Case Summary
FCT v DAY (2008) was a court case that represented the According to the details of the case, the taxpayer, who served as the customs officer, was incapable of complying with the basic principles of the Public Service Act 1922, which was adopted under the Commonwealth in the year mentioned in the title. The officer attempted at receiving legal advice, yet incurred costs in the process.
The study of the case and its further discussion by the organization’s authorities resulted in the further dismissal of the officer; however, the officer was not discharged but demoted to a less favorable position, which made the taxpayer in question file an appeal for the reconsideration of the decision. The appeal resulted in the officer’s further promotion to the position, which allowed for being paid a higher salary than the position, which the taxpayer was discharged from.
Because of the suspension from work, which the taxpayer suffered in the course of being demoted and then promoted again, the officer incurred significant financial expenses; the latter included legal expenses primarily and were taken to handle the case in point. According to the decision of the Commissioner, the expenses, which the taxpayer incurred in the process of handling the legal issues mentioned above, were supposed to be deductible as long as they addressed the routine activities of the taxpayer. However, in the case in point, the expenses were incurred due to the unwillingness of the taxpayer to comply with the existing legal regulations out of personal considerations; as a result, the court ruled that the taxpayer could not receive any reimbursement of the costs taken, as the above-mentioned costs were not related to the issue of handling professional responsibilities and abiding the company’s rules regarding the staff’s code of behavior (Coleman et al. 113).
Arguments of the Key Parties
Day, the officer, who was demoted and, therefore, incurred a considerable loss in the process due to the necessity to cover the legal expenses related to representing his case, claimed that the expenses, which he had taken, were to be reimbursed by the company as prescribed by the basic principles of the Public Service Act. According to the latter, the staff members, who incur losses as a result of the disruption in the working process due to legal issues, are supposed to be offered a refund (Pinto and Sadiq 112). Consequently, the taxpayer argued that the company left him no other choice but to resort to the line of actions that he undertook and that triggered his losses.
The opponent of Day, which was represented by the member of the FTC Company, claimed that the organization was not eligible for covering the expenses in question, as the existing terms of employment did not require that the taxpayer should be obliged to follow a certain code of conduct. To be more specific, the company’s code did not pressure the employee mentioned above into objecting to the legal measures that he was subdued to, as well as engaging in any form of improper conduct whatsoever. Particularly, the company’s regulations allowed for complying with the legal demands set by the corresponding bodies; therefore, it was the taxpayer’s conscious choice to adopt a specific behavioral pattern, which resulted in further losses.
Court’s Decision
According to the court’s ruling, the expenses, which a taxpayer has incurred as a result of legal procedures, are deductible (Krever 224). Moreover, the court decision expanded on the idea in question by stating that the legal expenses, which the taxpayer has incurred in the course of resisting the legal or civil disciplinary actions must be deductive in the case when the compliance with the specified actions affects the taxpayer’s personal life negatively (Coleman et al. 211). However, seeing that the court has proven that the expenses, which the officer took, were not related to the fear of losing the position that the taxpayer occupied at the specified point in time, the latter is legible to paying the expenses fully.
In other words, the court decision drew a very thick line between the expenses that have been incurred in the course of addressing the legal issues emerging in the course of both criminal or civil proceedings, and the expenses, which affect the taxpayer on a financial or personal level, therefore, jeopardizing the taxpayer’s chances of obtaining regular income. Therefore, the court stated that, if threatening the conditions of the taxpayer’s employment, the charges incurred are to be dismissed. Additionally, the court’s ruling claimed that the expenses, which have been caused by the taxpayer’s unwillingness to comply with the existing legal standards of conduct due to their company’s policies, which presuppose a dismissal or a salary reduction, no charges should be incurred to the taxpayer in question. Specifically, the charges are to be dismissed in the instances, where the rights of the taxpayer are protected by the Public Service Act (Coleman 116), deserve to be mentioned as the key principle for the court to base its decision on. The verdict passed by the court leads to the conclusion that the choices made based on personal preferences cannot be deemed as justifiable for revoking the costs incurred.
Works Cited
Coleman, Cynthia, Rami Hanegbi, Geoffrey Hart, Sunita Jogarajan, Richard Krever, John McLaren, Wes Obst and Kerrie Sadiq. Principles of Taxation Law. Sydney, AU: Thomson Reuters. 2015. Print.
Krever, Richard E. Australian Taxation Law Cases. Sydney, AU: Thomson Reuters, 2015. Print.
Pinto, Kendall and Kerrie Sadiq. Fundamental Tax Legislation. Sydney, AU: Thomson Reuters, 2015. Print.