PM Roach SM
Administrative Appeals Tribunal
P.M. Roach (Senior Member)
The applicant (A) is an officer in the service of the Commissioner. During the years of income ended 30 June 1982 and 1983, with the assistance of the Commissioner, he engaged in university studies. In his return of income for the year ended 30 June 1982 he detailed "self-education expenses" at $820, and after allowing for $62 to be recouped in relation to union fees, he claimed a rebate of $250 for "self-education expenses" (sec. 159U) and $508 as a deduction pursuant to the provisions of sec. 51 of the Income Tax Assessment Act. In the following year he detailed gross expenses of $1,080; allowed for reimbursement of $59; claimed a rebate of $251; and a sec. 51 deduction for $771. The claims to rebate were wholly allowed by the Commissioner, but the claims to sec. 51 deductions were reduced by $66 and $61 respectively. A objected to the assessments and, upon his objections being disallowed, requested that his objections be referred on for review.
2. In these reasons, I will make detailed reference only to the circumstances touching the year of income ended 30 June 1983 because, despite the introduction of two slightly different considerations which in my view have no significance, the issues to be traversed in the two years are the same. (The slightly different considerations are that between the close of the 1982 academic year and the commencement of the 1983 academic year A both changed his residence and acquired a new motor vehicle, having a larger motor than his earlier vehicle.)
3. A lived with his family in the family residence (H) which was originally located in one suburb and later in another (I shall identify those homes as HA and HB respectively). He was employed by the Commissioner to carry out his income earning activities at the Commissioner's city office (O). As a university student he also attended the university (U). The need to be present at all three sites, commonly in the course of one day, necessitated that he travelled between the sites. He did this by his own motor vehicle.
4. From the evidence and from the return of income produced in evidence it appears that his travelling for the above purposes and the claims arising were as follows:
$ from HA to U 32 trips 176 km 31.46 from HB to U No claim from HA to O No claim from HB to O No claim from U to O 32 trips 78 km 14.38 * from U to O 24 trips 60 km 10.79 from O to U 82 trips 205 km 37.28 from U to HA 45 trips 248 km 45.30 * from U to HB 2 trips 9 km 1.72 * from O to HA No claim from O to HB No claim
In addition, the applicant claimed to have undertaken return trips between his home and the university as follows:
$ HA to U to HA 217 trips 2,387 km 429.55 HB to U to HB 18 trips 162 km 30.94
The Commissioner disallowed only the claims marked with an asterisk.
5. It was not explained how in the course of a half-calendar year, being the latter part of the university academic year, there would have been a need to have made the return trip between home (HA) and university (U) on a greater than daily basis. It may be that the explanation lay in the circumstance that the applicant studied throughout weekends and had a practice of returning home to take his meals. Travel distances were not great.
6. The quantum of the claimed deductions was calculated on a cents per kilometre basis at rates of 17.4 cents per kilometre in the first half of the year (and in the preceding year), and at 19.1 cents per kilometre for the balance. That approach was not in dispute in this case and it is not an issue before me.
7. The issues for determination were defined by the applicant as follows:
"The objection is based on two grounds, as follows:
1. Incorrect application of the provisions of sec. 51
- The disallowance is based on the premise that where there is direct travel from home to the university to the place of employment, travel from the university to the place of employment is similar to `fares to and from work' and, thus not allowable.
- I do not consider this to be a proper application of the principles enunciated in
Lunney v. F.C. of T. (1958) 100 C.L.R. 478. In the circumstances, that part of the travel disallowed as private (as outlined above) cannot be construed as `fares to and from work' and thus falls outside the principles of Lunney's case.
- The expenditure falls within the scope of the positive tests of sec. 51(1) and is not precluded by the negative tests.
2. Failure by the Commissioner to apply the provisions of sec. 159U
- Even if it is considered that the claim is not allowable under sec. 51(1) (which is not admitted) I submit that the Commissioner has erred in not applying the provisions of sec. 159U.
- The Act allows self-education expenses to be claimed under the provisions of sec. 159U to a maximum of $250. Under those provisions expenses of self-education are allowable so long as they are necessarily incurred `for or in connexion with a prescribed course of education'. In the circumstances I consider that the amount disallowed would fall within the provisions of sec. 159U. As the amount in dispute is less than $250 the full amount should be allowed.
- It would appear that the provisions of sec. 159U have not been considered because the `classic cases' on self-education were decided on the provisions of sec. 82JAA and 51. Under sec. 82JAA travelling expenses did not form part of the expenses of self-education and thus fell to be considered solely on the provisions of sec. 51(1). Such is not the case under sec. 159U."
8. From the foregoing findings of fact, it appears that the applicant followed a not uncommon routine. He resided with his family in the family home (H). On working days, he travelled from there to the Commissioner's office (O). When he travelled directly there he made no claim to deduct travelling expenses, accepting that the expenses incurred "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 not deductible (
Lunney v. F.C. of T.; Haley v. F.C. of T. (1957-1958) 100 C.L.R. 478). On other days, on leaving home he travelled first to the university (U) and, having completed his
ATC 323attendance there, travelled directly from there (U) to the Commissioner's office (O). The Commissioner has allowed a deduction for the first leg of such travel (H to U) but has denied a deduction in relation to the second leg (U to O).
9. At the end of the working day, the travel pattern was repeated. If A travelled directly from the Commissioner's office (O) to his home (H), no claim for travelling expenses was made (cf. Lunney and Hayley - ante). If, however, he travelled from the office (O) to the university (U) for the purposes of study and thereafter travelled from the university (U) to his home (H) he claimed the expenses of the entire journey. In this instance, the Commissioner allowed a deduction for the first leg (between office (O) and university (U)) but denied a deduction in relation to the second leg between university (U) and residence (H).
10. On other occasions, A had attended at the university (U) during the course of the working day and for that purpose he travelled from the office (O) to the university (U) and, on completing his duties there, if he did not proceed on to his home (H), he returned to the office (O). He claimed those expenses and they were allowed. Those activities as a student were not restricted to the working hours of the week. Of an evening and at weekends, when he had no duties to perform at the Commissioner's office, he would attend at the university. On those occasions, if he travelled directly from his home (H) to the university (U) and returned directly to his home (H) from the university (U), he claimed all of those expenses as deductions and they were allowed.
11. This Tribunal is bound to give full effect to the decision of the High Court of Australia in Lunney and Hayley (ante) but in doing so must conform with the understanding of that decision as expressed in later Court decisions. It is desirable that it should also adopt an interpretation consistent with past Board of Review decisions in circumstances similar to those of the applicant. That being so, although in my view it may well be that no distinction is to be drawn between a journey directly from home to office and a journey from home to office via the university where no substantial deviation is required, I have concluded that in this instance I should follow the decisions of the three Taxation Boards of Review which have held that, in circumstances similar to those of the applicant, the costs of travelling from office to university are allowable to sec. 51 of the Act, even though undertaken at the conclusion of the working day and forming part of an overall journey from the workplace to the home (Case S21, No. 1 Board,
85 ATC 236; Case S25, No. 2 Board,
85 ATC 263; and Cases S44 and S45, No. 3 Board,
85 ATC 344 and 345). That being so, I conclude that the costs of the first leg of the return journey, but not of the second leg, are allowable pursuant to sec. 51. To that extent, the applicant has no basis for criticising the Commissioner's assessment.
12. As to the outward journey at the commencement of the day, I see no distinction in principle. On that basis, in my view, the costs of the outward journey from home to university are not allowable pursuant to sec. 51 of the Act, just as the costs of the return journey from the university to home at the end of the working day are not allowable. On the other hand, I am satisfied that the second outward leg between university and office is not to be distinguished in principle from the first leg of the return journey. Accordingly to that extent the applicant succeeds and his claim has to be allowed in sums of $7 and $14 respectively.
13. However, the applicant has an alternative argument, contending that that which is not available as a deduction pursuant to sec. 51 but is allowable pursuant to sec. 159U should be first taken into account in calculating the sec. 159U rebate so as to maximize the available amount allowable as a deduction pursuant to sec. 51 of the Act. For that argument to succeed, the applicant would have to satisfy me that he has not already been allowed in respect of his travelling allowances more than he is entitled to pursuant to sec. 51 of the Act. I am not persuaded that any amount is allowable pursuant to sec. 51 of the Act in relation to the cost of the return journeys only between home and university, yet those expenses ($460) comprise the greater part of his total claim ($603) and substantially exceed the allowable rebate of $250 pursuant to sec. 159U of the Act. Indeed the fact that the costs of travel between office and university are allowable is only because the university is considered as a place of work. The corollary to that is that A's travel between his residence and the university falls within the rule in Lunney and Hayley (ante).
14. Accordingly, I conclude that the determinations of the Commissioner upon the objections - being the only issues before me - should be varied by allowing further deductions in sums of $7 and $14 respectively.