Facts
The complainants A. and [B.X.] lodged an appeal against the tax assessment decisions of the Cantonal Administration for direct federal tax Schwyz for the tax periods 1997/98 and 1999/2000. The Cantonal Tax Commission Schwyz rejected the appeal. The complainants then appealed to the Administrative Court of the Canton of Schwyz, which dismissed the appeal on 16 March 2005. The complainants requested the Federal Court to overturn the decision of the Administrative Court and to reassess the direct federal tax for the tax periods 1997/98 and 1999/2000.
The complainants argued that the husband [A.X.] , as a self-employed tax consultant, was entitled to deduct losses from his self-employed activity from his income from dependent employment. However, the lower court found that the husband had given up his self-employed activity at the end of 1996 and could therefore no longer claim any deductions.
Considerations
The Federal Court examined whether the lower court had violated federal law. It found that the complainants were affected by the contested decision and were entitled to appeal. The Federal Court is not bound by the parties' requests or their grounds in administrative court appeal proceedings and can approve or dismiss the appeal for reasons other than those presented in the proceedings.
The Federal Court assessed whether the husband [A.X.] had engaged in self-employed activity during the relevant financial years 1995/96 and 1997/98. It found that the lower court had reached the conclusion, based on an assessment of all the circumstances, that there was no self-employed activity. This conclusion is not objectionable, as the husband had stated…