Baya Casal v Deputy Commissioner of Taxation

Federal Court of Australia|2025-02-18|Before: McEvoy J

BACKGROUND 3 On or around 9 December 2021, the applicant received a payment of $15,326.96 from her employer, the Ivanhoe Grammar School, on termination of her employment as an early learning centre assistant. This followed a restructure of the school's Early Learning Centre (ELC), and advice from the school that the applicant would be eligible to move to a new role as a redeployment or that she could take a redundancy. The applicant chose not to accept the new role, which would have had reduced hours and changed working days, and her position was terminated. 4 The school treated the applicant's payment as an employment termination payment (ETP) within the meaning of s 83-130 of the ITAA97, rather than as a genuine redundancy payment within the meaning of s 83-175 of the ITAA97. ETPs and genuine redundancy payments are taxed in a different manner, ETPs having a less beneficial tax treatment. The income tax treatment of ETPs is outlined in Division 82 of the ITAA97 and the treatment of genuine redundancy payments is outlined in Subdivision 83-C of the ITAA97. 5 On 21 December 2021 the applicant applied to the respondent for a private ruling on the issue of whether her payment ought to be treated, and taxed, as a genuine redundancy payment for the purposes of s 83-175(1) of the ITAA97. 6 On 26 April 2022 the respondent issued a notice of the private ruling to the applicant. The respondent ruled that the applicant's payment was an ETP (and not a genuine redundancy payment). The relevant facts and circumstances stated in the description of the scheme for the purposes of the private ruling were as follows:

You were employed by Ivanhoe Grammar School (Employer) in the Buckley House Early Learning Centre, starting on 28 January 2014 as an early learning centre (ELC) assistant.
You were employed on a part-time basis of 34.56 hours per week
On 5 October 2021, the Employer notified you that the ELC structure was to be remodelled with the part time hours to decrease and working days changed. The skills and duties for the role are similar.

THE STATUTORY REGIME 13 As has been mentioned, the way that the applicant's payment is taxed depends on whether it is classified as a genuine redundancy payment pursuant to s 83-175(1) of the ITAA97 or an ETP pursuant to s 83-130 of the ITAA97.

Genuine redundancy payments 14 The central provision relevant for present purposes is s 83-175(1) of the ITAA97, which is in the following terms: 83-175 What is a genuine redundancy payment? (1) A genuine redundancy payment is so much of a payment received by an employee who is dismissed from employment because the employee's position is genuinely redundant as exceeds the amount that could reasonably be expected to be received by the employee in consequence of the voluntary termination of his or her employment at the time of the dismissal. 15 A genuine redundancy payment must satisfy the conditions in s 83-175(2) of the ITAA97, which are as follows: (a) the employee is dismissed before the earlier of the following: (i) the day the employee reached pension age; (ii) if the employee's employment would have terminated when he or she reached a particular age or completed a particular period of service - the day he or she would reach the age or complete the period of service (as the case may be); (b) if the dismissal was not at arm's length - the payment does not exceed the amount that could reasonably be expected to be made if the dismissal were at arm's length; (c) at the time of the dismissal, there was no arrangement between the employee and the employer, or between the employer and another person, to employ the employee after the dismissal. 16 Part of the redundancy payment is treated as non-assessable non-exempt income: s 83-170(1) and (2) of the ITAA97. That is, that particular part of the payment is not included in a taxpayer's assessable income and is not subject to income tax: s 6-15(3) of the ITAA97. 17 The only part of a genuine redundancy payment that is subject to this favourable tax treatment is the part of the payment that does not exceed the amount calculated using the following formula (the Tax Free Amount) in s 83-170(3) of the ITAA97: Base amount + (Service Amount x Years of service) 18 The integers in this formula are defined as follows: (a) the base amount is $11,341 for the income year ending 30 June 2022 (the year during which the applicant's payment was made); (b) the service amount is $5,672 for the income year ending 30 June 2022; and (c) years of service means the number of whole years in the period, or sum of periods, of employment to which the payment relates. 19 Any part of a genuine redundancy payment that exceeds the Tax Free Amount would ordinarily be taxed as an employment termination payment. 20 If the applicant's payment of $15,326.96 was a genuine redundancy payment, then the entire amount would be non-assessable non-exempt income and excluded from her assessable income (i.e., the entire amount would be tax free).

Employment termination payments 21 A payment is classified as an ETP if it is received in consequence of termination of employment, not less than 12 months after termination, and it is not a payment mentioned in s 82-135 of the ITAA97 (one such payment being a genuine redundancy payment). 22 ETPs are taxed under Division 82 of the ITAA97 differently from genuine redundancy payments. ETPs do not receive the benefit of the same tax free concession as genuine redundancy payments (although there can potentially be some concessionary tax treatment). 23 The Tax Free Amount of a genuine redundancy payment is a type of payment mentioned in s 82-135 of the ITAA97, so that amount is not treated as an ETP. The remainder of a genuine redundancy payment is treated as an employment termination payment. 24 The respondent accepts that the applicant's payment was received in consequence of the termination of her employment. Therefore, if the applicant's payment was not a genuine redundancy payment, it would be treated as an ETP. In these circumstances it is unnecessary to dwell further on the nature of an ETP for the purpose of the IAA97.

THE FACTS OF THE SCHEME THE SUBJECT OF THE PRIVATE RULING 25 Before turning to the question of whether the applicant's payment is properly to be regarded as a genuine redundancy payment, it is necessary to be clear about the court's task on an appeal from an objection decision, and in particular about the facts of the scheme by reference to which this question is to be answered. There is some controversy between the parties as to what factual matters constituting the scheme can be inferred, and whether certain documents can be considered by the court in determining whether the respondent's conclusion that the payment to the applicant was not a genuine redundancy payment was correct.

Principles relevant to the appeal of private rulings and objections 26 The parties have described the legislative regime and the applicable principles relating to the making and review of private rulings in their respective appeal statements and submissions. The aspects of this description which are relevant for present purposes are as follows. 27 A taxpayer can object against a private ruling in the manner set out in Part IVC of the TAA53 if they are dissatisfied with it: s 359-60, Sch 1 TAA53. In deciding whether to allow or disallow an objection against a private ruling, the Commissioner can consider any additional information that the Commissioner did not consider when making the ruling: s 359-65(1), Sch 1 TAA53. 28 Importantly for present purposes, in reviewing a private ruling: (a) The court's function on appeal is to review the Commissioner's opinion as stated in the ruling as to the way in which the relevant tax law applies to the scheme which was the subject of the ruling: Reef Networks at [6]; Bellinz v Federal Commissioner of Taxation (1998) 84 FCR 154 at 160 (Hill, Sundberg and Goldberg JJ); see also Commissioner of Taxation v Eichmann [2019] FCA 2155 at [21] (Derrington J). (b) The relevant material to be considered on appeal is the ruling and any documents identified in the description of the scheme which were provided by the applicant, or used by the Commissioner: Eichmann [2019] at [22]; Rosgoe Pty Ltd v Commissioner of Taxation [2015] FCA 1231 at [12]-[15] (Logan J); ElectNet (Aust) Pty Ltd (Trustee) v Commissioner of Taxation [2015] FCA 456 at [35] (Davies J); Cooperative Bulk Handling Ltd v Federal Commissioner of Taxation [2010] FCA 508 at [16] (Gilmour J); and Bellinz at 160. (c) The court cannot, on appeal, redefine the scheme stated by the Commissioner in the ruling or create its own scheme, but must ascertain how the law applies to the facts as stated: Eichmann [2019] at [22]; Rosgoe at [12]-[15]; Cooperative Bulk Handling at [16]; Keycorp Ltd v Commissioner of Taxation [2007] 158 FCR 153 at [3] (Allsop J); Commissioner of Taxation v McMahon (1997) 79 FCR 127 at 140 (Beaumont J). It is the specified scheme and only the specified scheme which the court considers on appeal: Hastie Group Ltd v Commissioner of Taxation (2008) 172 FCR 496 at [3] (Ryan, Gordon and Foster JJ), citing McMahon at 144. The court generally cannot depart from that description in any respect: Re Cooper Bros Holdings Pty Ltd trading as Triple R Waste Management v Commissioner of Taxation (2013) 93 ATR 324 at [8]; but see Eichmann v Commissioner of Taxation (2020) 280 FCR 10 at [16] (McKerracher, Steward and Stewart JJ) (Eichmann (2020)). (d) The court is not entitled to engage in the finding of primary facts. The facts stated in the scheme form the matrix in which a ruling is made about how the tax law applies in that scenario. The court cannot add to those facts and cannot travel beyond them: Eichmann [2019] at [22]; Rosgoe at [12]-[15]. Further, the court cannot investigate the facts, make assumptions, or make good any deficiency in the scheme description: Cooperative Bulk Handling at [16]; Hastie Group at [3]. (e) Generally speaking, a court cannot draw inferences of fact which supplement the ruled facts: Eichmann (2020) at [16]. A court can, however, draw inferences from ruled facts which are both obvious in nature and where there are no other possible competing inferences that might be drawn: Eichmann (2020) at [16]. A court is also permitted to construe the ruled facts so that they can be better understood. Especially where the facts are expressed with language that is too general, or by the use of words that are vague or unclear, the court may need to construe the language used, in the context of the ruling, to give the ruling a workable meaning in order to allow the court to discharge its function of determining whether the Commissioner's application of the law to the stated facts is correct. Such a process of construction does not involve the drawing of inferences of fact: see Eichmann (2020) at [15].

Whether the applicant would have had a material reduction in her remuneration 29 Insofar as the facts of the scheme are concerned, there is an issue between the parties as to whether the applicant's remuneration would have been subject to a material reduction. For present purposes it is to be noted that the applicant submits that the three ELC positions she was offered by the school involved a material reduction in her remuneration as well as a reduction in hours. 30 The respondent contends that a material reduction in the applicant's remuneration is not a fact which is set out in the scheme as it is defined in the private ruling or the Objection Decision. The respondent maintains that this information cannot be gleaned from the facts which are stated in the scheme, including the amount of the applicant's payment itself. The respondent submits therefore that a material reduction in remuneration cannot be inferred and is not a fact which can be considered by the court in this appeal. 31 I consider there to be an air of unreality to the respondent's submissions in this regard. The facts of the scheme include that the applicant's new or proposed role as an early learning assistant would involve decreased working hours: (at [3]). The facts of the scheme also include that one of the new roles would involve a reduction in working hours from 34.56 hours (at [2]) to 28.5 hours (at [4]). I accept, as the applicant submits, that as a matter of common sense and human experience there is an obvious inference to be drawn from that fact that her renumeration in such a role would also be reduced: see Eichmann (2020) at [16]; Djokovic v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2022) 289 FCR 21 at [82] (Allsop CJ, Besanko and O'Callaghan JJ). There is no competing inference able to be drawn, and drawing the inference that there was to be a material reduction in the applicant's remuneration does not contradict any of the existing ruled facts: Eichmann (2020) at [16]. As will be seen, there is also incontrovertible documentary material which establishes that this is so. I accept, therefore, that to understand the fact of reduced hours also to involve a material reduction in remuneration constitutes a permissible construction of the ruled fact which is consistent with accepted principles, and that it is appropriate to proceed on this basis.

The relevance of the 5 October 2021 letter 32 The fact that the applicant's remuneration was to reduce, and the extent to which that would have occurred if she accepted one of the new roles offered to her by the school, is set out in a letter which was sent to the applicant by the school on 5 October 2021. The letter is referred to in the private ruling, but not otherwise explained. Indirect reference is also made to the letter in the facts of the scheme themselves at [3] and [4]. 33 The 5 October 2021 letter contains an attachment which, under the heading "[p]roposed three new ELC Co-educator positions", sets out the total hours of work per week, the days and hours to be worked each day and the annualised salary attached to each of the three proposed new roles (Role 1, Role 2 and Role 3). 34 The applicant submits that the court is able to and indeed should consider the 5 October 2021 letter in order to construe and better understand the facts of the scheme (particularly at [3]-[4]). That is, to construe the facts of the scheme to understand that: (a) the position in the example in scheme [4] would have involved the applicant working 28.5 hours per week in circumstances where she had been working 34.56 hours per week (and that this was in fact the proposed role with the largest number of hours as the other two were for 21.5 hours per week); (b) there would thus have been a reduction in hours and thus annualised salary between the applicant's existing roles and the roles offered to her by the school of between approximately 20 and 40 per cent; and (c) the most remunerative position offered to the applicant would have paid her $40,636, and the other two positions would have paid her $30,644. 35 In relation to this aspect of the 5 October 2021 letter, the respondent submits that the scheme does not set out the hours of two of the roles which were offered to the applicant (being the two which were for 21.5 hours per week), nor the amount of remuneration of any of the roles. The respondent submits that the only information as to the rates of remuneration in the scheme is that of the termination payment paid to the applicant, which cannot be used to infer her remuneration in any respect. The applicant, so the respondent submits, cannot rely on facts which are not stated in the scheme as defined where no obvious inference can be drawn from the facts which are stated. The respondent otherwise takes a neutral position on the issue of whether the 5 October 2021 letter can be taken into account by the court. 36 I accept that the reference to the 5 October 2021 letter in the ruling, both as a document to which the respondent had regard and indirectly in scheme [2], is enough for the court to have regard to the letter itself with a view to drawing factual inferences: Eichmann 2020 at [16], citing Eichmann [2019] at [22]; Co-operative Bulk Handling at [26], citing Bellinz at 160. I accept also that there is nothing preventing the court from using the 5 October 2021 letter to identify uncontroversial ways in which the facts of the scheme may be construed and better understood, and that there is no controversy in adding to the understanding of the ruled facts by noting what would have been the change in the applicant's working hours and remuneration in each of the new roles offered to her. To the extent that the respondent submits that it is not permissible to do so because these facts are not stated in the scheme itself, I do not accept that submission. 37 For its part the respondent drew the court's attention to the 5 October 2021 letter to illustrate a fact different to that relied on by the applicant, being the nature of the new roles offered to the applicant by the school. An aspect of the respondent's case on the appeal is that the applicant was not made redundant because there were other roles at the school (outside the ELC) available to her. In this regard, the 5 October 2021 letter contains the following passage: Going forward, the School would still require three co-educator positions which are available for your redeployment. These roles are in addition to the existing lunch and rest break cover co-educator role. Details of the proposed new co-educator positions are attached, along with a copy of the position description. Other roles available for your redeployment are any other suitable role advertised on the School's Careers page on our website. 38 The respondent accepts that the availability of other roles within the school beyond the fact that she was offered three ELC roles is not referred to specifically in the scheme as described in the private ruling. The respondent submits, however, that there is an inference that could be drawn from the content of the 5 October 2021 letter that there were other suitable roles which the applicant could have performed advertised on the school's website. 39 Again, the respondent makes no submission as to whether the court is permitted to, or should, having regard to the relevant principles, draw this inference from the content of the 5 October 2021 letter, submitting only that whether to do so is a matter for the court. 40 The applicant's position, however, is that contrary to the fact of the hours and remuneration attached to the proposed new roles, the inference the respondent points to in the 5 October 2021 letter is not a permissible one. First, she submits that the scheme refers only to three new ELC roles and does not refer with any specificity to other roles at the school. The applicant maintains that to draw an inference that other roles were "available" in the sense referred to in Dibb v Federal Commissioner of Taxation (2004) 136 FCR 388 would be contrary to the facts of the scheme. Secondly, the applicant submits that even if it were possible to look at the letter to identify additional facts, the letter merely directs attention to the school's website and does not identify any other available positions. The letter, she submits, says nothing about whether there were in fact any other roles advertised on the school's website. Thirdly, the applicant submits that even if an inference could be drawn that there were other roles advertised, there would be no evidential basis for a finding that any other positions as might have existed were sufficiently similar to the applicant's pre-restructure position as to prevent what otherwise would be the genuine redundancy of that pre-restructure position. The applicant submits that such a finding would not be an "obvious inference" for the court to draw: Eichmann (2020) at [16]. 41 If it were able to be drawn from the letter, the inference that there were other suitable roles available within the school may be relevant in determining whether there was a genuine redundancy. In my assessment, however, such an inference, cannot be drawn from the letter. 42 I have accepted, consistently with the principles identified in Eichmann (2020) (at [16], approving the propositions summarised by Derrington J in Eichmann [2019] at [22]), that it is permissible for the court to use the 5 October 2021 letter to define and better inform an understanding of the scheme. It is not, however, permissible to use it to identify additional facts. I accept that the inference the respondent submits could be drawn from the letter involves the identification of new and controversial facts which would depart from the facts of the scheme as defined. The letter states that "any" suitable roles would be advertised on the school's website and no more. The respondent's suggested inference is that not only were there in fact roles advertised on the website, but that those roles were sufficiently similar to the applicant's pre-restructure position as to be relevant to the question to be determined on this appeal. I am not satisfied that the fact of there being available similar or suitable roles for the applicant advertised on the school's website is an "obvious inference" to be drawn from the letter. To draw the inference suggested by the respondent would be to identify additional facts for the scheme which would be contrary to the existing facts, particularly [4].

The relevance of the payslip dated 9 December 2021 43 The other document which the parties submit is relevant to the issues in this appeal is the final payslip the applicant received on 9 December 2021. The payslip is relevant to the issue of whether, and the extent to which, the applicant's remuneration would have decreased if she had taken up one of the post-restructure roles offered to her. The payslip is not mentioned in the ruling itself, but is listed as one of the documents considered by the respondent in the Objection Decision. 44 The applicant submits that the payslip should be considered by the court as evidence of the remuneration she received in her pre-restructure position. According to the payslip, as at 9 December 2021 the applicant was working 0.92 Full Time Equivalent hours, and her annual salary was $50,698.88. The applicant submits that her remuneration as detailed in the payslip can be used by the court to compare what her annual salary was in her previous position to what it would have been in any of the post re-structure roles she was offered by the school as set out in the 5 October 2021 letter. That is, by comparing the applicant's annual salary on the payslip to the alternatives listed against the new roles in the 5 October 2021 letter, it can be seen that her annual salary would have been reduced from $50,698.88 to either $40,363 or $30,655. It is said that the court can infer that this is a reduction in the order of 20 to 40 per cent. 45 The applicant submits that these factual matters are not controversial and that they are inferences which are able to be drawn. Alternatively, she submits, the court can consider the payslip in order to construe and better understand the ruled facts (at scheme [4]), and that this involved no departure from authority: see Eichmann (2020) at [16]. 46 The respondent's position is that whether to infer facts from the payslip is a matter for the court, and that the approach should be the same as that which is taken in relation to the 5 October 2021 letter. 47 As I have explained, I am satisfied that it is permissible to consider the 5 October 2021 letter in order better to understand the roles the applicant was being offered by the school, and that they would have reduced her working hours by some 20 to 40 per cent. For the same reason I accept that the payslip is also able to be considered to draw factual inferences as to these matters, and better to understand the facts of the scheme as set out which are stated in the scheme (and further revealed by the letter). There can be no controversy as to the quantum of the applicant's remuneration, nor as to the remuneration proposed in the three new roles offered to her. Indeed, as the applicant submits, there is no competing inference able to be drawn from the documents. 48 As to the applicant's alternative submission regarding the payslip, I accept that the payslip and its stated remuneration of $50,698.88 is something to which the court may have regard in order to construe the parts of the scheme regarding the roles offered to the applicant on 5 October 2021 by the school. I accept that when regard is had to the payslip, in addition to the 5 October 2021 letter, it is apparent that the applicant's remuneration would have been reduced by approximately 20 to 40 percent if she had accepted one of the new roles offered to her. 49 As I have explained, I accept that a reduction in remuneration of some 20 to 40 per cent is material. In circumstances where an employee is working and being paid by the hour, I reject the respondent's submission that such a reduction is only modest. Indeed, I regard the submission as untenable.

The relevance of the 28 October and 16 November 2021 letters 50 The respondent also drew the court's attention to two further letters, dated 28 October and 16 November 2021, which are said to illustrate additional facts not set out in the scheme as defined in the private ruling. The respondent contends that these letters contradict a number of the applicant's submissions in the appeal as to factual matters, and submits that: (a) the 28 October 2021 letter contains evidence that the school underwent the relevant restructure not for reasons of reducing the number of employees, but so as to reorganise the roles they were performing (specifically to have a dedicated person for each particular group of children in the ELC); and (b) like the 5 October 2021 letter, the 16 November 2021 letter contains evidence that there were vacant roles within the school to which the applicant could be redeployed - in other words that were other positions available to her. 51 The respondent notes that although the 28 October and 16 November 2021 letters are not listed in the private ruling as documents which were considered, they are listed in the Objection Decision. The letters, the respondent submits, were additional documents considered on the review of the private ruling pursuant to s 359-65 of Sch 1 TAA53. 52 The respondent's position is that the court must determine whether it is entitled to find the existence of further facts which are not explicitly stated in the ruling or, instead, determine that it is not entitled to investigate and set out new findings of fact. The respondent adopted a neutral position on this question. The respondent did, however, submit that facts able to be extracted from the 28 October and 16 November 2021 letters may impact upon on the court's consideration of the questions arising in this appeal. 53 I accept, as counsel for the respondent noted in oral submissions, that while s 359-65 of the TAA53 may allow the respondent to consider additional documents in a review of a private ruling, that section is not so broad as to allow a court on appeal to consider those additional documents in a way that would redefine the scheme: see Re Cooper Bros Holdings [34]-[46]. 54 The factual matters said to be illustrated by the 28 October and 16 November 2021 letters, being the purpose of the school's restructure and the existence of vacant roles as at November 2021, are not facts which are set out in the scheme. I am satisfied, having regard to the principles essayed by Derrington J in Eichmann [2019] and Allsop J (as his Honour then was) in Rosgoe, that to consider the letters in the way the respondent suggests would be to conduct an impermissible fact finding exercise and would involve a redefinition of the facts of the scheme.

The relevance of the 28 September 2022 email 55 The fact of a change in the applicant's working days between her existing role and any available new roles also assumed some significance between the parties. The facts of the scheme, at [3], simply state that the applicant was to have her "working days changed", without specifying which days she worked or what the change was to be to those days. In this regard the respondent sought to draw the court's attention to a letter dated 28 September 2022, received from the applicant's authorised contact, which it was submitted explains the number of days the applicant was working each week in her existing role. This, the respondent submitted, may be compared to the working days of each new role listed in the 5 October 2021 letter to determine the nature of the change, if the court determined that the letter could be considered for that purpose. 56 The 28 September 2022 email was also a document before the respondent, but reference was made to it only in the Objection Decision and not in the private ruling. 57 The applicant also referred in written and oral submissions to the 28 September 2022 email for the purpose of demonstrating the reduction in the applicant's hours and therefore her remuneration. The 28 September 2022 email sets out materially equivalent information to the 5 October 2021 letter in this regard. 58 The respondent's position is that whether or not the court can have regard to the 28 September 2022 email depends on the approach which is taken to the 5 October 2021 letter. Once again the respondent makes no substantive submissions as to the approach which should be adopted. 59 For the reasons I have explained, I have determined that to consider the facts of the hours and salary of each of the roles the applicant was offered which are contained in the 5 October 2021 letter is permissible on this appeal. I am satisfied, as the respondent submits, that the same conclusion follows in respect of the 28 September 2022 email insofar as it refers to Role 1, Role 2 and Role 3 by reference to the 5 October 2021 letter. 60 I am not satisfied, however, that it is permissible to consider the 28 September 2022 email for the purpose of construing the days on which the applicant was working in her existing position prior to the restructure. These matters are not stated in the scheme as defined in the ruling and to take account of them would impermissibly add to or supplement the facts of the scheme. Nor am I satisfied that there is anything vague or ambiguous in the facts of the ruling which require the court to have regard to the 28 September 2022 email on the subject of the days the applicant was working: see Eichmann (2020) at [15]-[16]. That is to say, I do not consider that it is necessary to better understand the phrase "working days changed" or that that expression is sufficiently ambiguous to warrant taking into account additional documents or facts. The facts of the scheme are that the applicant's working days were to change, and no more. Even if I am wrong in this respect and the 28 September 2022 email should be considered for the purpose of construing the days on which the applicant worked in her position prior to the restructure, I do not consider that this would affect my ultimate conclusion on the question raised by the appeal.

Conclusion as to the facts of the scheme 61 It follows therefore that in respect of the facts about which there was controversy between the parties, I am satisfied that the three roles offered to the applicant by the school on 5 October 2021 involved a reduction in both hours and remuneration of between approximately 20 and 40 percent. I consider this to be a material reduction in both the applicant's hours and her remuneration, had she accepted one of the three roles offered to her. 62 The facts to which the court may have regard in this appeal are otherwise limited to those which are stated in the scheme as defined in the ruling.

The respondent's case in summary 63 Against this factual background it is convenient to begin by explaining the respondent's position on the question of whether the applicant's position was genuinely redundant. The respondent submits that s 83-175(1) of the ITAA97 only applies to a limited type of redundancy, that being where dismissal from employment is because the employee's position is genuinely redundant: see Weeks v Federal Commissioner of Taxation (2013) 209 FCR 264 at [18] (Dowsett, Besanko and Robertson JJ). The respondent maintains that there will only be a genuine redundancy if an employee's position ceases to exist, not merely if an employee's services cannot be effectively used or an employer no longer wants a job to be performed by the particular person, referring in this regard to Weeks at [17] and the decision of the primary judge in Weeks v Federal Commissioner of Taxation [2012] FCA 342 at [27] (Reeves J). In the respondent's submission, the focus in considering the question of genuine redundancy is not on whether a position of a particular name has been abolished, but the underlying reality or substance of whether the functions, duties and responsibilities attached to the position are superfluous: Re CZRS and Federal Commissioner of Taxation (2015) 100 ATR 679 at [21], citing R v Industrial Commission (SA); Ex parte Adelaide Milk Supply Cooperative Ltd (1977) SASR 6 (Bray CJ, Bright and Mitchell JJ) and Jones v Department of Energy & Minerals (1995) 60 IR 304 (Ryan J). On the respondent's case that would include situations in which an employer no longer wishes to have a particular job performed: Re Coker and Federal Commissioner of Taxation (2010) 79 ATR 258 at [8], citing Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327 at 332-333 (Beazley J), which was cited with apparent approval in Dibb (Spender, Dowsett and Allsop JJ). 64 It is the respondent's position that if the employer still has a job that it wishes the employee to perform then there may not be a genuine redundancy, particularly if the duties of that job are not too dissimilar from the existing ones. In this regard the respondent gives the example of Re Marriott and Federal Commissioner of Taxation (2004) 56 ATR 1265 at [47]-[49] (a decision of the Administrative Appeals Tribunal). The respondent contends that it would only be if the employer considered that there was no available job for which the employee was suited that there might be a genuine redundancy, referring generally in this regard to Dibb. 65 On this basis the respondent's position is that the present case is simple. The applicant was employed part-time as an early learning centre assistant in the school's ELC. The school was offering three new roles at the ELC after its restructure. The facts as defined in the scheme demonstrate that he skills and duties required for these new roles were similar to the skills and duties of the applicant's existing role. The school still required employees to work in the ELC and perform similar skills and duties to the applicant's former role. The applicant could have performed one of these roles, but she chose not to do so. On this basis the respondent submits that there was an available role for the applicant, and that the functions, duties and responsibilities attached to her former position were not superfluous - the school still needed employees performing those functions, duties and responsibilities in the ELC. Thus the respondent maintains that the applicant's payment was not a genuine redundancy payment because her position was not genuinely redundant. 66 The respondent also contends that if the availability of roles other than the three ELC roles offered to the applicant were to be a permissible inference to draw having regard to the 5 October 2021 letter, then that fact would be another reason why the respondent's opinion that there was no genuine redundancy was correct. That is, there would have also been further suitable roles available to the applicant. For the reasons I have explained, however, the availability of other roles is not an inference which I would draw from the 5 October 2021 letter, so this aspect of the respondent's case falls away.

The applicant's case in summary 67 The applicant contends that her position was genuinely redundant within the meaning of s 83-175(1) of the ITAA97. She submits that the respondent's argument involves an assumption that, as long as some duties attached to a particular job remain to be performed after a restructure as part of a different post-restructure job offered to the employee, then the employee's pre-restructure position is not genuinely redundant. This, the applicant submits, is incorrect. 68 The applicant notes that as the Australian Taxation Office's Taxation Ruling (TR 2009/2 "Income tax: genuine redundancy payments") on this subject recognises, where there is a reallocation of duties and functions from one position to another position or positions as part of an organisational restructure: (1) the former position is redundant (Taxation Ruling at [26]); (2) if the employee does remain employed (which of course the applicant did not), the reason why s 83-175 may be unsatisfied is the absence of a dismissal, not the absence of a genuine redundancy (Taxation Ruling at [26]); (3) even where there is a resignation rather than a dismissal (which, in the present context, the respondent does not suggest), there is still a redundancy where the resignation amounts to constructive dismissal (Taxation Ruling at [30]); and (4) an example of constructive dismissal is where the alternative position offered is inappropriate given the employee's circumstances (Taxation Ruling at [22]). 69 The applicant submits that these paragraphs in the Taxation Ruling correctly accept that restructuring a position out of existence results in redundancy, unless (perhaps) another position exists post-restructure that closely approximates the pre-restructure position. This, the applicant contends, is the central proposition that decides the case in her favour. 70 Here, there was a reallocation of duties and functions from the applicant's position in the ELC to a number of different positions (see the scheme at [3]-[4]), and she was dismissed. This being uncontentious, the applicant submits that accordingly her position was redundant. She contends that even if it were necessary to look to whether an alternative post-restructure position was "appropriate" given her circumstances, the answer is that the alternative positions outlined in the scheme were not appropriate. This is because they involved a material reduction in hours, and in remuneration, with the working days changed. 71 The applicant submits that if she had accepted a job involving a reduction in remuneration (which she did not, and could not have been compelled to do - as to which see, for example, Abbott v Women's and Children's Hospital Inc (2003) 86 SASR 1 at [34] (Besanko J)) then she may not have been dismissed, and that this would be why s 83-175 would be unfulfilled. The applicant did not accept reduced hours and remuneration and was as a consequence dismissed. Thus the applicant maintains that the correct characterisation of the situation is that her position was genuinely redundant.

The meaning of genuine redundancy 72 I accept, as the applicant submits, that the question of redundancy is linked to the question of "the continued utility of the job which [the employee] is performing." That is, an employee becomes redundant "whenever (and for whatever reason) his [or her] employer no longer desires to have performed the job which that employee was doing": Adelaide Milk Supply at 8 (Bray CJ); 26-27 (Bright J); followed in Short v F W Hercus Pty Ltd (1993) 40 FCR 511 at 520-521 (Burchett J, Drummond J agreeing); Dibb at [33] (Spender, Dowsett and Allsop JJ), and Foster's Group Ltd v Wing (2005) 148 IR 224 at [33] (Habersberger AJA, Maxwell P and Nettle JA agreeing). 73 In this regard it may be accepted that a job becomes redundant "when the employer no longer desires to have it performed by anyone." In this sense a dismissal for redundancy is one that occurs "because the employer no longer wishes the job the employee has been doing to be done by anyone": Adelaide Milk Supply at 8, and 26-27; Short at 520-521; Dibb at [33]; Foster's at [33]. 74 A "job" for these purposes means "a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer's organisation, to a particular employee": Jones at 308; Dibb at [41]. See also Foster's at [35]. 75 As the applicant submits, where Dibb (at [43]) refers to the possibility of re-deployment into an "available job for which the employee is suited," that concept should not be understood as contemplating that a redundancy can be avoided by re-deploying an employee into any role, no matter how different from the employee's existing role. Rather, the "available job" existing after the reallocation of duties within the organisation must, as the court emphasised at [43], be "defined by reference to those reallocated duties" - that is, those particular duties. Not duties on changed working days, for fewer hours, with reduced pay. 76 In this sense it is relevant to observe that the Victorian Court of Appeal in Fosters, having considered Dibb, concluded at [36] that the critical question is whether, "through no fault of the employee his or her role no longer exists or the duties have so changed that for all practical purposes the original role no longer exists." Similarly, in Weeks at [16] (referring to Dibb) the Full Court referred to the circumstance of a position being "reorganised out of existence." 77 It follows that there may be no redundancy where the duties in an alternative post-restructure role are "not too dissimilar from the duties that [the employee] had been carrying out" (see Marriott at [47]), where they "closely approximate" those of the pre-restructure role (see Re Taxpayer and Federal Commissioner of Taxation (2011) 83 ATR 986 at [28]), where there are "no significant changes in the work performed" (see Re Sukumaran and Federal Commissioner of Taxation (2000) 44 ATR 1171 at [18]), or where there are only "some changes" (see Cowling v Commissioner of Taxation (2006) 64 ATR 1025 at [70]). In such circumstances, again adopting the language of the Full Court in Weeks (at [16]), the prior position will not have been "reorganised out of existence." 78 By contrast, as will be seen, an alternative role will be "too dissimilar" or will not "closely approximate" the pre-restructure role, or will involve "significant changes in the work performed," where the post-restructure job involves materially fewer hours of work to be performed and hence materially less remuneration to the employee. 79 In as much as the respondent's articulation of the principles regarding where there is a genuine redundancy under taxation legislation is concerned, there is force in the applicant's contention that the respondent proceeds on the unsafe footing that if a proposition is not stated in Dibb or Weeks, then it cannot be correct. As the applicant submits, it is the language of the statute which is to be construed and applied, not those cases as if they were a statute. 80 It is not necessary, for the applicant to succeed, to point to a statement in Dibb or Weeks expressly to the effect that a change in working days, or hours, will (if material) mean that a former position is redundant. As the applicant submits, these were not the facts of Dibb and Weeks, so it is unremarkable that such statements, or the converse of them, were not made in those cases. Nonetheless, I accept that Dibb and Weeks should be understood as establishing general principles which, properly analysed and applied, are consistent with the applicant's case. I will turn shortly to why I accept the applicant's submission that a material reduction in hours means that there is a redundancy. 81 As a matter of principle, however, even if there were not authority for the proposition that material alterations to days and hours of work amounts to a redundancy, that proposition must be correct. The question posed by s 83-175 of the ITAA97 is whether the employee's position is genuinely redundant. I accept that different hours on changed days means (subject to the question of materiality) that a position is different. In this sense it is obviously the case that a part-time position is different from a full-time position, a weekend position is different from a weekday position, and a position with overnight 10 hour shifts on Saturday and Sunday is different from one with four five hour shifts starting 9:00 am Monday-Friday (even if the total hours were to be the same). 82 I also accept, as the applicant submits, that if an employee's remuneration is materially reduced, that employee is no longer working the same position as the employee was formerly. It is axiomatic that remuneration is one of the few essential elements of an employment contract, and in this sense it cannot be the case that if an employee's working hours are reduced, say by half, and remuneration is correspondingly halved, the employee is nevertheless in the same "position". 83 Insofar as the respondent advances various scenarios amounting to a submission that a "position," or a "job," or the "functions, duties, and responsibilities" of that position or job can only mean the tasks that an employee is performing at work, the following may be said. The respondent's submission is that as long as the employee is performing the same tasks - even if on different days, at different times, for fewer hours, and for less pay - the "position" is the same. I do not accept that this can be so. As the applicant submits, such a submission is inconsistent with authority, and is an inapt approach to the words "functions, duties, and responsibilities", even assuming that they were a substitute for the statutory language of "position". I accept that the concepts of "duties" and "responsibilities" are wide enough to incorporate days and hours of work. 84 There is force in the applicant's submission that the mistake that the respondent makes in this regard is the same as that identified by the Fair Work Commission in Kekeris v A Hartrodt Australia Pty Ltd [2010] FWA 674 at [27], and Ulan Coal Mines Ltd v Howarth [2010] FWAFB 3488 at [17]-[18]. The mistake is to regard the test as being whether given "duties" survive restructure, whereas in fact the test is "whether the job [or position] previously performed … still exists": Kekeris at [27]. 85 The facts of Kekeris and Ulan Coal involved re-distribution of tasks to the relevant employee. The same work (or "tasks") being done in a re-organised way, the Fair Work Commission observed, is a "classic redundancy situation": Fitzjohn v Southern Cross Protection Pty Ltd [2015] FWC 1601 at [131]. 86 Insofar as the respondent raises the problem of indeterminacy (or the difficulty in "drawing a line"), I accept the applicant's submission that this ignores the reality that courts and tribunals (including the Full Court in Weeks) have considered what degree of change is required for redundancy: see generally the discussion above at [77]. 87 Finally, insofar as the respondent submits that the applicant's statements of relevant principles are underpinned by an unstated assumption that an employee's subjective views of whether a position is suitable are relevant, I do not accept that this is so. As the applicant submits, the question to which she directed submissions was the degree of change as between the previous position and a new, post-restructure, position. This does not involve a subjective assessment.

A material reduction in hours means redundancy 88 In support of the position that a reduction in her hours as has occurred here amounts to redundancy, the applicant refers to a series of cases which have arisen under the Fair Work Act 2009 (Cth). Although the respondent urges caution in relation to reliance on the interpretation of phrases in a different statutory regime, and disputes the relevance of most of the cases cited by the applicant, I accept the applicant's submission that the cases to which she refers are instructive on this point, and that it does not follow that the concept of "redundancy" is different as between income tax and industrial legislation. 89 The first of the cases decided under the Fair Work legislation to which the applicant refers is Hryhorec v Mobility Plus [2013] FWC 1072. As a result of a restructure, the employee's full-time position could not be maintained, but he was offered part-time positions involving a lesser number of hours per week (see at [26]). This was not the result of any desire to remove the employee specifically, and no accommodation could be reached about reduced hours (at [27]). Accordingly, the Fair Work Commission was satisfied that the employer no longer required the employee's former (full-time) position to be performed by anyone, that "redundancy became the outcome" (at [27]), and that this was a case of genuine redundancy (at [30]). 90 Similarly, in Irvine v Perspective Recruitment Pty Ltd [2020] FWC 5231, redundancy was referred to as a "last resort" where there could not be agreement between employer and employee as to reduced hours (that is, where an employee chose not to accept the employer's offer of reduced working hours: at [54]). See also Stanley International College Pty Ltd [2018] FWC 4843 at [19] where the Fair Work Commission concluded that an employee's position was redundant in circumstances where she had been offered alternative employment but with a 50 percent reduction in both hours and remuneration. 91 In Broadlex Services Pty Ltd v United Workers' Union (2020) 296 IR 425 (Katzman J), the relevant reduction in hours and pay was 40 per cent (at [3]). Her Honour considered (at [91]), that this involved the employer repudiating the pre-reduction contract of employment, "because [the employer] no longer required the job the employee was doing to be done by anyone." The employee's former position had, accordingly, been made redundant and the employee was entitled to redundancy pay. 92 Also, in Fair Work Ombudsman v F L Press Pty Ltd [2015] FCCA 1578 the court: (a) found (at [234]-[235]) that imposition of a part-time contract on a previously full-time employee amounted to repudiation of the contract of employment; and (b) accepted (at [236]) that, "because [the employer] no longer wanted anyone to do [the employee]'s former full-time job, the termination of his employment amounted to a redundancy for the purposes of s.119 of the [Fair Work Act]." 93 It is unsurprising, as the applicant submits, that a meaningful reduction in remuneration has been found, in all of the bodies having the most regular dealings with the issue of redundancy - the specialist industrial tribunal, the Federal Circuit Court, and this Court - to be inherent in the redundancy of the pre-restructure, more-remunerative, position. As has been observed, "[r]emuneration plays a central role in employment contracts: '[in] reality it is difficult to exaggerate the crucial importance of pay in any contract of employment'": Irving, The Contract of Employment (1st ed, Thomson Reuters, 2012) at p 303 [6.17], citing Cantor Fitzgerald International v Callaghan [1999] ICR 639 at 648 (Judge LJ).

The applicant's position became genuinely redundant 94 It follows that in the facts which present in the circumstances of this case, the reduction in hours which has occurred means that the applicant's position has become genuinely redundant. Although the respondent contends that for the most part the applicant's reliance on cases involving the Fair Work legislation is misplaced, I do not accept this submission for following reasons. 95 First, as the respondent appears to concede, the income tax cases rely on industrial cases in giving meaning to the term "redundancy." The cases cited in Dibb in the relevant part of the judgment commencing at [18] are industrial cases. In Weeks, only Dibb and Adelaide Milk Supply were (relevantly) cited. The income tax meaning of "redundancy" is, for these purposes, the industrial meaning. 96 Secondly, as the applicant submits, there is a reason why industrial cases are cited, in income tax cases, in giving meaning to the term "redundancy." The reason is that the income tax rule dealing with the consequences of a "genuine redundancy" applies in an industrial context. Section 83-175 of the ITAA97 provides for the consequences of a termination of employment: see ITAA97 s 83-1. 97 Thirdly, as the applicant also submits, it is inevitable that "redundancy" in the relevant sense is, absent some sort of statutory definition giving it a different meaning, to be given the general industrial meaning that has developed in Australia. As Burchett J observed in Short (at 521-522), the judgment of Bray CJ in Adelaide Milk Supply was cited in submissions to, and adopted by, the Australian Conciliation and Arbitration Commission in Amalgamated Metals, Foundry and Shipwrights Union v Broken Hill Pty Co Ltd, Whyalla (Termination, Change and Redundancy Case) (1984) 8 IR 34 (TCR No 1). The standard fixed in that case, and in the Termination, Change and Redundancy Case (1984) 9 IR 115 (TCR No 2), led to the insertion into awards of clauses defining "redundancy," an example of which can be seen in Short (at 513-515). The definition of the concept of "redundancy" was as follows (see cl 31(a)(i)): Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment … (emphasis added.) 98 As the applicant submits, Dibb largely applied Adelaide Milk Supply and Short. Those cases informed (in the case of Adelaide Milk) or considered (in the case of Short), the model clause set out in TCR No 1. Dibb does not fix a meaning of "redundancy" which is different from its industrial meaning. 99 Further, s 119 of the Fair Work Act, which defines "redundancy," also contains an identical concept. Section 119, like TCR No 1, contemplates the termination of employment: … at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour. (emphasis added.) 100 As the respondent notes, s 389(1) of the Fair Work Act defines "genuine redundancy," again in terms including the following: A person's dismissal was a case of genuine redundancy if: (a) the person's employer no longer required the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise; (emphasis added.) 101 I accept, therefore, that the core meaning of "redundancy" (defined in the TCR No 1 based on (inter alia) Adelaide Milk Supply, explained in Short, and applied in the income tax context in Dibb (in particular at [43])) is the same in an industrial and an income tax context. Indeed, the centrality and identity of the relevant concept was explained, by reference to these cases, in Ulan Coal at [15]: These were the circumstances in which it was necessary to consider the meaning and application of the relevant statutory provisions and, in particular, the expression "the person's employer no longer required the person's job to be performed by anyone" in s 389(1)(a) of the [Fair Work Act]. These words have long been used and applied in industrial tribunals and courts as a practical definition of redundancy (see e.g. [Adelaide Milk Supply]; [TCR Case No 1]; [TCR Case No 2]; [Short]. They have also been adopted in the National Employment Standards provided under the [Fair Work] Act in dealing with entitlements to redundancy payments (see s 119). (emphasis added.) 102 The Full Bench of the Fair Work Commission in Ulan Coal (at [17]) cited Dibb (and Jones) to give further content to the concept of redundancy. I accept, as the applicant submits, that Dibb has been frequently cited in Fair Work Commission redundancy cases. There is no suggestion in Ulan Coal that it was necessary to modify principles from Dibb to account for differences between the income tax and industrial meanings of "redundancy." I accept that this is because there are, in relation to the core concept, no differences. The concept is the same. 103 It may be observed in this regard that the respondent does not go as far as to submit that the industrial cases are not of assistance. As has been mentioned, the respondent submits rather that "caution should be exercised" in applying industrial cases. For the reasons I have explained I accept the applicant's submission that there is no need for any unusual level of caution in this particular statutory context and that the meaning of redundancy is the same in both the industrial and income tax settings. 104 Returning more directly to the present controversy, the scheme at [2] states that the applicant was employed part-time and worked 34.56 hours per week. I accept the applicant's submission that the critical fact, in light of the foregoing analysis, is in the scheme at [3]: that is, the roles that would exist after the school restructured the ELC would cause the applicant's, "part time hours to decrease," and her "working days [to] change." 105 As has been mentioned, the example at scheme [4] is that one role would involve the applicant working 28.5 hours per week, in circumstances where she had been working 34.56 hours per week. That was the role with the largest number of hours: the other two were for 21.5 hours per week. I have accepted that the alternative roles involved approximately either 20 per cent or 40 per cent fewer hours, and hence a material reduction in remuneration. 106 The applicant's position or job was one that involved working 34.56 hours per week on particular days, for particular remuneration. I accept that because there was no continued utility in that job from the perspective of the employer, and the employer no longer desired to have that job performed by anyone, that job (or position) was redundant. It would seem that this understanding is consistent with the Taxation Ruling at [26], but it is unnecessary to say anything further about the significance of the Taxation Ruling in this context. 107 Finally, I accept, as the applicant submits, that if the "appropriateness" of alternative positions were to be relevant, this would involve a consideration of whether: (a) on the one hand, the alternative positions were materially similar to her existing position in that they involved merely a "reallocat[ion of her] duties"; or (b) on the other hand, the alternative positions were "too dissimilar," did not "closely approximate" her previous position, or involved "significant changes." 108 Self-evidently the present situation is analogous to the second of these alternatives. A position involving a material reduction in hours and in remuneration, and with working days changed, is not an appropriate alternative to the pre-restructure position. Accordingly, the applicant's position was genuinely redundant.

CONCLUSION 109 The applicant's single ground of appeal having been resolved in her favour, the appeal will be allowed. There was no suggestion that costs should not follow the event, and so there will be an order to this effect also. I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McEvoy.

Income Tax Assessment Act 1997(Cth)ss 6-15(3), 82-130, 82-135, 83-17, 83-170, 83-175

Fair Work Act 2009(Cth)ss 119, 389(1)

Taxation Administration Act 1953(Cth)ss 14ZZ, 14ZZO(b), Sch

nd Federal Commissioner of Taxation (2000) 44 ATR 1171 Re Taxpayer and Federal Commissioner of Taxation (2011) 83 ATR 986 Rosgoe Pty Ltd v Commissioner of Taxation [2015] FCA 1231 Short v F W Hercus Pty Ltd (1993) 40 FCR 511 Stanley International College Pty Ltd [2018] FWC 4843 Ulan Coal Mines Ltd v Howarth [2010] FWAFB 3488 Weeks v Federal Commissioner of Taxation (2013) 209 FCR 264 Weeks v Federal Commissioner of Taxation [2012] FCA 342

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Cases Cited (25)