PM Roach SM
Administrative Appeals Tribunal
P.M. Roach (Senior Member)
The applicant upon this reference is a man in his late thirties who has limited work skills and suffers from a significant sight problem, sufficiently serious to preclude him from employment in industrial situations involving the use and operation of machines, although not preventing him from driving a motor vehicle. As a result during the period under review the applicant was for a long time unemployed and remained so despite the willingness of the Commonwealth to subsidise persons who might have employed him. The last employment he held before the commencement of the year of income ended 30 June 1985 required him to travel from the urban area in which he resided into the country. Despite the availability of a Commonwealth subsidy his employment did not even last for the duration of the period during which the subsidy was available. In the
ATC 1193months following, extending (inter alia) for the first seven months of the 1985 fiscal year, he tried to obtain other work. In that period in his own words he ``travelled about 160km a week, sometimes more, to find work''. In late January 1985 he had some success locally. He was given an opportunity to try himself as an offsider in the building industry. He seized the opportunity and his efforts were rewarded when, following a couple of days of trial and an assurance from the Commonwealth that it would subsidise his employer, his appointment was confirmed. Being grateful that he had any employment at all and recognising that he did not have the benefits of membership of a strong industrial union, the applicant worked for a fixed return of $250 per week. If he was called on to do some extra work on a Saturday or Sunday, he did it without additional reward. When he was called on to travel to sites at varying distances from his home in order to earn his pay and no transport was provided, he travelled by his own vehicle. The decision to travel by his own vehicle was a result of a number of considerations. His eye disability was such that he could not wear spectacles on site and had to fit contact lenses an exercise which for him was of unusual difficulty. That disability also meant that he could not travel in a vehicle with cigarette smokers or in a car with its windows opened. He also used the car for shelter when adverse wind conditions arose. Another condition of his duties required that he attend on-site before the bricklayers - including his employer - so that he could then do whatever was necessary to enable them to commence work upon their arrival. From the first day he was required to collect two shovels and a brick-rake from his employer's home and travel to a suburban site. Thereafter with rare exceptions - sometimes occasioned by oversight on his part and at other times by the unusual circumstance that storage was available on-site and the site was to be attended at start-up next day - he transported the shovels and, as required, minor tools and equipment.
2. The sites he attended were located at varying distances from his home which was in the same suburb as the home base of his employer. The sites were to be found at many different compass points. Further on any one day it was not unusual for the applicant to attend at two sites. Often he was required to attend different sites on successive days. During the period of employment from late January 1985 to 30 June 1985 he worked at seven different sites. During this period the number of days and the distances travelled were 18km - 10 days, 22km - 11 days, 32km - 5 days, 35km - 45 days, 85km - 12 days, 90km - 20 days, and 180km - 17 days. For these purposes he used a 1973 1600cc sedan which he might have purchased for $1,700 had he had the means to do so. However, his circumstances were such that he acquired the vehicle on hire purchase on the basis that the attributed purchase price was $2,200 of which $1,700 was the amount to be financed after bringing to account a non-existent ``deposit'' fund of $500.
3. The applicant claimed a deduction in the sum of $3,297 calculated at a rate per kilometre. Fortunately for him, because he was ill-prepared to present evidence as to his actual costs of operating the vehicle, the Commissioner's representative conceded as a matter of fact that the travelling expenses of the applicant should be accepted as incurred at a rate of 23c per kilometre.
4. The application raises three questions for consideration, the last of which was quite explicitly raised by the applicant. They are:
- 1. Whether he is entitled to an income tax deduction for costs incurred in travelling in his endeavours to secure employment?
- 2. Whether he is entitled to an income tax deduction for costs incurred in travelling to his several places of duty in the course of his one employment?
- 3. Why, assuming that he is not entitled to the latter deduction, other persons who are employed by the Department of Main Roads in his State and whose duties also require them to travel to different places of employment and who are paid ``travelling allowances'', are allowed deductions for their travelling expenses?
5. The answer to the first question lies in the fact that the travelling expenses so incurred are not incurred ``in the course of'' gaining an assessable income, but rather in an endeavour to secure an opportunity to gain an assessable income from employment. I acknowledge that that answer hardly provides any incentive for an unemployed person to incur expense and seek employment, but the distinction has been
ATC 1194long known and it is not for me to try to upset it. As the law stands unemployed persons are entitled to unemployment relief so long as they are willing to accept work. They are not obliged to incur expense in seeking work and they can neither claim expenses of seeking employment as expenses of securing that unemployment relief nor as expenses to be allowed against any income which may come to be earned as a result.
6. The answer to the second question lies in considering the nature and character of the travelling expenses involved. Ordinarily the cost of travel between one's home and place of work or employment is not deductible (
Lunney v. F.C. of T., Hayley v. F.C. of T. (1957) 100 C.L.R. 478). The first decision involved the claim of a ship's joiner who on each work day travelled from his suburban home to his employer's office at Darling Harbour, Sydney where he was required to report at the commencement and at the completion of each day's work. From there he travelled at the expense of the company to various parts of the port of Sydney to carry out his work. The second claim was that of a self-employed dentist who travelled on each working day from his suburban home to his surgery in Macquarie Street, Sydney. Neither claim was successful. The decision of Dixon C.J. was particularly significant. He expressed doubts about the soundness of the conclusion but felt compelled to hold as he did by reason of the issue having been ``settled long ago''. However, it is a matter of particular significance in this reference and in many others to recall how the learned Chief Justice defined the problem before him. He said:
``These two cases stated raised the question of income tax law which has been accepted as settled for the last two generations. It is whether the fares paid by ordinary people to enable them to go day by day to their regular places of employment or business and back to their homes are deductible expenses allowable against the assessable income earned by the employment or business.''
He answered that question in the negative but in doing so he did not express any generalisation that expenses of travelling between place of residence and place of duty in the course of any employment are never deductible. Exceptions have always been recognised
F.C. of T. v. Vogt 75 ATC 4073;
F.C. of T. v. Collings 76 ATC 4254;
F.C. of T. v. Kropp 76 ATC 4406;
F.C. of T. v. Ballesty 77 ATC 4181; and
F.C. of T. v. Wiener 78 ATC 4006).
7. It has long been recognised that it is sometimes appropriate to categorise an occupation as ``itinerant''. Sometimes, as with a hawker, the taxpayer may carry on business. In other cases, such as that of a shearer, he may be retained by a series of different engagements for his personal services. In my view it is not of the essence as to whether the shearer is to be classified as being an employee in a master-servant relationship or as an independent contractor or whether he is to be considered as carrying on business from his home. Then, as here, there is the case of a person who pursuant to a single, ongoing engagement as an employee is required to attend at various sites in different localities nominated from time to time by the employer. Such a person might be a schoolteacher who follows a regular pattern over a school year of attending two different local schools on set days according to a predetermined program or the teacher may be one with supervisory responsibilities over a wide geographical area and who travels from day to day and from school to school as the need arises. In each case the question to be determined is how the travelling between place of residence and place of duty is to be characterised and that is the question to be resolved in relation to the present applicant. He does not work according to any regular pattern as to work site; there is no long-term plan by which he can predict what will be required of him in the future; and there is no certainty as to the range of work sites he may be called on to attend over a period. In my view his occupation is that of an intinerant worker. His occupation is to be likened to that of the teacher in Wiener (ante) and of the shearers in Case S29,
85 ATC 276. As such his travelling is to be distinguished from the travel of ``ordinary people to enable them to go day by day to their regular places of employment or business and back to their homes...'' (Dixon C.J. ante). I would allow the deduction.
8. Having reached that conclusion I can answer the third question. The applicant was unable to see why his claim was not to be allowed when his belief was that the claims of others, such as workers in the Department of
ATC 1195Main Roads, were allowed. His belief was not challenged, but it was not necessarily accurate. It was suggested in the course of argument that the difference might arise because the others were paid a travelling allowance, but I reject that. An amount paid regularly to an employee by way of ``travelling allowance'' or any other allowance is ordinarily income according to ordinary principles. Whether expenses incurred in travelling to and from work are deductible depends upon considerations which do not take into account factors such as whether the employee is paid an allowance (cf. Decision No. 2999). If the Department of Main Roads workers are entitled to deductions for the travelling expenses they incur that is, or should be, because they are entitled to deductions, probably for reasons similar to those which give rise to the present entitlement of the applicant.
9. I order that the determination of the Commissioner upon the objection be varied and that a deduction of $1,848 be allowed.
Claim allowed in part