Case T77

Members:
P Gerber SM
KL Beddoe SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 20 October 1986.

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Dr P. Gerber and K.L. Beddoe (Senior Members)

The applicant in this case is a qualified nursing sister employed at the relevant time at a small bush hospital in the country. Her home was some distance from the hospital and, due to staff shortages, the applicant was compelled at times to travel twice on the same day to the hospital. She recognised that travel from home to work and return was not an allowable deduction. However, she claimed an amount of $330 in the 1984 tax year as the cost of the additional travel, that is, on the occasions when she was called upon to return to the hospital for the second time to help out. This was put to the Tribunal on the basis of ``common sense''.

2. Regrettably, common sense has never been recognised as one of the canons of construction in the interpretation of the Income Tax Assessment Act 1936. The whole position of expenses incurred in travel to and from work was examined in detail by the Board of Review No. 2 in Case P6,
82 ATC 30. The Board stated at pp. 32-33:

``11. The issue touches upon a large number of taxpayers and, because people have been travelling to work in ever-increasing numbers ever since the steam locomotive took over from the horse-drawn buggy, the matter of deductibility of travelling expenses has exercised the attention of the Courts on a significant number of occasions over a considerable span of years.

12. Nearly a hundred years ago, in the case of
Cook v. Knott (1887) 2 T.C. 246, Pollock B. and Hawkins J., sitting as Judges in the Queen's Bench Division, had cause to examine whether expenses incurred by a solicitor in travelling from his home to perform legal duties in a neighbouring town were deductible. The Court there held that no deduction was available to the taxpayer as he incurred the expenses not in the

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ATC 1094

performance of his duties but because he chose to live where he did.

13. The same basic reasoning was applied by the House of Lords in
Ricketts v. Colquhoun (1926) A.C. 1, and by the Court of Appeal in
Newsom v. Robertson (1953) 1 Ch. 7.

14. Whilst the legislative provisions under which the above cases were decided are not identical with sec. 51 of the Australian Income Tax Assessment Act, it came to be accepted in this country that the cost of travelling between home and work was not a deductible outgoing. It was not until 1958 when the case of
Lunney & Hayley v. F.C. of T. was decided (ref. (1958) 100 C.L.R. 478) that judicial authority of the High Court on the issue was available. In that case, the High Court by a majority of four to one rejected any question of the deductibility of the cost of travelling between a taxpayer's residence and the place of his employment. In a joint judgment, Kitto, Williams and Taylor JJ. stated that sec. 51 of the Assessment Act provided for deductibility of outgoings of a `business' character only. They categorised the expenditure of travelling between home and work `as a personal or living expense' because it was incurred as `a necessary consequence of living in one place, and working in another' (see p. 501). They also stated that merely because an expenditure could be regarded as a prerequisite to the earning of income, it did not follow that for the purposes of sec. 51 it was incurred in gaining or producing that income.''

3. The above analysis makes it clear that the issue of travel expenses incurred between home and work has now been settled in this country. The result may well defy ``common sense''. Indeed, Dixon C.J. opined in Lunney ``... that if the matter were to be worked out all over again on bare reason, I should have misgivings about the conclusion... If the whole subject is to be ripped up now it is for the legislature and not the Court to do it.'' (ibid. at p. 486).

4. I am not persuaded in this case that travel to work twice rather than once a day alters the character of the expenditure - when all is said and done, it is still travel between home and work, and thus excluded from deduction under sec. 51 of the Income Tax Assessment Act.

5. One final point needs to be made. It was submitted on behalf of the respondent, that the applicant should fail on the onus of proof in that she had not established the total mileage involved in the additional travel claim advanced in this case. I find myself singularly unmoved by this submission. The applicant gave clear evidence, both as to distance between home and hospital, as well as the number of occasions she was called back. For good measure, the respondent made no attempt in cross-examination to challenge this evidence or to attack the applicant's credibility. Although it cannot affect the outcome of this application, I feel compelled to state that the applicant impressed both as a dedicated professional as well as an honest witness.

6. The Tribunal therefore affirms the decision under review.

Claim disallowed