breached And Reasons For Breach:
The main subject matter is that the appellant considers that overall amount of tax which is
property owed on significant part of her “redundancy payment” stands nil whereas the
defendant officer considers that the tax which is payable properly stands $7,825. According
to the primary judge advocate the main problem of law is if a worker that gets dismissed
within “sec 29 (3) (a) of Public Service Act 1999” or “Clause 97.1 of Agency
Agreement” based on the surroundings that as an excess worker to the ATO’s requirement,
with respect to the sense that her service is not anymore needed (Iknow.cch.com.au 2022).
Whether any sum of payment that is made with regard to termination, fall inside the word
“genuine redundancy payment” within the “sec 83-175 (1) of ITAA 1997”? The main judge
however replied that question negatively.
Discussion And Critical Analysis Of Court Decision And Reasons For Decision:
The law court noticed that the plaintiff has simply failed to inaugurate that the court of law
got it wrong in law or the primary judge has made a mistake as it failed to find that the
Tribunal had made a mistake in law (Woellner et al. 2016). The reason for judgement noted
an observation that the noteworthy query for current purpose is whether Ms Weeks was

3. genuinely made redundant.
The members of Tribunal had referred to provisions of “sec 83-175 of ITA Act 1997” and
found that payment made under genuine redundancy is considered “tax free” in the hands
of previous employee. The members of tribunal noted that the distinction that was
contained in clause 97 which was reflected in numerous authorities on issues involving
“Dibb v Commissioner of Taxation (2004)” made very clear that redundancy happens when
an employer not anymore needs the job done by anyone (Taxinstitute.com.au 2022). The
circumstances where an employment disappears effectively should be differentiated from
the circumstances where the employer not anymore needs a job done by the worker in
question.
According to the findings of court, the employment of Ms Weeks did not disappear even
though the position number had changed (Sadiq 2020). The full court in its unanimous
decision dismissed the appeal of taxpayer with cost by stating that the reason that the
payment which was made to taxpayer regarding termination of her employment cannot be
considered as tax-free genuine redundancy payment within “subsec 83-175 (1) of ITAA
1997”. Furthermore, there was no inconsistency amid the taxpayer as an excess employee
based on the requirements of “paragraph 29 (3) (a) of Public Service Act 1999” and Ms
Weeks position was not genuinely redundant within “sec 83-175 of ITAA 1997”.
Recommendations:
On a conclusive note, it is understood that a genuine redundancy happens upon the
dismissal of identical classified employees. The taxpayers must understand that voluntary
and involuntary payments that is made to redundant and retrenched employees normally
qualify if the payment is made in respect of notice or paid as severance payment on the
basis of period served and lump sum amount of gratuitous payments.
Introduction: Sanctuary Lakes Pty Ltd V. Federal Commissioner Of Taxation - (24 May
2013)
The analysis involves the outline of ATO’s response to case that concerned whether or not
the taxpayer was considered eligible to numerous deductions and whether the penalties
related were imposed correctly and remitted. The taxpayer was engaged in development of
sanctuary lakes resort, which is a residential development located in Point Cook, Victoria.
Several related entities along with the taxpayer also were considered accountable for
different functions of development and while doing so the taxpayer entered in several
agreements (Ato.gov.au 2022). While filing tax return for income year of 2003, the taxpayer
had claimed deductions regarding losses and outgoings which was incurred under
numerous agreements.
The commissioner found that the “federal court” in the case of “Sanctuary Lakes Pty Ltd v

4. FCT (2013)” put forward that the right question at the time of remitting the penalty for a
false statement cannot be expressed under the terms of harshness. Instead it involved
whether the decision maker is content, with regard to the circumstances of taxpayer that it
was appropriate to remit the penalty.
Outline Of Sections Breached And Reasons For Breach:
Following the audit by ATO regarding the involvement of taxpayer in development, the tax
commissioner issued an amended assessment where it disallowed certain number of
deductions claimed. The commissioner further held the taxpayer assessable for tax with
25% administrative penalty on the alternative basis in respect of three issues based on the
fact that taxpayer or its agent were failure in taking appropriate care while filing its 2003
tax return (Iknow.cch.com.au 2022). The commissioner also assessed the taxpayer based on
two issues with respect to the fact that the taxpayer did not had any reasonable arguable
position (RAP).
Upon review, the AAT agreed with commissioner that the taxpayer was not considered
eligible to any sum of deductions that was in dispute. The AAT further decided that the
numerous shortfalls in tax arose out of disappointment by taxpayer or its agent to take
sensible amount of care (Kenny and Devos 2018). Nevertheless, the AAT took the decision
of completely remitting the penalty that was payable in respect of single issue in dispute
based on the fact that the taxpayer had RAP on that issue.
Later both the parties appealed to the “federal court” regarding the decision of AAT. In his
appeal, it was argued by commissioner that the basis of AAT’s judgement to remit the
penalty outstanding was not consistent with that decision of court in “FCT v Traviati
(2012)”. The appeals of both parties were dismissed by full federal court (Taylor et al.
2017). The federal court also rejected special leave to taxpayer to launch an appeal to “High
Court” against the judgement of “full court”. The commissioner did not seek any special
leave to make an appeal in High Court.
Discussion And Critical Analysis Of Court Decision And Reasons For Judgement:
Accordingly, the full federal court dismissed the appeal of taxpayer. The court noted that
both claimed losses were of capital or capital in type and it was agreed with AAT the
expenses claimed as deduction did not arise by taxpayer during the 2003 income year
(Www2.deloitte 2022). In respect to the issue of penalty, the federal court agreed with
judgement given in “FCT v Traviati (2012)” and dismissed the argument of taxpayer where
it follows that taxpayer along with its agent should have considered any reasonable care
given that it had RAP.
The federal court further rejected the appeal of commissioner. The court disagreed with
views stated in “FCT v Traviati (2012)” and stated that the AAT didn’t took into account any

5. inappropriate deliberation in using its discretion to remit penalty within “sec 298-20 of
Schedule 1 of Tax Administration Act 1953” (Taxinstitute.com.au 2022). As per court it
considered the fact that the taxpayer had RAP regarding the deduction issue under dispute.
The court by majority noted that the AAT did not failed to apply incorrect test within “sec
298-20”. The AAT further acknowledged that there is also a need of circumstances which
can mitigate the failure of taxpayer to take reasonable amount of care and also appreciated
that the specific circumstances of taxpayer was relevant to the decision.
Recommendation:
On a conclusive note, it is not usual for taxpayer to have RAP within the income tax law, but
having found to be not taking any reasonable care while making statement to
commissioner, the full court noticed that having a RAP and undertaking reasonable care
represents an self-governing statutory standard for applying administrative penalties. The
taxpayer and its agent should have taken reasonable care while making statement given
that the taxpayer had RAP within the law.
Introduction: Walker V. Federal Commissioner Of Taxation - (14 March 2017)
The taxpayer here Mr Walker has applied for review involving an objection of decision. The
decision is associated to deductions claims while filing his tax return regarding the income
years ending 30th June 2013 and 30th June 2014 (Ato.gov.au 2022). The taxpayer here Mr
Walker claimed deductions concerning meals, groceries, accommodation, motor vehicle,
caravan, internet services and mobile phone.
Upon auditing the tax affairs of Mr Walker, the tax commissioner did not allowed
deductions, issued an amendment and also imposed penalties as a failure to take reasonable
care (Krever 2016). An objection was rejected in regard to deduction and the taxpayer was
informed that the penalties were being dealt in a separate manner and have been
remitted.
Outline Of Sections Breached And Reasons For Breach:
The AAT confirmed the decision of commissioner to disallow the deductions for more than
$25,000 concerning groceries, meals, accommodation, caravan, motor vehicle, internet and
mobile that was incurred in the year 2014 and 2015 income years. Usually, travel made by
taxpayer between their home and usual workplace is considered as private travel and it is
not allowed as deduction. This authority was established in “Lunney v FCT (1958)”.
Nevertheless, there are certain exceptions where deductions for travel is allowed to
itinerant workers (Morgan 2022). The taxpayer in his argument stated that he was an
“itinerant worker” and he should be considered eligible for claiming deduction which would
otherwise be considered as a private cost on this basis.

6. The taxpayer had the lifetime experience of working on farms that also included having his
own farm house. The taxpayer gathered bulk knowledge while working on strawberry
fields. The taxpayer wanted to expand his knowledge further than the strawberry farms and
started working at “Gaynday” in 2012 which was around 300 km from northwest of
sunshine coast. The taxpayer moved to a farm in Bowen and obtained work at Stanthrope
that was around 500 km from Sunshine Coast (Barkoczy 2022). All three employments
were exercised by taxpayer in a successive manner during the course of same fiscal year
and it went about in that order for around three years.
Discussion And Critical Analysis Of Court Decision And Reasons For Judgement:
The AAT noted that the taxpayer cannot be considered as “itinerant worker and cited
reason that the taxpayer consecutive engagements at three employer’s farm widely in
accordance with three seasons of crop grown at every farm. Every single engagement was
considered good for some period of months and the taxpayer lived at each place prior to
moving another place.
The AAT further rejected the alternative of argument of taxpayer that he was eligible for
claiming deductions on meals and lodging while staying away from home for temporary
work purpose (Morgan and Castelyn 2018). The argument of taxpayer was rejected based
on the grounds that his situations was distinguishable clearly from the employees that are
in the course of work are obliged by their employer. Comparatively, the taxpayer travelled
based on his choice.
The AAT simply rejected the claim of taxpayer that he was considered eligible for claiming
deduction for travel expense amid numerous locations of work within sec 25-100 of ITAA
1997 (Maley and Maley 2018). The section permits tax deduction concerning travel made
directly amongst two income producing places of work, but only if it forms the part of same
employment does not go through home. In the current case, one employment of taxpayer
had already stopped before the taxpayer decided to move to next place. Consequently, this
provision is not applicable.
Recommendations:
The taxpayers are required to denote that travel that is made by them amid home and their
usual work place is not usually permitted for deduction within the legislative provision of
“sec 8-1 ITAA 1997”. This is because, travel made between home and work place of taxpayer
is treated as private travel. Any expense that is incurred while travelling to work from home
must be simply ignored and the taxpayers are not entitled to get deduction. Travel expense
is only permitted for deduction to taxpayer within “sec 8-1 ITAA 1997” when it is incurred
between two related places of work or the nature of employment of taxpayer is of
“itinerant” in type.

7. We hope that the current letter of advice has helped you in understanding about the tax
consequences originating from the aforementioned cases. If you wish to discuss the
aforementioned cases in more detail, kindly do not hesitate to reach our office.
Yours sincerely
Associate – Taxation
Smith Tax Consultants
References:
Ato.gov.au. 2022. Ato.gov.au. [online] Available at: [Accessed 21 January 2022].
Ato.gov.au. 2022. Ato.gov.au. [online] Available at: [Accessed 21 January 2022].
Ato.gov.au. 2022. Ato.gov.au. [online] Available at: [Accessed 21 January 2022].
Barkoczy, S., 2022. Foundations of Taxation Law 2022. Cambridge University Press.
Iknow.cch.com.au. 2022. CCH iKnow | Australian Tax & Accounting. [online] Available at:
[Accessed 21 January 2022].
Iknow.cch.com.au. 2022. CCH iKnow | Australian Tax & Accounting. [online] Available at:
[Accessed 21 January 2022].
Kenny, P. and Devos, K., 2018. Australian Small Business Taxation. LexisNexis.
Krever, R., 2016. Australian Taxation Law Cases 2016. Thomson Reuters (Prous Science).
Maley, M.N. and Maley, D.M., 2018. Australian Taxation Office Guidance on the Diverted
Profits Tax.
Morgan, A. and Castelyn, D., 2018. Taxation education in secondary schools. J. Australasian
Tax Tchrs. Ass'n, 13, p.307.
Morgan, J., 2022. Re Walker and FCT - Deductions for travel, accommodation, food not
allowed as taxpayer not an itinerant worker - Tax Technical. [online] Tax Technical.
Available at: [Accessed 21 January 2022].
Sadiq, K., 2020. Australian Taxation Law Cases 2020. Thomson Lawbook Co.

8. Taxinstitute.com.au. 2022. Decision Impact Statement - Sanctuary Lakes Pty Ltd - The Tax
Institute. [online] Available at: [Accessed 21 January 2022].
Taxinstitute.com.au. 2022. Golf course losses and expenditure not deductible - Sanctuary
Lakes - The Tax Institute. [online] Available at: [Accessed 21 January 2022].
Taylor, J., Walpole, M., Burton, M., Ciro, T. and Murray, I., 2017. Understanding Taxation Law
2018. LexisNexis Butterworths.
Timebase.com.au. 2022. Case Law: Weeks v Commissioner of Taxation [2013] FCAFC 2
(Taxation) - TimeBase. [online] Available at: [Accessed 21 January 2022].
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation Law
2016. OUP Catalogue.
Www2.deloitte.com. 2022. Www2.deloitte.com. [online] Available at: [Accessed 21 January
2022].