Kentish v Commissioner of Taxation

REASONS FOR JUDGMENT 1 This is one of three matters heard together, because the issues are relevantly the same. The principal reasons for decision have been given in Bond v Commissioner of Taxation [2015] FCA 245 (Bond). It is not necessary to repeat them. I made an order on 19 March 2015 dismissing this appeal. These are my reasons for doing so. 2 Mr Kentish was employed by Qantas Airways Ltd as an airline pilot. He first worked for Trans Australia Airlines as a pilot from 1978, and from 1990 he worked for Australian Airlines Ltd. Upon the sale of Australian Airlines Ltd to Qantas in about 1992, he became a pilot for Qantas until his employment was terminated on 28 May 2008. 3 On 20 February 2012, Mr Kentish resumed employment with Qantas as a Flight Simulator Instructor. His contract of employment is, of course, different from that of Mr Bond, but not in any material respect. 4 In October 2007, he was diagnosed with an injury or illness called entrapment of the femoral nerve. As a consequence, on about 5 September 2007, his medical certificate was cancelled and his licence was cancelled by the Civil Aviation Safety Authority, so he could no longer work as an airline pilot. 5 On 5 September 2007, Mr Kentish applied for "the Full Capital Benefit" under his Loss of Licence Insurance. On 26 May 2008, he received formal confirmation in writing from Qantas by letter of 16 April 2008 that his application had been approved. As the procedure anticipated (see Bond at [78]), he received at that time the Deed of Release for execution, details of staff travel benefits for medically retired employees, and information about the Qantas Superannuation Disability scheme. The letter set out the capital lump sum benefit. 6 Mr Kentish signed the Deed of Release on 28 May 2008 and returned it to Qantas. It was relevantly in the same terms as that applicable to Mr Bond. It clearly required the termination of his employment with Qantas. He accepts that his employment with Qantas was terminated at about that time. 7 He subsequently received from Qantas on about 10 June 2008 the estimate of his loss of pilot's licence payment (LOL payment) showing that it was taxable as an Employment Termination Payment. He subsequently received the net amount on or shortly after that date. 8 This appeal, too, concerns the question whether tax was payable on the LOL capital payment as an Employment Termination Payment. That was the basis on which the Commissioner assessed that payment as taxable on 22 May 2009, and following consideration of the objection on 29 June 2011. That decision was affirmed by the Administrative Appeals Tribunal in its decision given on 4 February 2013. 9 Counsel for Mr Kentish and the other two pilot officers of Qantas whose cases were heard together helpfully provided separate written submissions for each. In the case of Mr Kentish, the applicable agreement is the Qantas Airways Limited Flight Crew (Short Haul) Certified Agreement 2002 (SHCA) as it is in the case of Mr Bond. The relevant insurance policy is the Scottish Re Policy, common to all claims. Counsel did not suggest any material difference in any of the documentary materials. Mr Kentish's contract of employment has the same features as those concerning Mr Bond to which I have referred in Bond at [83-84], although the one month's notice of termination is not a feature of the particular facts pertaining to Mr Kentish. 10 For the reasons given in Bond, I conclude that this appeal should also be dismissed. In short, in the particular circumstances, the receipt of the LOL capital payment was "in consequence of the termination of" his employment under s 82-130(a)(i) of the Income Tax Assessment Act 1997 (Cth). In the case of Mr Kentish, I note (to indicate that it has not been overlooked) that his LOL payment was less than in the case of Mr Bond or Mr Purvis, as the age adjustments to the entitlement referred to in Bond at [100] came into play. I do not consider that that affects the conclusion about the application of s 82-135(i). Again, I will hear the parties as to costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.