Over 100 terabytes of data, a case built on being a thought leader and not one disputed dollar allowed.
Your client’s home lab holds over 100 terabytes of data. His case is that the job requires a thought leader.
He claims $40,664 in work expenses in a year. The ATO audits them to zero and adds a $4,778 recklessness penalty. The Tribunal has sided with the ATO on every disputed dollar.
Hartley and Commissioner of Taxation (Taxation and business) [2026] ARTA 1590.
What happened
Start with the role. Mr Hartley worked as a Domain Sales Manager at Ericsson and his consultant profile calls him “a digital strategist, enterprise architect and exploratory developer” [9]. His case was that the role required a thought leader [12].
The audit took the $40,664 to zero and added penalty [2]-[3]. The objection won back $6,004 and revised the penalty [5]. After concessions, just under $31,870 stayed in dispute, including over 100 terabytes of storage, The Age and Apple One [7, 11]. At the hearing he was represented by his tax agent and the Commissioner appeared by counsel.
Being better at the job is not the job
Broadly, section 8-1 asks whether the employment was the occasion of the spending [24].
In Hatchett in 1971, Menzies J allowed a teacher his certificate fees and refused his Arts degree fees [26]. Encouragement from an enlightened employer, his Honour wrote, is “not, of itself, enough”. General Member Burch found Ericsson akin to that employer [32].
Burch accepted the role involved specialised expertise, yet found the activities came from general interest (and the upkeep of his professional standing) and would have happened without Ericsson, as they did before Mr Hartley joined [28, 30]. The essential character of the spending went to “income-earning capacity, rather than his income-earning activity” [34]. None of the disputed claims survived and the objection decision was affirmed [36, 39].
The reasons apply Hatchett and never mention Finn, where the High Court in 1961 allowed a salaried architect his study tour claim. For Windeyer J, generally speaking, expenses of “maintaining or increasing his learning, knowledge, experience and ability” were incurred in carrying on the calling. Whether a home lab sits closer to Finn’s tour than to Hatchett’s Arts degree is the argument the reasons never test.
The practical takeaway
A reimbursement or a role description putting the work inside the job would have changed the evidence. In 2025 Ericsson instructed Mr Hartley to keep the lab out of its work [17].
Holding the work as his own, partly so it survived any exit, was read here as spending on the career, not the job [30].
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.