Case U217

PM Roach SM

Administrative Appeals Tribunal

Judgment date: 27 November 1987.

P.M. Roach (Senior Member)

The applicant is a constable of police. He claims income tax deductions in the sum of $54 in each of the years of income ended 30 June 1983 and 1984: claimed as one-half of the costs incurred by him in those years of income in having his hair cut. Quantum is not in dispute. He claims that to that extent the expenditure constitutes "... losses and outgoings... incurred in gaining or producing (his) assessable income...". The Commissioner's representative concedes that that is so but says that the entirety of the expenditure constitutes expenditure "... of a capital, private or domestic nature..." within the meaning of sec. 51(1) of the Income Tax Assessment Act 1936 ("the Act").

2. Unlike most other employees whose obligations in and about their employment are only determined contractually, the applicant, as a police officer, is bound by the provisions of Statute, and of Regulations and Standing Orders made pursuant to the provisions of that Statute. Upon breaching of provisions of the Act, Regulations and Standing Orders, he is liable to disciplinary proceedings. Those provisions oblige him to maintain a standard and style of haircut which he would not follow but for his membership of the police force. He thinks he might still prefer the long-haired and bearded image he manifested before joining the force. Such a style would now only be permitted him when on special assignment calling for such a presentation. Compliance with that obligation results in the applicant incurring expenditure. He acknowledges that, quite independently of that obligation, he would have incurred some expenditure and to that extent he acknowledges that expenditure on haircuts is "private" within the meaning of the Act. Accordingly, he confines his claim to that proportion of the total expenditure which he contends he would not have borne but for his income-related activities. In that way he seeks to distinguish the case of the army officer in Case L61,
79 ATC 488. He also seeks to distinguish that case on the basis that, unlike the army officer, he has presented evidence establishing that the expenditure is a price of qualifying for future advancement and increased earnings. In my view nothing turns on the distinctions asserted.

3. Many persons in the community incur expense in their grooming and clothing by reason of the expectations of others. (The point is illustrated by the lady with a preference for colourful attire obliged to wear the sombre black and white clothing which is traditional to her profession as a barrister. Her claim to a deduction was denied by the House of Lords
Mallalieu v. Drummond (Inspector of Taxes) (1983) 2 All E.R. 1095.) Those expectations of others are often reflected in the standards of dress and appearance required by employers of their employees. For income tax purposes it does not matter whether those obligations are founded in contract or in the provisions of statute law. If those obligations occasion expense incurred "in the course of" deriving assessable income they are, to the extent to which they were so incurred, allowable as deductions provided (inter alia) they are not expenses of a "private" nature. If they are expenses of a "private" nature they are not allowable at all. If the expenses serve both a non-private income-earning purpose and a "private" purpose, they are to be apportioned. In my view, the expenses incurred by the applicant in maintaining the standard of haircut required of him were wholly private. They are not to be distinguished from the expenses he incurred in being clean shaven (S.O. 22.52) unless assigned to Marine Division duties (S.O. 22.55); or other specific duties "which may require beards and long hair and old clothes or special clothing to be worn" (S.O. 22.54); or the obligation to be "clean" and smart in appearance (S.O. 22.50).

4. Nor in my view is there any substance in the contention that the claim of the army officer might have succeeded had he been able to establish that promotion, and thereby increased remuneration, might have been denied him for want of compliance with Standing Orders. The test laid down by sec. 51(1) is whether the expenditure in question was incurred "in the course of deriving (his) assessable income...". That is a reference to his then present income and not some future source of income
F.C. of T. v. Maddalena 71 ATC 4161. If incurring the expenditure had led to an increase in earnings from his then employer, that would be some evidence - even strong evidence - that the expenditure was incurred "in the course of deriving (his) assessable income" and, in that way, assist him in making out his case. But in these circumstances such considerations, even if they had been established, would not have

ATC 1218

altered the "private" character of the expenditure.

5. As a claim relating to home office expenses was not proceeded with, the determinations of the Commissioner upon the objections are to be affirmed.

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