Case P79
Judges:KP Brady Ch
LC Voumard M
JE Stewart M
Court:
No. 2 Board of Review
K.P. Brady (Chairman); L.C. Voumard and J.E. Stewart (Members)
In this reference the taxpayer is a schoolteacher employed by the Education Department of State A. In January 1977 she journeyed to Thailand as one of a group of teachers under
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a teaching scheme sponsored by the Australian Teachers' Federation in conjunction with the Departments of Foreign Affairs and of Education in Thailand. The idea behind the group visit was that it be part of an exchange scheme between teachers in Australia and South-East Asia. As the matter eventuated, Asian teachers did not come to Australia because of their inability to afford the trip, the requirement being that participating teachers from both lands pay their own fares and expenses; additionally, they were not to be paid for the teaching duties performed in the invitee country.2. In her return of income for the year ended 30th June, 1977, the taxpayer claimed the following expenditures as deductions from her salary income:
$
Return air fare Australia/Thailand 680
Cost of visa 7
Accommodation for three weeks at C,
a city in Thailand where the
taxpayer taught during her stay
in that country 70
Meals for three weeks 84
---
841
---
The Commissioner disallowed all of the above expenditures as not being deductible under sec. 51(1) of the Assessment Act. Upon the taxpayer objecting, and that objection also being disallowed, she has requested this reference.
3. The taxpayer began teaching in 1971 at a high school at T in her home State's capital city following completion of her B.A. and Dip.Ed. degrees. In 1973 she obtained 12 months' leave of absence without pay to travel to Europe with her husband, also a teacher, and it seems that she spent some time whilst in England teaching in comprehensive schools in London. She resumed teaching at the T high school in 1974. In January 1975 she undertook a three weeks' teaching trip to Indonesia similar in kind to the overseas trip which is the subject of this reference. She again resumed her appointment at the high school and taught there throughout 1975 and 1976.
4. Stemming from the fact that there were many migrant children at the school with a considerable number from Vietnam and Timor, the taxpayer became interested in the problems associated with teaching English as a foreign language. Accordingly, early in 1976 she applied for and received a release-time scholarship applicable to the first term of 1977 to study prescribed units of a migrant education course at the W College of Advanced Education. (It seems that a release-time scholarship is one by which a teacher is kept on full pay to do a course of study in an area where the Education Department feels it has a need.) In making application for that course, the taxpayer pointed to the teaching experience which she had had in Indonesia, and to the further experience of Asian schools and students that she would have on making her proposed trip to Thailand.
5. Upon returning from that country at the end of January 1977, she took up her scholarship and studied the subjects of General Linguistics I, Language Teaching Methodology I and Social Psychology of Minority Groups. The assessment for the latter subject was by means of an essay on the history, lifestyle and culture of a minority group. The taxpayer chose to write her essay on the Thai people, and in her paper she alluded to the need for teachers in Australia to be appreciative of Thailand's history and culture when dealing with Thai children and adults. Much of the material used in the essay was based on the first-hand knowledge she had obtained from her recently completed visit to that country.
6. Upon the successful completion of the course, the taxpayer became eligible to teach newly-arrived migrant children. Accordingly, in resuming duties at T high school in the second term of 1977, half of her teaching load was taken up with teaching English to new arrivals, the remaining half being devoted to teaching general English and Humanities. No additional remuneration, however, was paid for the specialist nature of her duties so far as the migrant children were concerned.
7. To complete the chronology, the taxpayer was again overseas in 1978 and 1979 (in 1978 on leave without pay, and in 1979 on long service leave for the greater part). Upon her return to Australia she was appointed to the P high school, which appointment she continued to occupy.
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8. It is appropriate to examine more closely what the taxpayer did during her visit to Thailand as her claim for deduction of the cost of getting to and from there, and for her sustenance there, is based on the ground that those expenditures were incurred in deriving her assessable income as a teacher in Australia. We were informed that the taxpayer, as one of a group of some 15 teachers, departed from Australia on 2nd January, 1977, and returned almost four weeks later on the 29th of that month. Travelling to Thailand, she stayed overnight at Kuala Lumpur and arrived in Bangkok the following day. Then, in a smaller group of eight, she journeyed by train to C, a large city in Thailand, and proceeded to the teachers' college there. On the following day she commenced to teach English to the Thai students. In answer to the question whether she could speak Thai (to which she replied in the negative), she said:
``... lessons were not intended to be conducted in Thai. Lessons were intended to help the students in the country in which you were teaching improve their skills in English, to give them practice in spoken English, to give them a chance of hearing a native speaker and having a native speaker give them lessons in spoken English. A lot of the local teachers' knowledge of grammar in English was quite poor. They wanted to have native speakers of English to help improve the spoken skills of the people we were teaching.''
9. The taxpayer taught every day from Monday to Friday from 9.00 a.m. to 1.00 p.m. for the three working weeks she was at C. Mostly she taught on her own, but occasionally she gave a lesson in conjunction with a local teacher. The afternoons were largely given over to making visits to other schools and in having general discussions with local teachers. The party left C on 22nd January to return to Australia, and en route the taxpayer stopped off at Kuala Lumpur for a period of four days, which she conceded was a holiday. However, as she very properly pointed out, no claim was made for any expenses incurred on that segment of her trip.
10. In order to succeed in her claim, the taxpayer is required to show that the expenditure outlaid on the visit to Thailand was ``incurred in gaining or producing (her) assessable income'' as those words are used in sec. 51(1) of the Assessment Act. As judicially interpreted, those words mean not only that there be a connection between the expenditure and the taxpayer's assessable income, but that the expenditure must be seen to have a direct effect on that income (see
F.C. of T. v. White 75 ATC 4018 at p. 4022). Essentially the taxpayer sought to do this by demonstrating that the Thailand experience assisted her in obtaining promotion. As a secondary argument she contended that the experience assisted her in obtaining the scholarship. There are difficulties, however, in accepting either line of argument.
11. The taxpayer informed us that she was assessed as satisfying the requirements for promotion in October 1976, some few months before she journeyed to Thailand, following upon her application made in September. It would seem that that assessment meant that she was officially regarded as suitable for promotion to the position of Senior Mistress, but would receive that promotion only as and when the appropriate vacancy took place. Whilst we accept that her application for such assessment was more comprehensive than might otherwise have been the case because she was able to allude to her Indonesian teaching experience and planned trip to Thailand, we do not consider that the assessment panel would have placed undue emphasis on an overseas teaching experience that might, or might not, eventuate.
12. Also, she was not able to demonstrate that her favourable assessment resulted in any way from the Thailand trip, as indicated from the following exchange which ensued when giving her evidence:
``Q. Did the assessors give any indication one way or the other of the degree of assistance that it [the Thailand trip] gave? - A. No. Unfortunately, in the assessment you were just given a grading in four categories, which is personal influence, scholarship and teaching skills, degree and quality of involvement and professional responsibility. They just give you an S, an A and an N grading. S is successful, N is not successful, and A is
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outstanding. There is no particular comment why you are or are not successful in any of those areas. In fact my assessment was before the trip to Thailand...''
13. In any event, the anticipated promotion and, more relevantly, the increase in income, did not eventuate, through no fault of the taxpayer's, we hasten to add, but because the higher teaching position to which she could be promoted did not become available.
14. The taxpayer pointed to the fact that her favourable assessment as a senior teacher provided her with the potential to earn a higher income. We would agree with that statement. She impressed us very much as a most competent and dedicated teacher and we have little doubt that she would have obtained promotion if the opportunity had presented itself. But, as we have already commented, to have us find in her favour she must show that the expenditure incurred in making the trip to Thailand was incurred earning her assessable income, although that income need not necessarily be derived in that same year (see White's case (supra) at p. 4020). Assessable income includes the gross income, other than exempt income, derived by a taxpayer and, in determining what is the gross income, regard must be had to what the term ``income'' is generally understood to mean, there being no definition of ``income'' in the Assessment Act (ref. the judgment of Jordan C.J. in
Scott v. C. of T. (N.S.W.) (1935) S.R. (N.S.W.) 215 at p. 219). Potential income, i.e. possible income as opposed to actual income (see the Shorter Oxford English Dictionary), is a far cry from the term ``income'' as generally understood, and therefore that argument of the taxpayer's cannot prevail.
15. At first glance there might appear to be similarities between the taxpayer's situation and that which appertained in
F.C. of T. v. Finn (1961) 106 C.L.R. 60. That case involved the expenses of an overseas trip made by a senior architect employed by the Western Australian Government during leave accumulated by him and used for that purpose; during the trip he devoted himself to the study of architectural matters, his purpose being to improve his capacity to do the work for which he was paid and to further his chances of promotion. As regards the latter aspect, it was immediate and specific. But the substantial point of difference between the taxpayer's situation and that of Mr. Finn was that, in making the trip, the latter taxpayer was acting in accordance with the conditions of his service. In giving his judgment, Dixon C.J. stated at pp. 67-8:
``He [the taxpayer] was in fact complying with the desires, and so far as going to South America was concerned, with the actual request of the Government. His journey abroad and what he did while in Europe, as well as in South America in the following year of income, was therefore in a correct sense incidental to his employment, and most relevant to it.''
That aspect does not appertain in the instant case. The taxpayer's employer, the Education Department, did not sanction the trip, and apart from the reference made to it in the taxpayer's submission for promotion, it did not officially know of it. Had the Department known, there is little doubt that it would have encouraged the taxpayer to proceed with her plans, but as was stated by the High Court in
F.C. of T. v. Hatchett 71 ATC 4184 at p. 4187, that sort of support is not of itself sufficient to warrant deduction.
16. In regard to the taxpayer's second line of argument, viz. that her income obtained under her scholarship was influenced by her Thai teaching experience, the evidence showed that she obtained the scholarship early in 1976 some months before she made the trip, although it was only after she returned from the trip that she undertook the course. In her application she cited the planned teaching experience in Thailand, but again we question the weight that an assessing body would, or even could, place on an uncertain event.
17. The taxpayer concluded her address before us by alluding to an unreported decision of another Board, Ref. No. 154/1973, wherein a teacher was allowed the expenses of a trip to South-East Asia in circumstances which the taxpayer alleged were less valid than her own. That sort of judgment as made by the taxpayer is very much a subjective one. We can only reiterate what has been said by Boards on other occasions that a great deal depends upon the
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facts of each case. On the facts that were adduced in evidence before it at the above hearing, the Board found that there was a sufficient nexus between that taxpayer's expenditure on the trip and his assessable income. Beyond that, we do not consider it appropriate to make further comment.18. Before making the necessary order, we would add this further observation. In making her submissions, the taxpayer alluded to the fact that in the assessment of her 1974/75 tax return she had been allowed a deduction for the cost of the trip made to Indonesia. Arising from that action of the Commissioner, we were invited to allow the expenditure now in issue, on the basis that the trips were similar in nature. Assuming that the material facts were no different (and that is an assumption we are not entitled to make), we can only conclude that the deduction for the 1975 trip was obtained in error.
19. For the reasons detailed above, we consider that the taxpayer had not demonstrated that the expenditure outlaid in journeying to Thailand had a direct effect on her income. We therefore consider that the decision of the Commissioner upon the objection was correct, and we confirm the assessment.
Claim disallowed
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