Case F24

JL Burke Ch

RE O'Neill M
CF Fairleigh QC

No. 1 Board of Review

Judgment date: 4 June 1974.

J.L. Burke (Chairman); R.E. O'Neill and C.F. Fairleigh, Q.C. (Members): For the year ended 30 June 1972 the taxpayer claimed a deduction of $195 for the purchase of a wig for his wife. The Commissioner disallowed the claim.

2. The accountant for the taxpayer then wrote to the Commissioner objecting to the disallowance, and stating the basis as being that the taxpayer's wife was born with a hair disability, and could be classified as bald, and for psychological reasons she wears a wig to cover her lack of hair.

3. The Commissioner disallowed the objection and also wrote in reply to that accountant that recent decisions of the Taxation Boards of Review have established that a wig is not a medical or surgical appliance prescribed by a legally qualified medical practitioner for the purposes of sec. 82F(3)(f) of the Income Tax Assessment Act. The accountant sent to the Commissioner a further letter enclosing a certificate from a legally qualified medical practitioner and the letter states that the Commissioner will readily appreciate the medical condition of the taxpayer's wife and her embarrassment to appear in public without a wig; because her head is not fully developed it is necessary to have wigs especially made. The medical certificate sets out that she has alopecia totalis and has suffered from this since adolescence; as she is totally bald a surgical wig is essential for her mental health.

4. The decision on the objection was duly referred to a Board of Review.

5. The Commissioner's reasons for disallowing the claim as set out in the statement pursuant to reg. 35(1) are referable to both sub-para. (d) and sub-para. (f) of sec. 82F(3) and accordingly the written address submitted at the close of evidence refers to both those sub-paragraphs.

6. The taxpayer's wife gave evidence that she has suffered from alopecia totalis from a very early age, perhaps from about the age of two years. She described the effect of this condition as baldness on various parts of her body, particularly the head, the arms and legs, etc.; the hair would grow and then fall out; sometimes she would have eyebrows and sometimes not; usually she did not have eyelashes, but at the time of the hearing of the objection she did, and attributed this to the circumstance that she had recently had her first child; she had been completely bald when she became pregnant, and hair had grown in patches after the birth of the child. Thus she surmised that it might be a hormone condition.

7. The evidence was that the taxpayer's

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wife has been wearing wigs since about the age of seven or perhaps nine years. For many years legally qualified medical practitioners had recommended that she wear a wig. On the evidence this is plainly to be understood as meaning medical advice that she wear a wig, and consequently it is sufficient to comply with the requirement of a prescription in sec. 82F(3)(f).

8. The advice of the medical practitioners was that she should wear a wig because of the consequences to her mental health if she failed to do so. She was also advised to wear a wig by specialist physicians and those practising in dermatology and she believes that she consulted most of the eminent specialists in this branch of medicine in both Sydney and Melbourne and the constant advice was to wear a wig. In her address to the Board the taxpayer's wife made the interesting point (in answer to the written submission of the Commissioner's representative) that there is an impaired bodily function when hair will not grow.

9. The taxpayer's wife said, and it was tacitly accepted by the Commissioner's representative, that her father had always claimed and been allowed a deduction for the cost of the wigs upon furnishing a note from the specialist that the wig was necessary.

10. The taxpayer's wife said that she could not leave her home without wearing a wig as she would not look presentable. As a consequence of accepting and acting upon the advice as aforesaid of the members of the medical profession she had been able to remain at school to obtain her leaving certificate, undertake a secretarial course and to hold as secretary positions which she detailed, and these were highly responsible ones. The alternative she said was to stay at home and not work.

11. One of the specialists in dermatology attended overseas seminars frequently and upon his return to Australia he endeavoured to assist the taxpayer's wife with new methods of treatment, but none was successful. The only temporary beneficial effect on the baldness came from cortisone treatment over a period of 18 months, and then the taxpayer's wife had to be subjected to a drug withdrawal programme. For many years one medical practitioner had prescribed valium, amytal and similar drugs to assist her to cope with the problems arising from the alopecia totalis.

12. Under cross-examination the taxpayer's wife was asked whether the wearing of the wig in any way helped the condition of alopecia totalis and she replied that it would not have helped the condition, but it has ``helped (her) mental approach to life and things like that''. She rejected the proposition that the major benefit was in her appearance, whilst accepting that all the benefits are tied up together, and stressed the importance of not being able to do anything (scil. outside her home) without the wig so that appearance was important, as everyone likes to look normal.

13. In evidence the taxpayer's wife described the wig as being especially made for her upon a block of a particular kind imported from England because her head had not developed to normal size and was only the size of a child's head. The usual type of wig available in stores would be too big for her head. The person employed to make the wig has to take a series of measurements of the head, and the entire wig is hand made in sections. There is a mesh at the top where the hair is drawn through and the wig has pliable metal springs sewn into elastic. The hair in the wig is entirely human hair.

14. The written submissions on behalf of the Commissioner (evidently prepared before the hearing) contend that the purchase and wearing of the wig, whether by direction of a legally qualified medical practitioner or not, does not satisfy the requirement under sec. 82F(3)(d) of being therapeutic treatment and a reference is given to the definition in the Shorter Oxford Dictionary and to
17 T.B.R.D. 31Case S8,
18 T.B.R.D. 346Case T67, and Case E8,
73 ATC 55.

15. It is unnecessary to pursue this question in light of the conclusion which is reached on sec. 82F(3)(f). The contention of the Commissioner which his representative advances after an analysis of a series of decisions of Boards of Review is that it could not be said that the wig could be described as ``... specifically designed to replace or alleviate an absent or impaired bodily

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function or medical defect and... limited in normal circumstances to such replacement or alleviation''. It is further contended that even if it is accepted that the wig with which the reference is concerned had been prescribed by a legally qualified practitioner it still does not constitute a medical or surgical appliance as contemplated by the section, and so the submission is that following the decisions in the previous ``wig'' cases the claim must fail.

16. A summary of the reported decisions on the present subject is as follows. In September 1967 (
18 T.B.R.D. 23Case T23) No. 3 Board of Review unanimously disallowed a claim for the cost of a hair piece which had been recommended by a physician. The taxpayer in that case had radical surgery to his scalp in respect of a melanoma; skin from his leg was grafted over the wound; hair would not grow over the graft and the physician advised the taxpayer to wear a hair piece to protect the graft from dangerous knocks and strong sunlight to minimise the re-occurrence of cancer. The taxpayer purchased a normal hair piece from a wig maker. In disallowing the taxpayer's claim for a deduction pursuant to sec. 82F(3)(f) the Board held that to answer the description of a medical or surgical appliance, an appliance must be manufactured or distributed or generally recognised as an article intended to achieve a medical or surgical end. The Board said that the hair piece in the instant case was of the normal cosmetic type and its character did not alter by having been recommended by a physician or by having been purchased for medical reasons. In para. 9 of his reasons Mr. McCaffrey said that there was no doubt that it was important for that taxpayer to protect his scalp from injury and from an appearance angle to wear a toupee and further said that the toupee does not of itself have any medical or surgical value.

17. In October 1971 (Case C61,
71 ATC 272) No. 2 Board of Review unanimously disallowed a claim for the cost of a wig which had been recommended by a physician. The taxpayer in that case had suffered from childhood from baldness (alopecia totalis). He acquired a made-to-measure wig which he wore at all times, except when sleeping; use of a wig enabled him to mix more freely socially; new wigs were purchased at intervals of about two years and deductions were allowed for the cost in all instances except the last two; the baldness was a source of embarrassment to the taxpayer and caused him to withdraw from society and the wearing of the wig alleviated this condition. The supplier of that wig was described on the invoice as ``Ladies Hairdressers, Street and Theatrical Wigmakers and Hair Specialists'', and it was the practice of the supplier to make that taxpayer's wigs to his scalp measurements, the hair being knotted to a base fitted with elastic grips at the side and metal inserts to make it sit properly; as far as practicable the hair colour of the wigs remained unaltered but the coiffure changed from time to time.

18. In para. 6 of its reasons No. 2 Board said wigs are generally used for cosmetic purposes and are manufactured, sold and recognised as being worn for those purposes; such wigs cannot on any tenable view be regarded as medical or surgical appliances; there was little to distinguish that taxpayer's wig from the generality of such articles; it was made to that taxpayer's own measurements and, because he was bald, the base was smaller than otherwise would be the case and the method of gripping the scalp was different from the method used in wigs worn by people with natural hair. However No. 2 Board said that those were differences of detail and not of essence, and that that taxpayer's wig appeared indistinguishable in nature and character from those usually worn; further that wigs in general and that taxpayer's in particular could not be described as medical or surgical appliances.

19. A further case came before No. 2 Board of Review in April 1973 (Case E8, 73 ATC 55). That taxpayer's daughter suffered from a disease (monilethrix) which caused her hair to snap at about the level of the scalp, resulting in an appearance of baldness. A skin specialist advised that there was no known cure and gave a certificate that ``she must wear a wig for medical and psychological reasons''. The wig was unlike wigs used for decorative and fashion purposes to the extent that it was held in place by a combination of flat steel springs and elastic and was made of human hair; it was replaced on three occasions as a result of

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the child's physical growth and general wear and tear; prior to that reference the Commissioner had allowed three claims for deductions in respect of these wigs. The Board by majority disallowed the appeal and confirmed the assessment. In his reasons for dissenting Mr. Todd (Member) referred to the evidence of the medical practitioner that the important thing was for the girl to grow up as a normal child and she could not do that unless she wore a wig; otherwise the child ran the risk of being ``psychologically crippled''. The only issue in that case on the reasoning of Mr. Todd was whether the wig could be described as a ``medical appliance'' within the meaning of those words in sec. 82F(3)(f) of the Income Tax Assessment Act and he concluded after careful reflection that the unanimous decision of No. 2 Board in Case C61, 71 ATC 272 was wrong.

20. In his reasons for dissenting, Mr. Todd said that on reconsideration it seemed to him that the requirement that the appliance be prescribed may do no more than ensure that an appliance is not acquired unnecessarily, and he did not think that the requirement that the appliance be prescribed denies that an appliance may be a medical appliance in some circumstances and not in others. Thus Mr. Todd rejected the proposition that ``it is not sufficient for a taxpayer to show that a physician has prescribed an appliance to be used for medical or surgical ends'', and also the proposition that the appliance be one ``which is manufactured as or distributed as or generally recognised to be an article or thing intended to achieve a medical or surgical end''.

21. In August 1973 the question was again considered by No. 2 Board of Review (Case E32,
73 ATC 273). That taxpayer's wife suffered from an irreversible pathological condition of the scalp (alopecia capitis and psoriasis of the scalp) which was aggravated by emotional stress. It was considered to be necessary to protect her scalp from direct sunlight and a wig was worn in accordance with medical advice; its use had the effect of preventing extreme embarrassment and psychological stress which she would otherwise have experienced in company, and thus, by avoiding such stress, prevented worsening of the condition. The wig had no therapeutic quality in relation to the alopecia, but alleviated a chronic anxiety state which would otherwise aggravate psoriasis. The maker of the wig had described it in evidence as being unlike normal cosmetic wigs in that it was constructed of human hair to the individual measurements of the patient; undue pressure which would cause pain or discomfort had to be avoided, and it was held in position by a system of metal springs. The maker stated that in the trade wigs possessing such characteristics were referred to as ``medical'' wigs, but literature in evidence did not contain such a description. The Board by a majority disallowed the appeal and confirmed the assessment. The sole question was whether the wig was a medical appliance for the purposes of para. (f) of the definition of ``medical expenses'' as in sec. 82F(3) of the Income Tax Assessment Act 1936-1971.

22. The majority of the Board considered that the facts did not differ in material respects from those in Case E8, 73 ATC 55. and adhered to the view that the phrase ``prescribed by a legally qualified medical practitioner'' carried the notion of an appliance prescribed by a physician or surgeon in relation to the health of his patient, that is, prescribed for medical or surgical reasons.

23. For the reasons given by him in Case E8, 73 ATC 55 Mr. Todd was of the opinion that the taxpayer was entitled to succeed as the wig in question objectively regarded was seen to be a medical appliance.

24. With all due respect to those who see the matter differently, the reasoning which impelled Mr. Todd to differ from the other members of No. 2 Board is highly persuasive; and again, with respect, his reasoning is in accord with the present day tendency of both the medical profession and the Courts to consider psychological treatment (as in damage claims arising from traffic incidents and industrial accidents) to be of major importance in restoring an injured person to a useful status in the community.

25. In the instant case the wig is literally applied to the head, in the sense that it is placed securely on the head, and it has

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several merits including the enhancement of the appearance of the taxpayer's wife. That particular benefit in itself would obviously be insufficient to result in an allowable deduction. But the fact that the wig provides that benefit does not deprive the taxpayer of an entitlement to a deduction under sec. 82F(3)(f) where it is established upon the evidence that the wig is prescribed as a medical or surgical appliance by a legally qualified medical practitioner. Sometimes the distinction between a medical appliance or surgical appliance will be self-evident, at other times it may be dependent upon expert evidence, and oft-times the distinction will be of little consequence, if it is demonstrably clear that the appliance is one or the other. If a wig is prescribed to alleviate a condition of neurosis arising from embarrassment, etc., in presenting an unnatural appearance as in the present case, then the wig is a medical appliance.

26. The professional advice given to the claimant that she should wear a wig because of the effect on her mental health if she failed to do so has the consequence that the payment for the wig is a medical expense in respect of a medical appliance prescribed by a legally qualified medical practitioner within the meaning of sec. 82F(3)(f) of the Income Tax Assessment Act 1936-1972.

27. For these reasons the claim made by the taxpayer is allowed and the assessment is to be amended accordingly.

Claim allowed

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