Federal Commissioner of Taxation v. Noume

Judges:
Spender J

Court:
Federal Court

Judgment date: Judgment handed down 16 March 1988.

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Spender J.

The Commissioner of Taxation appeals under sec. 44 of the Administrative Appeals Tribunal Act 1975 from a decision of the Taxation Appeals Tribunal of the Administrative Appeals Tribunal (``the Tribunal'') [reported as Case T92,
86 ATC 1143] constituted by Mr K.L. Beddoe to set aside a decision of the Commissioner in respect of the year of income ended 30 June 1982. The Tribunal allowed part of the objection of Vicki L. Noume, the taxpayer, by allowing deductions of $342 for travelling expenses and $16 for freight charges pursuant to sec. 51(1) of the Income Tax Assessment Act 1936.

Section 44(1) of the Administrative Appeals Tribunal Act 1975 provides:

``A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.''

Section 51(1) of the Income Tax Assessment Act 1936 provides:

``All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or of a capital, private or domestic nature, or are incurred in relation to the gaining or production of exempt income.''

The Commissioner seeks that the decision of the Tribunal be set aside.

Before the Tribunal, the taxpayer and the Commissioner proceeded on a statement of agreed facts:

• (1) The taxpayer was employed as a teacher at a school in Dimbulah prior to January 1982.
• (2) The taxpayer received a new posting to a school in Brisbane some time in November 1981.
• (3) To take up this new posting the taxpayer travelled from Dimbulah to Brisbane some time in January 1982.
• (4) The taxpayer travelled in a Datsun Stanza 1980 model which has an engine capacity of 1600cc.

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  ATC 4219

• (5) The taxpayer travelled 1,876 kilometres.
• (6) The taxpayer estimates the motor vehicle costs for the trip were $322.
• (7) The taxpayer paid $20 for one night's accommodation at Mackay.
• (8) The taxpayer freighted by rail to Brisbane personal items and educational goods.
• (9) The cost of the freight was $48.
• (10) The Education Department did not contribute towards the cost of the removal expenses.

The Tribunal said (at p. 1143):

``The question at issue is whether certain expenses incurred by the applicant in connection with the relocation of her place of employment are allowable deductions within the terms of subsec. 51(1) of the Income Tax Assessment Act.''

The relevant authorities dealing with deductibility of travelling expenses, and with expenses incurred in taking up an appointment, and with expenses involved in relocation being related to buying and selling houses, replacement of furnishings and other expenses in the disposing of one home and setting up another home were considered by the Tribunal.

The Tribunal adopted the words of Lord Wilberforce in
Taylor v. Provan (1975) A.C. 194 at p. 215:

``To do any job, it is necessary to get there: but it is settled law that expenses of travelling to work cannot be deducted against the emoluments of the employment. It is only if the job requires a man to travel that his expenses of that travel can be deducted, i.e. if he is travelling on his work, as distinct from travelling to his work. The most obvious category of jobs of this kind is that of itinerant jobs, such as a commercial traveller. It is a variant upon this that the concept of two places of work has been introduced: if a man has to travel from one place of work to another place of work, he may deduct the travelling expenses of this travel, because he is travelling on his work, but not those of travelling from either place of work to his home or vice versa. But for this doctrine to apply, he must be required by the nature of the job itself to do the work of the job in two places: the mere fact that he may choose to do part of it in a place separate from that where the job is objectively located is not enough.''

The Tribunal concluded that this principle applied irrespective of the frequency of such travel.

Implicit in the Tribunal's finding is that the taxpayer's job required her to travel, that she was travelling ``on her work'' as distinct from ``to her work''.

The Tribunal dealt with a sum of $48 for rail freight charges which were incurred in respect of ``personal items and educational goods''. The Tribunal held that to the extent the freight charges related to educational goods the freight charges were incurred in the course of gaining the applicant's assessable income and to the extent the charges related to personal items they were of a private nature not incurred in the course of gaining assessable income. The Tribunal said (at p. 1149):

``No basis of apportionment has been suggested to the Tribunal. I think justice will be achieved if I attribute 33⅓% of the freight charges to the educational goods. I would therefore allow a deduction of $16 in respect of freight charges.''

As earlier indicated, an appeal lies from the Tribunal to the Federal Court only on a question of law.

In the Notice of Appeal the questions of law said to be raised on the appeal are:

``(a) whether on the agreed facts before the Tribunal, the expenses incurred by the taxpayer in connection with the relocation of her place of employment can, as a matter of law, be described as expenses incurred in gaining or producing assessable income for the purposes of subsec. 51(1) of the Income Tax Assessment Act 1936 as amended;

(b) whether travel and freight expenses incurred by a taxpayer in order to take up a new posting in her employment as a teacher can, as a matter of law, be described as:

• (i) expenses incurred in gaining or producing assessable income; and
• (ii) not being outgoings of a private or domestic nature.''

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ATC 4220

Order 53 r. 3 of the Federal Court Rules requires the appellant, in addition to identifying the questions of law to be raised on the appeal, to state briefly but specifically the grounds relied on in support of the orders sought. The Commissioner stated these grounds as follows:

``(a) On the agreed facts before it, the Tribunal erred in law in holding that the expenses claimed by the taxpayer were incurred in gaining or producing assessable income.

(b) The Tribunal erred in law in holding that the principle enunciated by Lord Wilberfore [sic] in Taylor v. Provan [1975] A.C. 194 at p. 215 (and referred to at p. 12 of the Tribunal's reasons) applied in the circumstances of this case.

(c) The Tribunal erred in law in holding that the taxpayer, at the time the said expenses were incurred, was travelling `on her work' or in the course of her employment.

(d) The Tribunal erred in law in holding that the said expenses were not outgoings of a private or domestic nature.''

The nature of an appeal pursuant to sec. 44(1) of the Administrative Appeals Tribunal Act 1975 was considered by the Full Court of the Federal Court of Australia in
F.C. of T. v. Brixius [87 ATC 4963]. The Court referred to the observations of Brennan J. in
Waterford v. Commonwealth of Australia (1987) 71 A.L.R. 673 at p. 689, where he said:

``The error of law which an appellant must rely on to succeed must arise on the facts as the AAT has found them to be or it must vitiate the findings made or it must have led the AAT to omit to make a finding it was legally required to make. There is no error of law simply in making a wrong finding of fact.''

In
F.C. of T. v. Forsyth 81 ATC 4157; (1980-1981) 148 C.L.R. 203, Wilson J. said at ATC p. 4161; C.L.R. P. 210:

``The proper construction of sec. 51 has been discussed by this Court in a number of cases, and I think it is fair to say that its application in the circumstances of each case remains very much a matter of fact and degree.''

And at ATC p. 4163; C.L.R. p. 213, he said:

``In every case it is clearly a question of fact and degree whether the outgoing has the necessary relation to the gaining of assessable income.''

In
Handley v. F.C. of T. 81 ATC 4165; (1980-1981) 148 C.L.R. 182, Murphy J. was concerned with whether outgoings were of a domestic character, and said at ATC p. 4173; C.L.R. p. 197:

``These are all questions of degree.''

In
Maryborough Newspaper Co. Ltd. v. F.C. of T. (1929) 43 C.L.R. 450, Rich J. at p. 452 referred to the observation of Scrutton J., as he then was, in
Smith v. Incorporated Council of Law Reporting for England and Wales (1914) 3 K.B. 674 at p. 684, where he had said:

``It seems to me that the question whether money is wholly and exclusively laid out or expended for the purposes of a trade is a question of fact.''

He referred also to the observations of Lush J. in
Hancock v. General Reversionary and Investment Co. (1919) 1 K.B. 25, where he had said at p. 38:

``It is no doubt a question of fact whether a retiring allowance, whatever form it takes, is an expense incurred for the purpose of earning profits.''

Rich J. said at p. 453:

``All the cases emphasize the necessity of determining as a matter of fact, what the purpose of the expenditure was, and whether it was made wholly and exclusively for the production of assessable income.''

It seems to me that the matters that the Commissioner seeks to argue are ``matters of fact and degree''. Whether the travelling expenses, which were actually incurred, were incurred in the course of the respondent's employment was a matter for the Tribunal and this Court has no jurisdiction in the matter: cf. the approach of Northrop J. in
F.C. of T. v. Genys [87 ATC 4875].

If the matter were properly a matter for my determination, I would be inclined to reach the same conclusion as the Tribunal. This was not a case of a taxpayer travelling between homes or another place of residence and work, nor was it a case of a taxpayer travelling or incurring removal expenses to take up a new

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ATC 4221

appointment. It seems to me that the taxpayer was obliged to travel at her own cost between two places of employment.

There is one final matter. It seems to me that there is no basis on which the apportionment as to freight costs could be arrived at and, as a consequence, no basis exists for the Tribunal to have allowed a deduction of $16 for freight charges. However, the Notice of Appeal is silent as to the absence of any basis for apportionment and, given the small amount involved, it seems to me that this aspect of the matter should not concern this Court.

The appeal should be dismissed with costs.