Case T34

Members: KL Beddoe Ch

P Gerber M
GW Beck M

Tribunal:
No. 3 Board of Review

Decision date: 6 June 1986.

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Dr P. Gerber (Member)

This taxpayer is employed both as a schoolteacher and as acting librarian by a large private school in Sydney. His major interest is in the field of history. He has accumulated a substantial collection of books, monographs and articles in the area of history which he stores in what was described as his ``home office'' and for which various items of expenditure were claimed and disallowed by the Commissioner. In addition, there were claims for two school functions which the taxpayer attended - a farewell dinner to a departing staff member ($30) and a staff dinner ($10). Finally, the taxpayer claimed an amount of $293 under sec. 51(1) as the cost incurred in undertaking a course offered by the Law Extension Committee leading to admission as a barrister in New South Wales. Quantum in relation to this item is not an issue. The Commissioner submits that this item of expenditure relates to ``self-education'' expenses, so that the first $250 represents a rebatable amount in terms of sec. 159N, and that by virtue of sec. 82A, such amount is not deductible under sec. 51(1) as claimed. He allowed the balance, viz. $43.

2. Dealing with the two staff functions, I am satisfied that they constitute an integral part of the professional duties of a teacher in a private school. It is true that there is no compulsion in the legal sense to attend these functions nor would a failure to attend constitute a breach of contract. However, it is, in the circumstances, unreal to label these outgoings as ``private or domestic''. I am satisfied that these expenditures were in a real sense incurred in or in the course of earning the taxpayer's assessable income.

3. Dealing with the ``home office'' claim, much time was taken up with details of usage, size of room, description of office furniture, etc. A claim was made for water rates, council rates, insurance for the contents of the study as well as $7 for ``pest control''. The claim for a proportion of the various rates cannot succeed, if for no better reason than that this Board is bound by several decisions of the High Court which have held that these expenses are of a capital, private or domestic nature, and thus excluded from deductibility. A home office, despite its predominant use for the purposes of the taxpayer's profession, remains an integral part of the domestic home, so that the rates related to the property as a whole are unaffected in any way by the fact that a taxpayer performs part of his professional duties on the premises. The outgoing would remain the same whether or not he worked at home: cf.
Handley v. F.C. of T. , 80 ATC 4351 . The domestic home is thus uniquely private and readily distinguishable from, say, a private motor vehicle which is used partly for the derivation of income, thus enabling an apportionment to be made for such items as registration and insurance.

4. Dealing with the items pest control ($7) and home office contents insurance ($14), it transpired that these amounts were arrived at by taking the actual cost of pest control for the whole dwelling and the cost of insurance for the entire contents and attributing 10% of these amounts to the study/garage and contents. Such an approach may be permissible in relation to the pest control, it is hardly appropriate to the insurance component, which must be assumed to be on an ad valorem basis. Although I warned the taxpayer during the hearing that this method might well be regarded as constituting a deficiency of his evidence, no attempt was made to provide any basis which would make the amount claimed for insurance more meaningful. This part of the claim cannot therefore succeed. I would allow the $7 claim for pest control.

5. The taxpayer claimed an amount of $27 for electricity of which the Commissioner allowed $17. The taxpayer's evidence relating to the amount of time he spent in his study preparing lessons, etc., satisfies me that his

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ATC 298

claim for the cost of electricity is nearer the mark than the estimate arrived at by the Commissioner, which seems in this case to stem from a conditioned reflex to reduce a claim, whatever its merits.

6. Finally, there is the claim for attending law lectures in preparation for the Barristers' Admission Board exams. We received little assistance on the nature of this course. The matter is of some importance since the decision of Board of Review No. 2 in Case M11,
80 ATC 78 . In that case, the taxpayer incurred expenditure of $426 in undertaking the professional year of study required to be completed by candidates for membership of the Institute of Chartered Accountants. The Board held that the expenditure was fully deductible under sec. 51. The relevant section which provides that the first $250 of any amount incurred on self-education expenses are rebatable relate to expenses incurred with respect to a ``prescribed course of education'', which is defined to mean ``a course of education provided by a school, college, university or other place of education...''. In the aforementioned case, the Board held that the words ``other place of education'' should be read ejusdem generis with the words ``school, college, or university''. So read, the Board concluded that the Institute could not be regarded as a ``place of education''. What, then, is the status of the body which offers assistance in the preparation for the examinations held by the New South Wales Solicitors' Board and Barristers' Admission Board? Since we received no assistance on this question from either party, I had recourse, extra-murally, to the Statutes and By-Laws of the University of Sydney as published in the 1986 University Calendar. From this I learnt that on 7 September 1964 the Senate of that university agreed to the establishment of a Law Extension Committee. The Senate resolved as follows:

• 1. There shall be a Law Extension Committee to undertake, subject to the authority of the Senate, the organisation, supervision and control of courses in Law appropriate for students presenting themselves for the examinations conducted by or on behalf of the Solicitors' Admission Board and the Barristers' Admission Board for [sic] such other body or bodies as may be set up from time to time to conduct examinations for the admission of Barristers and/or Solicitors.
• (Clauses 2, 3 and 4 are not relevant for present purposes.)
• Clause 5 empowers the Committee, inter alia, to organise lectures ``as courses of instruction in Sydney''.
• Clause 6 provides that: ``The Committee shall not itself conduct any examinations... However, the Committee may... nominate persons to administer and assess work carried out by candidates for examinations conducted as set out in resolution 1.''

Against this background, I am satisfied that the Law Extension Committee is a ``place of education'' as defined. In the result, the first $250 - the statutory amount at the relevant time - must be rebated.

7. In the result, I would reduce the assessment by $58, made up as follows:

• (i) $40 the cost of the two school functions;
• (ii) $7 pest control;
• (iii) $10 electricity.