Federal Commissioner of Taxation v. Ruth Nancy ColemanJudges:
Supreme Court of Western Australia
Wickham J.: This is an appeal from a decision of the No. 2 Board of Review by which the Board allowed the objection of the respondent taxpayer to the disallowance by the appellant Commissioner of a deduction under sec. 82D of the Act from her assessable income in respect to the year of income ending the 30th June 1975. The claim of the taxpayer was for the allowance of a deduction under sec. 82D(1) in respect to a housekeeper wholly engaged in keeping house for her and in caring for her child under the age of 16 years. The claim was disallowed by the Commissioner ``because
ATC 4356there are no special circumstances which would make it just to allow a deduction''. Upon the objection being referred to the Board, the Board by majority substituted its opinion for that of the Commissioner (as it was entitled to do under sec. 193(1)) and upheld the objection.
The Commissioner purports to appeal to this Court under sec. 196(1) of the Act which provides for such an appeal ``from any decision of the Board which involves a question of law''.
The foundation for the deduction, as it was then, was in sec. 82D(1) which provided that ``where... a person is wholly engaged in keeping house... for a taxpayer and in caring for - (a) a child of the taxpayer less than sixteen years of age;... the taxpayer shall be entitled to a deduction...''.
The qualification to that was sec. 82D(4) which read as follows: -
``Where a taxpayer is married and the housekeeper is not, during the year of income, engaged in caring for the spouse of the taxpayer, being a spouse in receipt of an invalid pension under the Social Services Act 1947-1963 -
- (a) he shall not be entitled to a deduction under this section unless the Commissioner is of opinion that, because of special circumstances, it is just to allow a deduction; and
- (b) the deduction shall be of such amount, not exceeding Three hundred and sixty-four dollars, as, in the opinion of the Commissioner, is reasonable in the circumstances.''
The taxpayer was a married woman.
The primary facts as unanimously found by the Board were not in dispute and I adopt the Board's statement of them verbatim as follows: -
``4. In the year ended 30th June, 1975, which is the year of income with which we are concerned, the taxpayer was absent from home on parliamentary business on 177 days. Of these, 89 days were occupied by actual sittings of the Senate, 65 days were occupied by travelling, and 23 days by requirements to be absent interstate on other duties connected with her parliamentary role. In the first six months after the taxpayer's election she travelled 85,000 miles by air. In the full year she made 24 trips to country centres in Western Australia, from Albany in the south to Kununurra in the north, and from Esperance in the south-east to Exmouth in the north-west. Weekend commitments occupied 15 Saturdays and 17 Sundays. There were cabarets, balls, barbecues, dinners, theatre evenings, appearances on behalf of Cabinet Ministers, attendances at community organisations, branches of the taxpayer's political party and divisional councils, a farewell to the 'Nella Dan' on its way to the Antarctic and so on. Each month when at home she had five fixed monthly commitments, plus responsibilities to the local School's Parents and Citizens Association. The taxpayer had prior to her election become known as a consumer affairs expert and she continued her work in this field. In relation to this, one person was good enough to telephone her, from a party, at 2.00 a.m. The time difference between Western Australia and 'the Eastern States' can cause her telephone answering duties to commence at 7.00 a.m. There was more, but we have said enough for present purposes. Her duties were continuous and arduous, and were none the less so because she had chosen this life.
5. Turning to her family situation, the taxpayer's husband was also a busy person. He is in fact now a Commissioner of the Commonwealth Conciliation and Abitration Commission, but at the relevant time he was Secretary of the Western Australian Trades and Labour Council. His wife put his position thus:
- `He was negotiating on behalf of union members for pay and for conditions under the awards; he was advocating before the Industrial Commission; he was also a member of the Interstate Executive of the A.C.T.U., which called him away from home, and because he was the only recognised trade union leader in Western Australia, it was frequently necessary for him to negotiate any disputes that came under State jurisdiction rather than Federal jurisdiction. Also, to try
ATC 4357to liaise between industry and employees when disputes arose.'
6. There are two children of the marriage, a daughter who was in the year in question aged 19, and a son then aged 5. The age of the son made it crucial in all the circumstances for the taxpayer to obtain assistance in the home, and a fulltime housekeeper was engaged for the whole of the year save for a period of some 12 to 14 days.
7. The taxpayer's son attended kindergarten on a sessional basis during the year in question. The housekeeper engaged from time to time lived in the taxpayer's house, looked after the taxpayer's son and attended to the full range of household duties, including the preparation of meals. The taxpayer paid the housekeeper, provided her with a full housekeeping allowance, and paid her son's clothing and medical bills, and his kindergarten expenses.''
On these facts it could be argued that the housekeeper was not wholly engaged in keeping house for the taxpayer but was wholly engaged in keeping house for the taxpayer and her husband (or partly for one or the other) and in caring for their child. No point was raised as to this, and the objection at all times, here, before the Board and before the Commissioner, was dealt with on the basis that the respondent qualified for the application of the opinion referred to in sec. 82D(4) if other facts existed upon which the opinion could lawfully be formed. This finding of fact, that the housekeeper was wholly engaged in keeping house for the taxpayer and in caring for her child, is implicit in the decision both of the Commissioner and of the Board.
The only issue before the Board was ``simply a question whether because of special circumstances it is just to allow a deduction'': see T.S.p.4. This of course was understood to mean whether the Board should be of that opinion (or not) on the facts to be found. No question of construction of the statute or other question of law was raised before the Board, although I do not think that this necessarily entails that the decision of the Board did not involve a question of law.
Counsel for the taxpayer/respondent raised that last question as a preliminary question going to the jurisdiction of this Court and submitted that no question of law was involved in the decision.
I have come to the conclusion that that submission should be sustained and that this Court lacks jurisdiction on that ground.
An able and subtle argument was addressed to me by Mr. Kennedy Q.C. on behalf of the Commissioner, which was designed to draw into the Board's decision questions of statutory construction. The argument broadly involved the submission that given the primary facts, the relevant statutory criteria for decision involved questions of construction of the statute and that adopting the criteria which it did, the majority of the Board misconstrued (or at least arguably misconstrued) the statute, or misunderstood (or arguably misunderstood) the extent of its power. Given the correctness of that, then the decision would, I think, involve a question of law even though no question of law was argued.
It is convenient to set out and comment upon the grounds of appeal seriatim.
It is said that the majority of the Board erred in law and failed to apply the proper principles;
``(i) in holding that sec. 82D(4) of the Income Tax Assessment Act conferred an unfettered discretion upon the Appellant and therefore upon the Board of Review;''
This ground is based upon an observation made, in referring to the legislation, in para. 11 of the reasons of the majority, ``we can think of no provision more apt to give an unfettered discretion, and less apt to ensure that any decision given in respect of any one particular fact situation will be of any use whatsoever in deciding what should be done in any other fact situation''.
This was said in the context of making reference to prior discretionary judgments of the Boards on fact situations, and in saying that it was wrong to attempt to lay down any kind of fixed criterion. The majority had previously set out the provisions of the subsection and, in my opinion, it was saying no more than that the discretion, although
ATC 4358limited by specialty of circumstance and justice of result, was not fettered by findings of fact in other cases or by prior expressions of opinion based on those facts.
I find no question of law involved in the decision and arguable on the ground stated.
``(ii) in taking irrelevant factors into account in exercising their discretion.''
To this ground was added particulars taken from para. 13 of the reasons of the majority, ``the extremely busy public life of the taxpayer and the need to maintain through the housekeeper a continuity of stable home life for the taxpayer's son''.
Relevance of criteria is of course a question of law, but I do not think it possible to insinuate a question of law into the decision merely by submitting that certain criteria adopted are not relevant, or are arguably not relevant. It must be demonstrated that there is a genuinely arguable legal question. A question of law should be really and not merely colourably involved:
F.C. of T. v. Miller (1946) 73 C.L.R. 93 per Rich J. at p. 101. The appellant must do more than merely pose a question of law:
Buckland v. F.C. of T. (1960) 34 A.L.J.R. 60 at p. 62. The conclusion which I reach upon this has an air of arbitrariness or question begging about it, but it is a conclusion which is itself a matter of judgment rather than of inference in the ordinary sense. My conclusion is that the matters mentioned by the majority as being, it was submitted, not relevant to the formation of their opinion having regard to the construction of the statute, is a submission which is not sufficiently debatable to qualify as a real legal question. The weight as distinct from the relevance of the matters may be debated, but that is not a question of law. I am fortified in this conclusion by the contention of the Commissioner that relevant criteria are confined to circumstances involving the claimant spouse having been deserted by the other or, if not deserted in the technical legal sense, suffering from the involuntary absence or incapacity of the other spouse, and going no further. It was said that the provision could never confer a discretion upon the Commissioner to allow a deduction to a married woman (or a married man) whose spouse voluntarily went to work, even although the work be such as to create in practice a one parent or no parent household for long periods or regularly. It was likewise said that where the claimant (man or woman) voluntarily went to work so that a like situation was created periodically or regularly that the Commissioner had no discretion. I am unable to find anything in the subsection or in surrounding provisions to constitute a discussable basis for what is said to be that point of law. The effect of sec. 82B and 82D is as follows:
1. Where a married person contributes to the maintenance of a person, the former person is entitled to a deduction for the latter person being:
- (i) the former person's spouse;
- (ii) the former person's child under 16;
- (iii) a student between 16 and 25 (whether the former person's child or not);
- (iv) the former person's parent or the parent of the former person's spouse;
- (v) an invalid relative not under 16 being the former person's child, brother or sister, the parent of the person or of the person's spouse.
The deduction is reduced by a proportion of the separate net income of the dependant.
Being married is, self-evidently, not a disqualification except that a married person is not entitled to a deduction for a daughter-housekeeper whatever the circumstances.
2. Where a person not married contributes to the maintenance of a person, the former person is entitled to a deduction for the latter person being:
- (i) the former person's child under 16;
- (ii) a student between 16 and 25 (whether the former person's child, or not);
- (iii) the parent of the former person;
- (iv) an invalid relative not under 16 being the former person's child, brother or sister or parent;
- (v) a daughter-housekeeper but only if the former person is a widow or a widower.
The last provision excludes a never married or a divorced person who has a housekeeper daughter, from the daughter-housekeeper allowance. A ``de-facto'' spouse is excluded from the list of ``dependants'' but included as a claimant. The deduction is reduced by separate net income of the ``dependant'' as before.
In the case of both the married and unmarried taxpayer it is the income of the ``dependant'' which is relevant, not the income of the taxpayer.
3. Where a married person engages a full-time housekeeper that person is entitled to a deduction for the housekeeper if the housekeeper is keeping house for that person and caring for
- (i) that person's child under 16;
- (ii) that person's dependant child under 16;
- (iii) that person's dependant invalid relative not under 16 being that person's child, brother or sister;
- (iv) that person's invalid spouse.
The means of a child under 16 or of an invalid spouse are not relevant except that the spouse must be in receipt of an invalid pension. An invalid relative (other than an invalid spouse) must be dependant. There is no direct ``means test'' of the person cared for. Any ``means test'' is again the means of the dependant not the means of the taxpayer.
Section 82D(3) then has the effect that if the person is entitled to a direct deduction for a spouse then for the relevant period the person shall not be entitled to a deduction for the housekeeper unless the spouse is an invalid spouse.
Having dealt with all these qualifications for the deduction, the legislation provides by sec. 82D(4)(i)
``that where the person is married he shall not be entitled to a deduction for a housekeeper (except one caring for an invalid spouse) unless the Commissioner is of the opinion that, because of special circumstances, it is just to allow a deduction.''
In the case, therefore, of a married person the deduction, notwithstanding the word ``entitled'', is discretionary except in the case where the housekeeper is caring for an invalid spouse.
4. Where a person not married engages a full-time housekeeper that person is entitled to a deduction for the housekeeper if the housekeeper is keeping house for the person and caring for
- (i) that person's child under 16;
- (ii) that person's dependant child under 16;
- (iii) that person's dependant invalid relative not under 16 being that person's child, brother or sister.
Again the means of a child do not matter although in the case of an invalid relative dependancy is a condition. Insofar as means do matter it is again the means of the person cared for, not the means of the taxpayer.
A deduction for a housekeeper is denied under subsection (3) to a widow or widower who is entitled to a deduction for a daughter housekeeper. A divorced person or a ``de facto'', whether of the housekeeper or of some third person, is entitled to the deduction. Section 6 provides that ``child'' includes an ex-nuptial child.
It seems that the Parliament for revenue purposes in some respects (although not in all) favours de facto and illegitimate relationships above legitimate ones. The provisions are sexist in tone, e.g. a daughter housekeeper is provided for but not a son housekeeper. These considerations, however, do not seem to throw any light upon the validity of the Board's decision.
The Parliament has set quite a difficult comprehension test for the citizen and I am not certain that I have passed it. Anyone who does will see that, although interpretation requires time, the denotation of the words is in the end clear and that no question of legal construction arises, or at least none which is involved in the decision in this case.
``(iii) in finding that special circumstances within the meaning of sec. 82D(4) of the
ATC 4360Income Tax Assessment Act existed in the case and in particular in finding that the extremely busy public life of the Respondent and the need to maintain through a housekeeper a continuity of stable home life for the Respondent's son constituted or were capable of constituting special circumstances.''
As to the finding of special circumstances on the grounds mentioned: whether this may be put as an inference of fact from primary facts or an evaluative opinion from primary facts, the finding involves matters of degree and of judgment. As such it is not a finding of concrete fact from other facts as in ordinary inductive inference, but nevertheless for the purposes of the law is a finding of fact, or involves a question of fact rather than a question of law. The nature of the mental process is discussed particularly by Windeyer J. in
Da Costa v. Cockburn Salvage and Trading Pty. Ltd. (1970) 124 C.L.R. 192 at p. 213. Questions which are questions of degree are usually questions of fact: see F.C. of T. v. Miller ibid. at p. 103.
The submission that the matters referred to were not capable of constituting special circumstances is a submission of law appealing to the construction of the statute but, simply as a matter of reading the sections while taking in the arguments advanced, I am unable to conclude that there is a discussable case that these matters must fall outside the circle of considerations embraced by the legislation.
``(iv) in holding that it was just to allow any amount as a deduction to the Respondent in respect of a housekeeper.''
It was submitted that it could not be just to allow any amount because the taxpayer was not in need and her spouse was not entitled to a deduction for her, and other arguments were advanced relating to the facts of the case. ``Just'' probably in this context does not mean ``just'' in the abstract but ``just'' according to law. The decision however is a decision of fact, although it might involve a question of law if statutory criteria can be isolated and it can be shown that the opinion about justice is based on irrelevant considerations. This I think, is as near as the appellant comes to finding a question of law involved in the decision. The majority in para. 13 could not find any indication in the legislation that economic capacity to pay was relevant. Put in terms of relevance, as distinct from weight, this in my view is an arguable question of law. Whether this question was ``involved'' in the decision is another matter. What the majority did was to reject the idea of ``some kind of means test'' as necessarily disqualifying the taxpayer otherwise entitled to the benefit of the Board's opinion. Indeed the Board did have regard to some extent to economic factors when the majority referred to high incomes and high rates of tax. In my view this question of law was not involved in the decision.
``(v) the Board should have held that there were no circumstances in the particular case which constituted or were capable of constituting special circumstances within sec. 82D(4) of the Income Tax Assessment Act.''
This ground as framed in the first alternate does not yield any question of law. It might be that as a matter of inference or of judgment, the Board should have formed a different opinion or, insofar as any matter may turn on inference rather than opinion, adopted a different inference, but those are questions of fact. As to the second alternate, there is, I believe, no starting point for a submission that there were no circumstances which were capable of constituting special circumstances.
There is a construction point in the phrase ``the Commissioner is of the opinion that, because of special circumstances, it is just to allow a deduction''. The point is whether both the specialty of circumstances and the justice is each a matter for the opinion of the Commissioner or whether only the justice of the allowance is. It might matter in the context of the powers of an appellate tribunal but the question was not involved in the Board's decision.
Had this Court assumed jurisdiction the question before it would, subject to that, have been the lawfulness of the Board's decision rather than its correctness -
Denver Chemical Manufacturing Co. v. C. of T. (N.S.W.) (1949) 79 C.L.R. 296 per Dixon J. at 312. The answer which I would have given is obvious from these reasons but ``whereof I cannot speak, thereof I must be silent''.
The appeal is dismissed.