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Monday, 19 September 1994
Page: 943

(Question No. 1584)


Senator MacGibbon asked the Minister representing the Minister for Defence Science and Personnel, upon notice, on 27 July 1994:

  With reference to taxation rulings pertaining to Defence Force personnel:

  (1) Was the Minister or the department consulted by the Australian Taxation Office (ATO) in regard to the taxation treatment of mess fees and fitness expenses; if so, in what form did any consultations or discussions take place.

  (2) Is either the Minister or the department routinely consulted on occupation-based draft taxation rulings which concern Defence Force personnel.

  (3) If there was not any discussion or consultation regarding the taxation treatment of mess fees and fitness expenses, did the department or the Minister make a submission to either the ATO or the Treasurer (Mr Willis) once the draft ruling had been released: if not, why not.


Senator Robert Ray —The Minister for Defence Science and Personnel has provided the following answer to the honourable senator's question:

  (1) Yes, the Department was consulted by the Australian Tax Office (ATO) in regard to the taxation treatment of mess fees and fitness expenses. The Australian Defence Force (ADF) provided a representative on a committee set up by the ATO to review work-related expenses for ADF personnel. The review arose out of routine audit processing by the ATO of 1992/93 tax returns of ADF members.

  In addition to receiving input from the ADF representative on the review committee, the ATO was briefed on ADF conditions of service and also visited the Army base at Bandiana, Victoria where the committee was briefed on aspects of Service life, including mess fees.

  (2) The ATO tax ruling on work-related expenses for ADF members was the first such industry-based ruling for the ADF. The ADF was routinely consulted by the ATO during the review process and in the development of the ruling.

  (3) The ADF made a formal submission to the ATO when the draft tax ruling was circulated for comment. The final tax ruling was issued on 22 June 1994 and generally accords with the position which has been agreed between the ADF and the ATO and published to ADF members in the annual ADF Tax Guide. There were, however, several important areas where the tax ruling differs from the ADF position. These include the matters of mess fees and fitness-related expenses. The ADF has sought reasons for the rejection of arguments it presented in its submission to the ATO and is pursuing those aspects of the ruling which it considers to be detrimental to Service members. The Minister for Defence Science and Personnel has also raised these matters with the Assistant Treasurer.