PM Roach SM
Administrative Appeals Tribunal
P.M. Roach (Senior Member)
The applicant claims income tax deductions pursuant to the Income Tax Assessment Act ("the Act") for expenses incurred in travelling between his residence and several places at which he was employed during the years of income ended 30 June 1979 to 1981 (inclusive). At all material times he was a carpenter with only one employer. He was employed by a mining company and his remuneration and other entitlements were regulated by an industrial award pursuant to which he was entitled to specified allowances. In the years in question he received "tool allowances" in sums of $198, $241 and $318 respectively which he returned as assessable income, claiming the like amount as a deduction on the basis that the entirety of the allowance had been expended in the acquisition of replacement tools. No dispute arose in that regard. He also received "travelling allowances" in sums of $783, $1,053 and $1,297 respectively. They were also returned as assessable income and in each year he claimed deductions in the like amount as "travel allowance fully expended". The claims for the latter deductions were disallowed and the matter now comes before the Tribunal for determination pursuant to requests for reference made in December 1981 [sic] arising out of assessments made in March of that year. The requests were referred on for determination in November 1984 and heard in December 1986.
2. Although in evidence the applicant contended that his travelling expenses exceeded the deductions claimed, he did not seek any greater allowances than those originally claimed. There was no application seeking to amend the objections. Quantum was not disputed and it was common ground that if the applicant was entitled to succeed at all, his entitlement would be to succeed in the amounts claimed.
3. During the years in question the applicant had but one employer, a mining company which carried out activities using two mining plants which I shall distinguish as the major and minor plants. Throughout the years the major plant was employed at a site "J" and throughout those years the applicant was required to attend at that site to carry out maintenance works as principal carpenter for the company. Such attendances were ordinarily only on the one day per week set aside for routine maintenance but in the event of breakdown there might be other attendances which could be additional to the routine attendances. However, for the most part throughout the years at any given time the applicant had as his principal place of work one of several other sites. For approximately the first six months of the period he was engaged in erecting the minor plant at site "P". He then came to be regularly employed at site "B" for some four months where his principal duty was
ATC 231to undertake further training and generally assist as required at that depot. For the next 12 months or so his basic duty was to work at a new location "BA" and then he was transferred for the remaining 14 months of the period to another location "W" at which the minor plant was reassembled.
4. The responsibilities of the applicant principally concerned him in the maintenance and efficient functioning of both mining plants. In the event of a breakdown, which was said to be quite common - although I am not persuaded that breakdowns were frequent - the applicant would be called on to attend at the site of the breakdown. If at the time of call out he was working at another site, he would proceed from that site to the breakdown site and at the end of that working day would return from the latter site to his home if he had not returned to his original site of work earlier. On occasions - but I am not persuaded that they were anything more than rare occasions - he was called out to breakdowns at night and at weekends.
5. There was no available public transport system servicing the area and no transport was provided by the employer. The award provided for an entitlement in those circumstances to "travelling allowances" at daily rates scaled according to distance - the maximum allowed being payable "over 50 km". The applicant travelled at all material times by his own motor vehicle and whenever he travelled he carried his own tools with him. The return journey between his home and each of the several work sites was as follows: to J, 160 km; to P, 210 km; to B, 70 km; to BA, 50 km; and to W, 40 km. (All distances are approximate.) His equipment comprised a "drop saw" (which required a two handed lift); another circular saw; and his carpenter's tool box in which he carried a set of carpenter's tools appropriate to his circumstances and the duties about which he was employed. It was not practicable to carry all of that equipment by hand at the one time. He could have left the equipment at any current work site overnight but did not do so because of the absence of any secure place for storage of the equipment and of the lack of any insurance cover in the event of theft. Theft was said to be commonplace.
6. When the Commissioner issued his original assessments disallowing the claims to a deduction in relation to the "travelling allowances" the applicant vehemently protested. He claimed that all his workmates had been allowed the appropriate deduction and stated that he considered it unjust that he should be singled out by having his claims disallowed. He also claimed that he could name many Government departments and other bodies whose employees received deductions in similar circumstances. On 29 December 1981 when he requested the transmission of his objections for independent determination he said (inter alia):
"I consider it the right of any taxpayer to have a clear and concise explanation as to why he is being treated in a different manner to other taxpayers working at the same place and receiving the same allowances."
7. At the hearing no evidence was presented to provide any detailed support for those particular allegations but there was some evidence suggesting that this might have been so. (I admitted the evidence because the issue was directly raised by the applicant; because it was the third occasion in two months in which similar issues had arisen; and because I hold the view that if the review process is to function well in the interests of the community, it ought to openly address the issues as raised by applicants who have recourse to the Tribunal, particularly when they are not legally represented and do not have great status or influence and they are seeking a review of actions being taken by a powerful organ of the Executive Government. The answer will not always persuade and sometimes will not be understood, but failure to address such questions is only likely to engender suspicion and distrust.) The principal evidence suggesting that it might have been so was in the form of a letter from a Deputy Commissioner of Taxation on 22 May 1980 to the State Secretary of the applicant's union which said in part:
"Reference is made to your letter dated 31 January 1980 concerning increases in the tool and travelling allowances received by members of your Union.
Regarding the fare and travelling allowance, now entitled `Compensation for Travel Patterns', which is paid to members employed in an `on-site' capacity you are advised that provided members supply full details with their income tax returns, they
ATC 232will be eligible to claim a deduction to the extent of the allowance of $3.90 per day, which represents the amount of additional expenditure incurred in travelling to and from building sites.
In connection with the award allowance for tools which was increased to $5.00 per week, you are advised that a person entitled to the allowance may be allowed a deduction for the amount of the actual expenditure incurred by him in replacing tools up to the extent of the allowance received. It is emphasised, however, that the expenditure must have been incurred by the taxpayer claiming that the deduction and that the decision to allow deductions to the extent of the allowance received does not limit in any way the Commissioner's right to request at any time substantiation of a claim made against an allowance received.
It is further advised that should a member claim deductible expenditure incurred in excess of the allowance received, the Commissioner will require the claim to be fully substantiated."
8. There was also evidenced another letter from another Deputy Commissioner of Taxation dated 2 May 1968 advising the secretary of a government department of the State of the applicant as to implementation of a State award. The letter said (inter alia):
"Travelling Allowances. The allowances paid under the provision of cl. 26(ii)(b) 1 are assessable income. Employees must include these amounts in their income tax returns as income, but as they may claim for expenditure actually incurred up to the total value of the allowances received, the amount of the allowance should be shown in column 3 of the group certificates. These amounts should not be included in column 1. Tax instalment deductions need not be made from the allowances."
9. The other correspondence and the documents commented on were not placed in evidence. Further, the evidence did not indicate whether the views so expressed in those two letters were still held when the applicant was assessed, although if the applicant's statement as to the assessment of his workmates is correct, it seems likely that they were. (Reliance was also sought to be placed on documents published in 1986 in the name of the Commissioner but as they relate to "fringe benefits tax" and "substantiation", the subjects of legislation quite different to the legislation to be applied in the determination of these references, I find them of no assistance.)
10. In considering the issues to be resolved it is important to bear in mind that the questions are about deductibility of expenses. It is not disputed that the allowances received by the applicant constituted assessable income. That accords with the contentions advanced by the Commissioner in the correspondence which has been quoted. That being so the essential question is whether the applicant satisfied the requirements of the Act, and in particular sec. 51, claiming a deduction for expenses incurred. It was not suggested that entitlement to a deduction arises simply by reason of the amounts received having been paid to the applicant as "travelling allowances" pursuant to the Award although the correspondence quoted would seem to suggest the Commissioner has held the view that that circumstance alone is sufficient to establish eligibility for the deductions claimed. The existence of such an erroneous view of the Act could well explain why, assuming it to be the case, workmates of the applicant were being allowed deductions for amounts equal to "travelling allowances" received. However, it would not explain why such a claim should be denied to the applicant while being allowed to his fellows.
11. 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. (1957-1958) 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 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 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 when they were considered before the High Court of Australia. The learned Chief Justice, Sir Owen Dixon, expressed doubts about the soundness of the conclusion but felt compelled to hold as he did
ATC 233by reason of the issue having been "settled long ago". However, in his reference as in many others it is important to recall how the learned Chief Justice defined the problem before him. He said at p. 485:
"These two cases stated raise 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."
In answering that question in the negative 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 (cf.
F.C. of T. v. Vogt 75 ATC 4073;
F.C. of T. v. Collings 76 ATC 4254;
F.C. of T. v. Ballesty 77 ATC 4181 and
F.C. of T. v. Wiener 78 ATC 4006; Case S29,
85 ATC 276; and a decision of this Tribunal delivered 10 December 1986) [reported as Case T106,
86 ATC 1192].
12. In the latter case similar questions arose and I had occasion to consider whether the working conditions experienced by a casual labourer in the building industry were such that it was appropriate that he be classified as a itinerant worker (cf. the teacher in Wiener (ante); and the shearers in Case S29). It was argued for this applicant that he too should be categorised as an itinerant worker even though for periods of several months in succession he had as a matter of routine but one place of employment for four days of the week and a second place of employment on a fifth day; and that at intervals of several months, there would be a change in the principal place of duty. Without more I am not satisfied that the applicant should be categorised as an itinerant worker or that the Act authorises the deductions claimed, whether incurred as "additional expenditure" or otherwise.
13. However, in this case there is more. I am persuaded that his employment created the need, as a matter of practical necessity, for him to transport his tools from his home - where he was able to keep them safely - to the several work sites; that it was in practical terms necessary that he transport them by a motor vehicle; and that it was appropriate that the motor vehicle should be his own. In that he was like to the professional musician who needed to transport his instruments to various places of performance (cf. Vogt - ante). On that basis I am satisfied that the expenses incurred constituted allowable deductions pursuant to sec. 51 of the Income Tax Assessment Act and, there being no dispute as to quantum, I would vary the determination of the Commissioner upon each objection by allowing the same in full.
14. Having reached that conclusion it is not necessary to consider to what extent the applicant incurred expenses in travelling "in the course of" his employment when called on to attend "breakdowns", either when at work or out of hours.