Facts
The cantonal tax administration of Appenzell Ausserrhoden assessed the married couple [A.A.] and [B.A.] for the cantonal and communal taxes 2012. The taxpayers lodged an objection and requested the child and education expenses deduction. The tax authority dismissed the objection, as the taxpayers' daughter, [D.A.] , had taxable assets of around CHF 1.3 million and was therefore not considered to be in need of support. The taxpayers appealed to the Higher Court of the Canton of Appenzell Ausserrhoden, which granted the appeal and allowed the child deduction of CHF 6,000.--. The tax authority appealed to the Federal Court and requested the annulment of the contested decision.
The lower court had established that the parents, based on their legal obligation, would actually have to contribute more than 50 percent to the child's needs. The tax authority criticized this interpretation and application of Art. 38 para. 1 lit. a StA/AR and argued that the daughter would also actually have to depend on the support.
Considerations
The Federal Court examined the interpretation and application of Art. 38 para. 1 no. 2 (child deduction) and 3 (education expenses deduction) of the Tax Act of the Canton of Appenzell Ausserrhoden. The lower court had interpreted the relevant factual elements of Art. 38 para. 1 lit. a StA/AR to the effect that the parents, based on their legal obligation, would actually have to contribute more than 50 percent to the child's needs.
The tax authority criticized this interpretation and application of Art. 38 para. 1 lit. a StA/AR and argued that the daughter would also actually have to depend on the support. However, the Federal Court found that the tax authority's criticism was…