The case stated that the appellant individual had been a past employee at the office of the Australian Taxes. She had no plans of retiring and was looking at the available options. She had been taking long leaves for purposes of recreation and thus, for the reason of the long tenure of leave, the work was reallocated to the other employees. She was upset with the reallocation of her responsibilities that made her think that her position was no more useful. She found herself to be unworthy and raised an issue of voluntary redundancy to the national director by the help of a email (Blöchliger, 2015).
The email was not agreed earlier by the Australian taxation office and did not favor the view of the individual that her role had become redundant in nature. The email was again revisited after the disagreement made at initial times and the Australian taxation office gave an approval of redundancy as a formal offer. The appellant was dismissed from her job after the provision of the formal offer. The main issue of the appellant was not about the acceptance of the offer, but the argument that the amount of tax payable on the redundancy payment would not be taxable i.e. NIL. Whereas, the Commissioner noted that the tax on the payment of redundancy will be $7825.
The Income tax Assessment Act has dealing with the payment of redundancy in a genuine manner. Under the section of 83-175 of the Income tax Assessment Act, if there is genuinely a payment made for the purpose of redundancy, it will mean that there has been a genuine payment made for dismissing the employees for becoming redundant in a genuine manner. The payment of genuine redundancy needs to be higher than the expected payment derived from the termination done in voluntary nature (Colton, 2015). The argument must initiate with the decision of the situation as to whether the dismissal of the appellant is of genuine nature or not and whether the redundancy is genuine in character. As per the rulings stated within the Act of Public services, it has been stated that the termination of employees can take place only when the employee exceeds the available employees of the agency. The termination can also take place when the terms go in accordance with the agreements of the agency and its policies (Davis et al., 2015).
As per the Agency Agreements, it has been stated that there may be case where the employees are unable to utilize the current job in the workplace due to the changes in the nature of the jobs and services along with the changes in technological and other aspects of modern age scenario. In the cases mentioned above, there must be steps undertaken by the agency that need to include the supporting of the employees for the consideration of the options of careers. The agency must also take steps in providing the employees with options to leave the agency with dignity and respect for the past services that had been rendered by the company. Further, in the other clauses it was provided that the procedures that are mentioned above and is required to be followed if there is replacement in the employee’s job.
The decision of the Tribunal after proper analysis and examination, it can be stated that there was a dismissal of the appellant from the employment. The tribunal found that the appellant services were not effectively used and also found that an officer of EL2.1 level is required. The tribunal also held that the appellant’s job can only be performed by someone having her capacity and level. Furthermore, the number of the positions has observed changes that mean that there had been no disappearances from the work (Flynn, 2015). The related and linked operations and functioning of the jobs need to be done by the officers at the EL2.1 level.
As per the Tribunal, there were a few arguments that considered the requirement of distinguishing the situations in which there has been disappearances in the job and the cases in which there is no requirement of performing the jobs. As per the Act and rulings contained in the Income Tax Assessment Act 1997, it was stated that an employee can never be considered as a redundant one even when a situation arise, that considers that an employee in particular cannot play the role of the former employee (French, 2014).
The question of law to be considered is as follows:
The judge stated that there was a misconception imposed in the appeal and was also not a part of the question of law. Additionally, the judge stated that two among the three questions were not a part of the important questions related to the payments of a genuine redundancy. The question of law under the judgment was related to the identification of the payments with regard to the genuine nature of the payments of redundancy. The termination of the employee can be done if contained in the Public Service Act and the agreements related with the agency. In the given case, the dismissal of the payments made to the employee cannot be considered a part of the genuine redundancy. The reason of the dismissal was the excessiveness of the employees related to the necessity of employer (Gutman, 2016).
There was an argument imposed by the Tribunal that there were many errors made in the provision of the decision. The Tribunal before submitting an oral decision before the court got distracted by the agency agreement and its terms contained in the clauses in a respective manner. The clauses helped in the fact finding procedures and that the concept of genuine redundancy was narrow in nature and character. There were arguments about the failure of the Tribunal in conducting the finding of the facts in a detailed manner that had connection with the position and status of the appellants. Therefore there was an argument that the Tribunal had made many errors in the provision of the decision. There was a criticism on the procedure carried on by the Tribunal in finding the facts as they followed the method of collecting figures and facts by written system. The facts were gathered from the evidence collecting offices and those verifying the same through the process of cross examinations (Hobbs et al., 2017).
The case related to Dibb was the first case that came to the court for the tax appeal and the case was the first one to be referred to the Tribunal. The case was referred so that the case would not be a part of the error of law and it was necessary that then facts would be gathered and found out as per the necessity of the Tribunal. There was an additional argument made by the applicant. The argument was related to the misconstruction made by the Tribunal in relation to the agreements of agency. On the efficient analysis and examination, there was facts seen that the Tribunal had not carried on any misconstruction in the agreement of agency. On the argument imposed by the appellant, the Commissioner on further analysis stated that she had not been required for the work as per the agency agreements.
On the other hand, the respondent i.e. the Commissioner imposed tax on the payment of redundancy and stated that it was not a genuine redundancy. As a result it was observed that the above was an issue that is purely based on fact before the tribunal. It will help in the determination of the accurate redundancy arising from the status and position of the employees. On further examination, there was an inconsistency and stability found between the positions of the employees in becoming redundant and getting excessiveness in the agency requirements. For the reason, it can be said that the differences between the findings and language of the Tribunal. There is thus a coincidence situation among the employee termination under the Public Service Act and the genuine redundancy policies of company. On the other hand, there was no inconsistency and instability that may raise the law related errors in the fact finding process of the tribunal. The judgment of the court held that the appeal must be dismissed as the appellant was incapable and unable to establish the error in the laws imposed by the tribunal (Villios, 2016).
Conclusion of the case and Summary
The case above discussed and presented that the amount of payment received for the termination was stated as taxable in nature under the head employment termination payment. The taxpayer had imposed argument that the payment was redundancy payment of a genuine nature. The same was contained in the rulings and sections of the Income Tax Assessment Act 1997 to make it free from tax and other impositions. The initial ruling made in private was not considered correct. Further the appeal to AAT was also considered to be inappropriate in nature. Finally, she took help of the federal court by making an appeal.
The AAT provided an argument that there was no disappearance of the position of taxpayers in the ATO and thus the amount paid on termination will not form part of the genuine payment of redundancy. The court agreed with the AAT in the decision made and there was a statement made by the court that made clear that the case had a relation with the voluntary redundancy. There was a judgment held that there must be redundancy in the genuine payment of the position of redundancy. The court gave a statement that there was a correct distinction of the services of an employee with the genuine redundancy. In further cases, there is no genuine nature in the payments about the payment of termination and the same is taxable in nature. Thus, in the second case the paid amount must be considered as a genuine payment of redundancy and thus not taxable in nature.
The court made a decision and rejected the appeal of the taxpayer in a unanimous nature. The court also held that the taxpayer made payment and the same is not free from taxability as the payment was not genuine payment of redundancy. From the above analysis and discussions, it can be concluded that she has to pay tax as the same was not a payment of genuine redundancy.
Reference
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Davis, A. K., Guenther, D. A., Krull, L. K., & Williams, B. M. (2015). Do socially responsible firms pay more taxes?. The Accounting Review, 91(1), 47-68.
Flynn, M., 2015. Disputing a tax assessment: From objection to hearing: Part two. Brief, 42(1), p.16.
French, R., 2014. Interpreting the constitution-words, history and change. Monash UL Rev., 40, p.29.
Gale, W. G., & Samwick, A. A. (2014). Effects of income tax changes on economic growth.
Gutman, H. L. (2016). The Saga of Unfulfilled Business Income Tax Reform. Temp. L. Rev., 89, 267.
Hobbs, H., Lynch, A. and Williams, G., 2017. The High Court Under Chief Justice Robert French.
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Snape, J., & De Souza, J. (2016). Environmental taxation law: policy, contexts and practice. Routledge.
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