Background of the case

In the current case, the appellant was a previous employee of the statutory body Australian taxation office. The appellant took consecutively recreational leave and long service leave. She had a plan for retirement but it was not formally announced. However, the agency due to her long absence and considering the plan for retirement reallocated her work. On returning from vacation, she found that the employer made her working place redundant. This made her to apply for voluntary redundancy to the national director of the Commission.

The commission initially dismissed the claim that her role was made redundant and did not agree for providing voluntary redundancy (Tretola 2013). Then after reconsidering the decision, the commission agreed for providing an offer for voluntary redundancy formally. The appellant was dismissed after formal offer for voluntary redundancy was made by the agency. The main reason of dispute between the Australian taxation office and the appellant is the taxability of the amount received on termination. The appellant argued that no tax is payable on the amount received as genuine redundancy payment. On the other hand, the agency argued that tax payable on the termination amount is $7825. Therefore, the main dispute was in determining the taxability of the redundancy payment (McCormack 2013).

Sections that have been violated

The primary provision relating to genuine redundancy payment is provided under section 83-175 of Income Tax Assessment Act 1997. If the position of employee becomes genuinely redundant then the amount that is received on termination is known as genuine redundancy payment. In general, the amount received from the genuine redundancy should be more than the amount received on voluntary retirement. In this case, in order to resolve the dispute it is important to ascertain whether the employee was dismissed by the agency due to genuine redundancy (Sekhar and Gudimetla 2015). It is provided in the Public Service Act 1999 that a statutory agency can only terminate an employee if the agency has employee more than its required capacity.

In addition to this, the agency can also terminate an employee in accordance with the clauses provided under the agency agreement. In the agency agreement, the clause 97.1 provides that the agency will provide appropriate career opportunity to its employee or allow the employee to leave the organization with respect and dignity (Leeser et al. 2015). This can be done by the agency only if due to change in technology or change in the nature of performance of the job the position of the employee has become genuinely redundant.

Sections that have been violated

It should be noted that only if these conditions mentioned above apply then only the position of the employee is considered as genuinely redundant and the redundancy amount received is tax-free. In the clause 97.2, it is provided that this procedures that is mentioned above applies only if there is a requirement to replace the employee in the job. It should be noted that the requirements of the clause 98 should be followed if there is no requirement to replace the job of the employee.

Analyzing the decision of the tribunal and court

Tribunal

The Tribunal in its decision stated in para 25 that the employee was removed by the agency from employment. The reason provided in para 26 by the tribunal for removing the appellant from the employment is that the agency was unable to use the service of the employee effectively. That means from the agencies point of view the appellant is in excess of the required capacity of the agency. However, in the paragraph 28 of the decision the Tribunal stated that the position of the employee is still available in the agency (Walpole 2014). That means in order to perform the job of the employee an officer of the same level as that of the appellant will be required.

The Tribunal in paragraph 29 of the decision argued that there is a need to make a distinction between the position becoming genuinely redundant and the situation where the employer for performing the job does not require the employee (Stern 2013). On comparing the facts of the cases the Tribunal concluded that as per section 83-175(1) of the Income Tax Assessment Act 1997  the dismissal of the employee cannot be regarded as genuine redundancy as the position of the employee he is still available with the agency. Therefore, the inability or the unwillingness of the employer to use the service of the employee for a particular job cannot be regarded as a case of genuine redundancy under the provisions of the section 83-175(1) of the Income Tax Assessment Act 1997.

Court

The court has to decide various questions of law in this case. It was before the court to decide whether the payment that has been made by the Australian Taxation Office to the appellant for dismissal from employment is a genuine redundancy payment as per section 83-175 of the Income Tax Assessment Act 1997. The reason for dismissing the employee as provided by the Australian Taxation Office is the excess of employee available to the agency. The clause 97.2 of the agency agreement was inconsistent with the clause 97.1 of the agency agreement and the provisions of the Public Service Act 1999. Therefore, it is required by the court to make a decision regarding the validity of clause 97.2 of the agency agreement (Hurley and Hurley 2015). The court is required to make a decision whether the amount paid to employee terminated under clause 97.1 of the agency agreement should be considered as employee termination payment under section 83-175 of the Income Tax Assessment Act 1997.

Analyzing the decision of the tribunal and court

In general, the statutory agencies cannot use the consolidated reserve fund for making termination payment other than cases of genuine redundancy. It is also a matter of decision by the court whether the agency can use consolidated reserve fund for making payment for termination of employee other than the aforementioned case. The court in the judgment stated that the tribunal has not raised certain issues discussed above. The judge was of the opinion that as the appeal was misconceived so it cannot be treated as a question of law (Williams 2016).

The judge was of the opinion that the critical question of whether the amount received from termination of employment should be regarded as case of genuine redundancy payment as per section 83-175 of the Income Tax Assessment Act 1997 was not raised. The appellant was dismissed from the employment as the employee was considered as excess in requirement of the agency under the provision of section 29(3) (a) of the Public Service Act 1999 and the agency agreement under clause 97.1.

Analyzing the decision

In the argument provided by the appellant, it is stated that the Tribunal has made certain blunders of law. In the oral submission of the appellant, it is stated that the Tribunal was distracted by the clause 97.2 of the agency agreement. The Tribunal as an introduction to the fact-finding used the clause of 97.2. The question of law was not raised by the fact-findings so it is not legally impeachable as per section 44 of the AAT Act. On analyzing it can be seen that the concept provided under 97.2 of the agency agreement and the section, 83-175(1) of the Income Tax Assessment Act 1997 are similar in nature (Lee 2016). The Tribunal by referring to the clause 97.2 of the agency agreement tried to make a distinction between the narrower concept of redundancy as provided under section 83-175(1) of the Income Tax Assessment Act 1997 and the general concept of redundancy.

In the case of Dibb detail, fact-finding was conducted by the court so the appellant argued that in this case the Tribunal has not conducted a detailed finding of facts as was done in the mentioned case. Therefore, the appellant stated that it is a blunder of law that is made by the Tribunal as per section 44 of the AAT Act. The appellant raised the question in the manner in which the Tribunal has collected facts related to the case (Berger 2016). The Tribunal by using the method of written statement from the officers and cross-examination of the evidences obtained the relevant facts related to the case. The method of finding facts used in the case of Dibb is not applicable in this case because the first appeal was made before the Tribunal.

Analyzing the decision

Therefore, it is the decision of the Tribunal to use any method that it deems appropriate for collecting the facts of the case. It was further argued by the appellant that the tribunal has misconstrued the agency agreement clause 97.2. On analyzing the proceeding of the Tribunal it can be seen that the Tribunal has not made any misconstruction of the section 83-175(1) or the clause 97.2 of the agency agreement. The employee was not required for performing the job was the argument forwarded by the agency under clause 97.1 of the agency agreement. In the case of determining the tax, the agency stated that, as the position is not genuinely redundant so the amount received is not a genuine redundancy payment (Kraus 2013). Therefore, the taxation office argued that the taxpayer should pay tax on the amount received on termination.

It is provided under section 83-175(1) of the income tax assessment Act 1997 that if the position of the employee becomes genuinely redundant then it will be considered as genuine redundancy. In order to make a decision it is necessary to ascertain whether the amount that is received by the appellant is because of a genuine redundancy of the position. On analyzing the fact it can be seen that there is no inconsistency between the position becoming redundant and the excess employee in the agency (Ikpeze and Ikpeze 2015).

The finding of the Tribunal and the language of the section 83-175(1) of the income tax assessment Act 1997 is similar. It can be seen that there is a relationship between the meaning of redundancy provided in section 83-175(1) and the employment termination that is mentioned under section 29(3) of the Public Service Act. Therefore, it can be said that there has been no inconsistency in finding of facts by the Tribunal or there has been no error of law. The appellant failed to establish that tribunal has made any error regarding law so the appeal was dismissed (Schaffa 2016).

Conclusion

The discussion above have shown that the amount that is received on disposal should be treated as employee termination payment and the payment is taxed. It was argued by the taxpayer that the amount received under section 83-175 of the Income Tax Assessment Act 1997 is a genuine redundancy amount so it should not be taxable. The appellant went for a private ruling in order to resolve the dispute (Colton 2015). The decision in the private rolling was not in favor of the appellant. Then the appellant went to the Tribunal Court for dispute resolution. However, in the Tribunal Court the decision was against the appellant.

Therefore, the appellant went to the federal court for appeal. The Tribunal argued that the position of the employee has not disappeared in the agency. Therefore, the amount paid cannot be treated as genuine redundancy payment. The court agreed with the decision of the Tribunal. The court held that it is a case of voluntary redundancy so the amount received should be taxable. The court further agreed with the finding of the tribunal that there is a need to distinguish between genuine redundancy and the case of unwillingness of the employer to use a particular employee. Therefore, the decision of the Tribunal that the tax should be paid on the redundancy amount is held correct by the court. The court rejected the contention of the appellant and provided the decision that the employees required to pay tax on the termination amount.

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