Case Q10

Judges: MB Hogan Ch
P Gerber M

GW Beck M

Court:
No. 3 Board of Review

Judgment date: 11 March 1983.

---

Dr. G.W. Beck (Member)

This taxpayer is an army officer and he had lodged objections to certain disallowed expenditure in tax years 1980 and 1981. The matters in dispute were set out in the reg. 35(1) statement provided by the Commissioner as follows:

• (i) no part of the amount of $53 claimed for travel insurance in the year of income ended 30 June 1980 is an allowable deduction under sec. 51(1) of the Act;
• (ii) no part of the amounts of $174 claimed in the year of income ended 30 June 1980 and of $324 claimed in the year of income ended 30 June 1981 for upkeep of a dog, is an allowable deduction under sec. 51(1) of the Act;
• (iii) no part of the amount of $113 claimed for ``cost of renting study'' in the year of income ended 30 June 1980 is an allowable deduction under sec. 51(1) of the Act;

  ---

  ATC 40

• (iv) no part of the amount of $40 claimed for ``maintenance of a wrist watch'' in the year of income ended 30 June 1981 is an allowable deduction under sec. 51(1) or under sec. 53 of the Act.

2. The insurance premium paid in 1980 year was to effect a cover during transfer from one posting to another for the taxpayer's effects because their value exceeded $15,000. The taxpayer said that his employer provided insurance cover to the extent of $15,000 for all his and his family's effects. His military accoutrements (uniforms, etc.) had a value of only $500-$600 according to his evidence, but his private effects were thought to be worth very much more than the balance of the $15,000 cover provided and he therefore arranged an extra transit insurance cover of $20,000. The premium paid, $53, is the amount in dispute. The circumstances of this claim bear such similarity to those of Case M33,
80 ATC 241 that, for the reasons set out there, the claim must fail. The taxpayer was so advised from the Bench.

3. At two locations at which the taxpayer resided as a result of army postings he felt his family needed a measure of protection when he was away from the house at night in the course of his duties. He therefore acquired and maintained a German Shepherd which acted as a guard dog. The details of the risk to his family do not require setting down; I accept that the taxpayer bona fide believed that there was risk and the presence of the dog reduced it. He agreed at the hearing that there was no difference in principle between acquiring a guard dog and fitting security locks to a family residence. The Board informed him that, unfortunately, such expenditures were excluded from sec. 51(1) by a long line of cases, the most recent of which was
Frankcom v. F.C. of T. 82 ATC 4599 .

4. In 1980 year the taxpayer was posted to attend an advanced course as part of normal progress in his army career. He knew the course required after hours study and research, as well as the preparation of papers, and he therefore rented a cottage with a bedroom surplus to family needs which he used as a study. It was, he said, used for no other purpose and he claimed $113 being one-ninth of the rent of the nine-roomed house. The Board discussed some of the many cases dealing with expenditure on home studies with the taxpayer and particularly drew his attention to the recent decisions in
F.C. of T. v. Forsyth 81 ATC 4157 and
Handley v. F.C. of T. 81 ATC 4165 . The taxpayer was informed that, in light of those decisions, his claim could not succeed.

5. The taxpayer expended $67.50 on cleaning and repairing a wrist watch and he claimed 60% of this cost, $40, on grounds that he needed a timepiece to perform his military duties and he used his watch accordingly. In answer to questions the Board was told that during ``exercises in aid to civil powers'' the taxpayer used his watch frequently. Such exercises were normally associated with floods or bushfires but there were, as well, bomb threats or bomb scares and these happen ``once a week, once every 10 days''. A wrist watch is essentially part of the personal equipment that individuals acquire to enable them to more easily function in their daily lives. Prima facie, it is difficult to accept that a person using a watch in the manner described by this taxpayer held or used the watch with a specific purpose of earning assessable income. Under sec. 53 the purpose does not have to be dominant (
National Mutual Life Association of Australasia Ltd. v. F.C. of T. 70 ATC 4134 ) but he used the watch more or less incidentally when he was performing his military duties and there surely has to be a recognisable purpose if the section is to be satisfied. Certainly the performance of the duties might have been less effective if he lacked the watch, but that is not a factor that assists in bringing the costs under sec. 53. The taxpayer argued that he used the watch in the course of his work and therefore in the course of earning assessable income and this would bring the claim under sec. 51. This line of reasoning is foreclosed by my view that the watch was essentially an item of private equipment and the repair costs were thus of a private nature and expressly denied deduction by sec. 51. But, even if it is considered that the costs are not all private, apportionment between income earning and private use on the basis established by
Ronpibon Tin N.L. and Tongkah Compound N.L. v. F.C. of T. (1949) 78 C.L.R. 47 is denied on the de minimis

---

ATC 41

principle in view of what has to be regarded as minor use in the course of performing the taxpayer's army duties. The evidence did not support anything like 60% use in the course of his work.

6. I confirm the assessments in respect of 1980 and 1981 tax years.

Claims disallowed