P Gerber SM
Administrative Appeals Tribunal
Dr P. Gerber (Senior Member)
This taxpayer was born in 1933. She has had a lifelong commitment to radio and theatre and, from the time of her arrival in this country from England in 1957, she accumulated a formidable number of parts in radio plays with the Australian Broadcasting Commission (``ABC'') up to and including the year 1972, featuring in some 300 or so roles. All these were paid engagements.
2. In issue today is the deductibility or otherwise of the cost of a radio drama course undertaken by the taxpayer with the British Broadcasting Corporation (``BBC'') in 1984.
3. Given the nature of Australian radio and drama, the taxpayer's remuneration from the
ATC 286aforementioned engagements resulted merely in ``pin money''. But ``pin money'' or not, it was treated as assessable income and the respondent showed no hesitation in taxing it.
4. I am satisfied that if the taxpayer had undertaken the overseas study course at any time during the period 1957 to 1972, the cost would have been accepted as an allowable deduction without question. It is the events post-1972 which have persuaded the respondent that the taxpayer had ceased to be a professional radio actress and had, for want of a better word, joined the ranks of the amateurs.
5. One must therefore look at the applicant's activities and development post-1972 to see whether or not she had ceased to be a professional radio actress. Her reduced commitment to the ABC after 1972 was due to the formal retirement of Mr T, the then local head of ABC radio, and the gradual running down of radio drama production work and funding at the ABC, both regionally and nationally.
6. It was at or about this time that the applicant undertook some training in radio production work by studying what was referred to as ``shadow producing'' with Mr T. Her earnings from 1972 to 1978 with the ABC (and indeed from any other source) were minimal. Her professional income, however, became more impressive in the years 1979 to 1981, albeit this relatively substantial increase was in large measure due not so much from radio but from her transition to the theatre. Indeed, the bulk of her income from personal exertion was derived from the theatre, and whatever came her way from radio was a mere occasional windfall. At the same time, the taxpayer undertook an Arts degree, majoring in an area relevant to her professional interest.
7. This brings me to 1984 and the study course with the BBC. This course was predominantly designed for professionals interested in radio drama techniques. The specific course which the taxpayer undertook was scheduled from 30 January to 20 April 1984, and involved a 12-week attendance in ``Advanced Drama and Features'', offered to experienced producers, and aimed to demonstrate the use of new radio drama techniques. It was said to be particularly suitable for producers needing to strengthen the impact of ``educational and development support broadcasting'', as well as professionals responsible for developing writers and actors and enhancing program standards.
8. Quantum - that is, both fees and travel expenditure - is not in issue. In other words, the Commissioner concedes that, if the taxpayer is entitled to succeed, she is entitled to succeed in full.
9. On one view, the taxpayer could be said to have finally returned to a medium in 1984 which she had long since abandoned, in the sense that after 1972, her commitment to radio was minimal. However, that would, in my view, take too narrow a view of what can, collectively, be said to involve the exploitation of what the taxpayer referred to as her ``vocal skills''. Indeed, since the completion of her BBC course, she deposed that new avenues have opened up - predominantly with two tertiary institutions - in the field of drama. She was asked in cross-examination whether or not she would have obtained these appointments with these institutions if she had not taken the BBC drama course, and she very properly answered this by saying that she does not know. I do not believe that this is the appropriate test. If it can be shown that a course of study was in a real sense designed to widen the skills of a professional, it is one which can be said to have been undertaken in the course of deriving assessable income. This much emerges clearly from the decision of
F.C. of T. v. Finn (1961) 106 C.L.R. 60, where the learned Chief Justice observed (at p. 64) that:
``It will be seen that the question involved in the case is of an important description. For it is indeed important that officers and employees engaged at a salary in the exercise of a skilled profession should not be in a worse position in respect of the costs of better equipping or qualifying themselves in point of knowledge and skill than are those exercising the same profession as a calling remunerated in fees paid by clients or by the members of the public who, under whatever style, enlist their services.''
Windeyer J. agreed with the Chief Justice and went on to say (at p. 70):
``The facts and considerations relevant in this case appear fully in the judgment of the Chief Justice. Generally speaking, it seems to me, a taxpayer who gains income by the exercise of his skill in some profession or
ATC 287calling and who incurs expenses in maintaining or increasing his learning, knowledge, experience and ability in that profession or calling necessarily incurs those expenses in carrying on his profession or calling. Whether he be paid fees by different persons seeking his skilled services from time to time, or be paid a regular salary by one person employing him to exercise his skill, matters not in my opinion.''
10. On the whole of the evidence, I am satisfied that the taxpayer has demonstrated a lifelong commitment to radio and the theatre in general, that this is a professional calling requiring skill and expertise, and that it is given to very few in that profession to obtain substantial financial rewards. Indeed, the fact that the financial returns in this case have been so slender is, I suspect, the reason why this case is now before me. Be that as it may, I note that in the year of income now under review, some $110 was returned as income from one of the tertiary institutions and accepted as such by the respondent and taxed. To argue on the one hand that the applicant is not employed in drama, and to accept the remuneration received for that work as income - however modest - appears to me to attempt to have the best of both worlds.
11. It was submitted that the expenses came ``at a point too soon'' to be allowable, in that the taxpayer's course of study had become a new adventure, removed from her previous activities. Reliance was placed for that proposition on that much over-used decision in
F.C. of T. v. Maddalena 71 ATC 4161. It seems to me that such an approach adopts too narrow a view of ``drama'', which covers a wide range of activities. In any event, as I pointed out before, the taxpayer has stated that new opportunities in teaching vocal skills at tertiary institutions have opened up as a result of her studies which are likely to be productive of assessable income in future.
12. I am satisfied that the costs incurred in attending the course at the BBC was relevant and incidental to the derivation of assessable income and is an allowable deduction pursuant to sec. 51(1) of the Act.
13. The remaining issue is one involving an expenditure, not presently quantified, but included in the total amount claimed, which was incurred in spending a week in Russia. (This notwithstanding the ``concession'' that quantum was not in issue.) The taxpayer deposed that almost the whole of her time in Russia was spent attending theatre productions and talking to producers.
14. In ordinary circumstances, a taxpayer who spends a week attending plays would in a very real sense be deemed to be engaged in recreational pursuits of a kind which are regarded as ``private or domestic'' and thus excluded from deduction by sec. 51(1). However, given this taxpayer's professional commitment to the theatre, her brief stay in Russia during a lull in her course can best be described as a ``busman's holiday''; the fact that it was also an enjoyable experience is therefore irrelevant - the Act contains no Spartan test.
15. In the result, the cost of the trip (including the Russian ``leg'') and the tuition fees constitute an allowable deduction.
16. However, it occurs to me that, given the nature of the course and the fact that it was offered by a corporation which, inter alia, has assumed a teaching role, the course may well constitute a ``prescribed course of education'' within the meaning of sec. 159U(5) of the Act, with the consequence that the first $250 may have to be excluded from deduction under sec. 51(1). Since neither party came prepared to argue this point, I have not had the assistance I would like before giving a concluded decision on it. I therefore propose to direct that the applicant succeeds on the objection, save as to the first $250, as to which - hopefully - the parties may reach agreement. Should the parties be unable to agree on this issue, I propose to deal with it finally on receiving written submissions from the applicant and the respondent.