Case T96

Members:
PM Roach SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 31 October 1986.

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P.M. Roach (Senior Member)

The applicant is a forestry technical officer employed by the Forestry Commission of his State. At all material times he resided in the vicinity of the forest to which he was assigned in the course of his duties. His responsibilities required that from time to time he travel throughout his area and that on other occasions he should attend at the nearest regional city office of his employer. He was provided full time with a vehicle for use in the course of those duties. The applicant also derived income

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ATC 1159

from working on his father's rural property. His duties there related to the baling and cartage of hay and growing of the pea crop. Further, in relation to the hay, it was his responsibility to arrange for additional labour to be available on site. He did that by arranging for friends to assist. He provided them with transport from the city to the farm and return. On such days the total paid was shared equally. The applicant also received from his father other remuneration for his other services.

2. This reference arises because the taxpayer claims a deduction pursuant to sec. 51 of the Income Tax Assessment Act in relation to travelling expenses incurred in travelling between the two places at which be attended in order to derive his income. Since the general rule laid down in
Lunney v. F.C. of T. and Hayley v. F.C. of T. (1958) 100 C.L.R. 478 is that costs of travelling between home and work (or business) and back again are not deductible, it is material to state that his place of residence was in the immediate vicinity of his forest base and within the area for which he was responsible; that the regional city office was 50 km from his home and forest base; and that his father's farm was 120 km from his home and forest base, being 70 km beyond the regional city. That being so, the distance between the two places at which he carried out income-earning activities was such that the nearer he resided to one, the further he resided from the other, a consideration which does not seem to have been in the mind of the Court of Appeal in
Newson v. Robertson (1953) Ch. 7 which seems to have been postulated on the assumption that distance between place of residence and place of work is determined by a taxpayer's choice to live at a given distance from his only place of work.

3. It was accepted on both sides that ordinarily the costs of travel between place of residence and place of employment are not deductible (Lunney v. F.C. of T. (ante)) and there was no suggestion in the evidence that the circumstances of the applicant were exceptional by reason of problems such as the need to carry tools or equipment or by reason of the itinerant nature of his work. The applicant put his case on the basis of the cost of travelling between two places of income-derivation. As to that he sought to strengthen his claim by claiming the status of an independent contractor to his father. I am satisfied that there is no sound basis for the contention that he was an independent contractor but I am also satisfied that whether he was an independent contractor or not has no bearing upon the result.

4. The decided cases establish the following:

• (a) if the applicant had only derived income from his employment with the Commission, any expenses he might have incurred in travelling from his home to that place of employment, or from that place of employment to his home, would not have been deductible;
• (b) similarly, if the only income-earning activity undertaken by the taxpayer had been at the farm of his father, 120 km distant from the applicant's home, the costs of travelling from the residence to the farm and the costs of travelling from the farm to the residence would not have been deductible;
• (c) that if he had derived income at both places but only on alternate days, the costs of travelling between his home and one place of income-earning activity on one day and between his home and the other place of income-earning activity on another would not have been deductible; but
• (d) if having arrived at his ``base'' he is then required to travel, as for example a barrister is required to travel from his chambers to different courts (cf. Newsom's case), the cost of such travel is a cost of earning income and an allowable deduction.

5. The references raise the question: What significance attaches to the circumstance that on such days as he travelled to his alternative employment, the applicant travelled directly from his place of full-time employment and travelled immediately his duties were complete at that place of employment to the farm, to later return directly from the farm to his place of residence?

6. In my view that circumstance is sufficient to make the costs of the outward journey to the farm deductible. It is true that, while travelling, he was not performing the duties of his employment at either place but none the less it was expense incurred ``in the course of gaining or producing'' his total income and thereby ``incidental and relevant'' to the production of that total income. Like the barrister's journeys between his chambers and the courts, having embarked on his income-earning activities for

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ATC 1160

the day, he travelled from one place of earning income to another in order to earn more income. There was no ``duality of purpose'' such as the Board of Review found to exist in Case F43 (
74 ATC 245) a finding which led to the conclusion that the income-earning activities relied on were only accidental and not such as to alter the characterisation of the travel in question.

7. However, the return journey stands on a different footing. The evidence is that on each occasion he returned directly from the farm to his private residence although on two occasions in each year he provided transport to the city for fellow employees in discharge of the responsibility he had assumed to ensure the attendance of those fellow employees at the farm. I consider the cost of those two journeys from the farm to the city to be allowable, it being an expense directly occasioned by the terms of his employment. However, for the rest I cannot escape the conclusion that the journeys, long though they were, are to be characterised as a private, personal or domestic expense incurred in travelling from a place of employment to a private residence.

8. That being so, in relation to the year of income ended 30 June 1984, I would allow a deduction of $288 (ten journeys of 120 km and two of 70 km, in all 1,340 km @ the agreed rate of 21.5 cents per km). In relation to the year of income ended 30 June 1985 I would allow a deduction of $283 (being nine journeys of 120 km and two of 70 km, in all 1,220 km @ the agreed rate of 23.2 cents per km).

9. The remaining claim is a claim to a deduction of $71 in respect of newspapers in the year of income ended 30 June 1984. The applicant was an investor in a modest way. He derived income by way of interest on loans to institutions; from dividends on shares; and profits from some share trading. His evidence was that in addition to purchasing the local daily newspaper for the ordinary purposes of his household, he also purchased the The Australian daily and The Financial Review periodically, at a cost of $95 his objective being to use them to help obtain the best return available on his investments. To that end he charted the history of some ten stocks including some he held. He claimed a deduction of $71 being 75% of his expenditure. I am satisfied that to the extent to which he incurred expense in the management of his investment portfolio, modest though it was, he is entitled to a deduction. I accept that he did use the newspapers in question predominantly for the purpose I have stated. That being so, an apportionment is called for and I find nothing unreasonable about the percentage proposed by the applicant. I would allow a deduction in the further sum of $71 in relation to the year of income ended 30 June 1984.

10. I would allow the objections to the extent only of reducing the taxable income of the applicant by $359 in the years of income ended 30 June 1984 and 1985 respectively.

Claim allowed in part