Case F16

Judges: FE Dubout Ch
GR Thompson M

N Dempsey M

Court:
No. 3 Board of Review

Judgment date: 19 September 1973.

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N. Dempsey (Member): This taxpayer made a claim in his return for the year ended 30 June 1971 for a deduction of $630.52 in respect to travelling expenses to Great Britain. He had been employed until 31 December 1970 by an Australian University and in support of his claim the following memo was attached to his return -

``The taxpayer was employed in Australia to 31 December 1970 and since then has gone to Great Britain for a period of approximately three (3) years to gain further experience in Surgery in English Hospitals. It is pointed out that the taxpayer had already passed the examinations for the Royal Australian College of Surgeons before leaving and had been a member of that body for sometime. It is therefore reiterated that the purpose of the visit is to gain further valuable experience in his particular field and in view of this the costs of his travelling to England are claimed below as an allowable deduction. Would you also please note that, the taxpayer's spouse and three (3) children accompanied him but no claim has been made for any part of their expenses. It is also pointed out that the taxpayer's claim only included the cost of getting him to England and does not include any expenses from the date of arrival in England.''

2. The claim was disallowed in full and an objection having been lodged and in respect to this item disallowed, reference has been sought to a Board of Review. Two other items were covered by the objection, one of which was allowed prior to reference to the Board and the Commissioner concedes that the other claim involving ``Sundry Expenses'' $25 should be allowed.

3. Taxpayer was still overseas at the time of the hearing and evidence was given on his behalf by his father who is a co-holder of a power of attorney from his son. His evidence was to the effect that the son left for overseas late in November 1970 and arrived there on 2 January 1971. His intention was to remain overseas for a minimum period of three years.

4. Prior to his departure he sold his home and his car and since his departure the only assets he has retained in Australia are his household furniture and effects which are stored, a fluctuating current account with a bank and a few investments.

5. He has been virtually speaking in constant employment in England since his arrival there and apparently will remain there until he is able to obtain a suitable appointment in Australia when he then proposes to return. He has no guarantee from his former employer in Australia of re-engagement should he return, and awaits a suitable position becoming vacant when, by application, he will seek to obtain it.

6. The case submitted for the taxpayer is that he proceeded overseas to broaden and enlarge his knowledge and skills in medicine so that he would be equipped to achieve, when he returned to Australia, a greater amount of income. Reference was made to the decision in
F.C. of T. v. Finn , 106 C.L.R. 60 and to
F.C. of T. v. Hatchett , 71 ATC 4184 to support the claim.

7. However, I am unable to see that anything that was said in either of these cases lends support in this case and remarks in the

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ATC 80

latter case are against the allowance of the deduction.

8. The claim is based on sec. 51(1) and as the taxpayer was not and is not engaged in business, it must, to qualify, be a loss or outgoing incurred in gaining ``assessable income''. The term ``the assessable income'' has been held not to be restricted to the assessable income of the particular year. However, to succeed the expense must be found in some activity which produces or will produce assessable income.

9. In this case, the income producing activities of the taxpayer in Australia had ceased prior to the expenditure being incurred and to the date of the hearing they had not recommenced and there is nothing to indicate when they might recommence. As was said by Menzies J. in the case of F.C. of T. v. Hatchett (supra), at p. 4187, in dealing with the question of the university fees ``I am unable to find any connection between the payment of the fees and the assessable income of the taxpayer.'' Such University fees were disallowed.

10. I think that the same can be said of the claim for travelling expenses in this case. No connection can be found between such expenses and the assessable income of the year ended 30 June 1971, which, as already stated, was earned prior to the expenses being incurred. The incurring of such expenses is, in my view, too far remote from any income which may be earned in Australia in the future to be taken into consideration on the basis that it may relate to future increased earnings.

11. I accordingly uphold the decision of the Commissioner that the claim should be disallowed, and in accordance with the request of the Commissioner, the assessment should be further amended to allow the claim of $25 ``Sundry Expenses''.

Claim allowed in part