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Holm and Commissioner of Taxation [2023] AATA 3545 (31 October 2023)

Jack Bresnahan, ||

Recent Administrative Appeals Tribunal (Tribunal) decision on factors relevant to granting extension of time for work-related texts


On 20 October 2022, Mr Kenneth Holm (Applicant), wrote a letter to the ATO (Respondent) seeking to have his taxable income decreased by $2 for each of the income years from 1999 to 2019 (the relevant years), as well as for 2020 and 2021, for deductions for an estimated 20 work-related text messages he sent each year.

The Applicant, who only became aware of these deductions when informed by a friend at a party, argued that he hadn’t made these claims at the appropriate time of lodging his tax return in the relevant years because ATO resources didn’t list “work-related text messages” as an allowable deduction.

Whilst the ATO allowed his objection for the 2020 and 2021 income years, they refused his request for the amendments in the relevant years as the request wasn’t made within two years from the date of the relevant notices of assessment. The ATO also refused the Applicant’s request to treat his objections as if they were lodged in time.

The Applicant applied to the Tribunal for review of the decision to not treat the objections as if they were lodged in time. He was self-represented.

Relevant law

Section 14ZW of the Taxation Administration Act (TAA) sets out the timeframes within which objections must be made.

If the two-year window to lodge an objection has passed, a taxpayer must make a written request to the Commissioner stating the circumstances surrounding, and the reasons for, their failure to lodge, and request that the Commissioner grant them the extension of time.[1] If the Commissioner refuses the extension, the taxpayer can appeal to the Tribunal for a review of that decision.[2]

Whilst it wasn’t in dispute that work-related texts are deductible, as they are clearly incurred in gaining or producing income in accordance with s 8-1 of the Income Tax Assessment Act (ITAA), a taxpayer is still required to substantiate that they actually incurred those expenses.

Section 900-15(1)(b) of the ITAA provides that to deduct a work expense you need to substantiate it by getting written evidence. A taxpayer can still claim their expenses without satisfying the substantiation rules if the nature and quality of the evidence they do have satisfies the Commissioner.[3]

Issues in dispute

The Tribunal heard evidence, and ultimately based their decision not to grant the extension of time, on the following factors:

  1. Who held responsibility for the taxpayer’s lack of knowledge about the unclaimed deductions;
  2. Whether the extent of the delays in lodging the objections weighed against granting the extension of time;
  3. Whether the Applicant could substantiate the claimed expenses; and
  4. Whether prejudice would be suffered by either side if the extension was or wasn’t granted

The Tribunal also considered generally whether this case warranted the expenditure of more public resources.

  1. Responsibility for the unclaimed deductions

The Applicant’s argument

The material the Applicant relied on referred to deductions for the “work-related proportion of some computer, phone and home office expenses.” The Applicant contended this was misleading and that text message expenses were not a natural extension of phone call costs, and that he cannot reasonably be expected to know more than what ATO publications provide.

The ATO’s argument

The ATO’s response was that the cornerstone of the taxation system is self-assessment, which places the onus on taxpayers to ensure their returns comply with taxation laws, meaning that by choosing to be self-represented “the Applicant is under a greater responsibility to ensure the correctness of his return.

The ATO further argued that their material merely assists taxpayers, and that s 8-1 of the ITAA is intentionally broad and that it would be impracticable for the Commissioner to list all types of deductions that could be claimed.

The Tribunal’s decision

Whilst the Tribunal accepted that the Applicant was unaware they could claim the deduction for work-related texts, when lodging his returns in the relevant years, it didn’t accept that the responsibility for this lack of knowledge was attributable to the ATO and its publications.

In making its decision, the Tribunal reinforced that ATO publications are inclusive rather than prescriptive, and that it is a “taxpayer’s responsibility in a self-assessment system to manage their own tax affairs.

  1. Delay in lodging the objections

Whilst the Applicant agreed that the delays in lodging his objections were substantial, he contended that the circumstances for the delay were due to misleading ATO material, and as such he was unaware of his mistakes.

The Tribunal did not agree, finding that the “length of these delays, especially in relation to the earlier years, weighs against the granting of the extensions of time.

  1. Arguable / substantiated case

The Applicant’s arguments

The Applicant argued that because he used a pre-paid phone, which didn’t provide statements, it would be unreasonable to expect him to do more than make a reasonable estimate of the amount of work-related text messages he sent a year.

The ATO’s argument

The ATO contended that whilst an expense associated with sending a work-related text message is an allowable deduction, the Applicant “must do more than simply assert an entitlement to a deduction based on an estimate,” and he had been unable to substantiate his expenses such as through providing contemporaneous phone bills.

The Tribunal’s decision

In finding that the Applicant would have little chance of succeeding at objection because they couldn’t substantiate their expenses, the Tribunal decided this weighed heavily against granting the extension of time.

  1. Prejudice

The Applicant’s argument

In contending that he would face prejudice if not granted the extension of time, as his assessments in the relevant years would be wrong, the Applicant referred the Tribunal to the consideration of prejudice by Hill J in Brown v Commissioner of Taxation [1999] FCA 563:

Except where the effluxion of time may affect adversely the ability of the Commissioner to defend an assessment, it is hard to see what prejudice there could be to the Commissioner… other than administrative inconvenience.

The ATO’s response

Whilst conceding that the prejudice to itself was limited, the ATO did contend however, that even if the Applicant could demonstrate an entitlement to the deductions, the degree of prejudice to the Applicant would be limited, as the total deductions claimed were less than $21 in total.

The Tribunal’s view

The Tribunal decided that the granting of an extension of time would cause limited prejudice to the ATO.

For the Applicant, the Tribunal decided that due to the small amount of tax in dispute, and that the Applicant would be required to substantiate his claimed deductions at objection, which he had thus far failed to do, the prejudice to him was also limited.

  1. Further expenditure of public money

Lastly, in affirming the ATO’s decision at objection, the Tribunal’s view was that the quantum of tax in dispute should not be determinative of whether an extension of time is granted, but that in this matter, with regards to the reasons for delay and lack of strength in the Applicant’s objections, the circumstances weighed against the expenditure of any further public money.


This decision provides a helpful summary of the relevant factors to be considered when granting an extension of time. Whilst deciding against the Applicant, the Tribunal demonstrated reasonable sympathy and leniency for a taxpayer’s rights to lodge objections out of time, in circumstances where their claim is legitimate, and they have a genuine reason for having not lodged in time, even where the disputed amount is minimal.

For more information on factors relevant to granting extension of time for work-related texts, please contact Coleman Greig’s Taxation team.


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