RK Todd DP
Administrative Appeals Tribunal
R.K. Todd (Deputy President)
The applicant taxpayer's claim was to be entitled to deductions in respect of the cost of what was described as protective work clothing and of dry cleaning thereof. The description ``protective'' is apt enough in the circumstances and I shall use that word to describe the clothing when referring to it generally. To use that phrase however determines nothing of itself. The Commissioner having disallowed the applicant's claim, his objection decision is here under review.
2. In the relevant year of income the applicant was employed by a company engaged in a major engineering/construction project in an alpine area. Initially she was engaged in office work, as what she called an ``office girl Friday''. This kept her on indoor office work for 90 per cent of the time. After three to four months however her duties changed. She became an ``offsider'' to the purchasing officer. This still involved going to the office, but it also involved collecting wage records, time sheets, delivering telephone messages and so
ATC 551on. She had to go to the store, which was in an Atco caravan shed across the car park. She had to check what was in the store, order goods such as boots, clothing, nails and saws, and deliver them to the store when they arrived. If they were not too heavy, she delivered them herself.
3. Most goods had to be taken in due course from the store to the portal of the construction site, which was about 2km away. There was however another site a journey to which involved about a three-quarter hour's drive around a mountain. When the applicant left the main site office she had to walk about 800m to the car park, and then when she got to the construction site she had a good ten minutes' walk at that end unless she was merely making a brief stop to ``drop something off''. If she was checking stores, she had to park in a car park and thus be involved in the walk described. These outdoor trips were made three times in the morning and six times in the afternoon. In addition, on her way to work in the morning she would have to go to the company's post office box and post mail in the afternoon. She said that she also had to go out to purchase milk for the office ``as I was the only girl'', the first but not perhaps the only sign of ancient chauvinism that appeared in the case. The critical point is however that on the evidence I find that at the relevant times the applicant spent little time in the office, after the change in her duties that I have mentioned, and that she spent most of her day engaged on outdoor errands which, while she drove a car to get to her destination, meant that each day she became frequently exposed to extreme outdoor weather conditions in construction site surroundings. These surroundings included, during the year in question, unsealed roads and car parks.
4. I have already said that the site was in an alpine area. The applicant was exposed in her outdoor travels to torrential rain, snow and galeforce winds. In winter the applicant said that it was more often than not raining. The applicant went out, she said, in all weathers, but sometimes got someone to drive her. Most of the time it was muddy underfoot.
5. The construction site workers received an issue of overalls, trousers, shirts, a cap, a jacket, boots, and riding boots. The salaried office staff did not get these but were issued with a thick snow boot. I understood the applicant to have received a pair of these boots.
6. The applicant presented to me as a cheerful uncomplaining person, and she made no complaint whatsoever about the way in which she was treated. But the fact is that when, because her duties exposed her repeatedly to the outdoor weather conditions described, she asked to be issued with the outer clothing issued to the construction workers she was refused. It was ``not in the award''. The applicant then asked if she could buy it from the company store. She was permitted to do this, but she did not think that anyone else had bought them in this way. The clothing which she bought was:
- (i) a waterproof coat, like a car coat. It was ``a proper jacket with a hood''. She had never seen one like it on sale to the public. She did not wear it indoors and she left it in the car at night when she reached home.
- (ii) A woollen jumper. This was a V-necked brown pure wool jumper. Something similar, but not the same, could be bought in a shop. This was worn indoors during the day, but the applicant was not indoors for long. The jumper was also left in the car at the end of the day when the applicant reached home.
- (iii) Thick woollen socks. I understood these also to have been left in the car at the end of the day.
7. I accept the applicant's evidence that without the clothing she would have been in danger of suffering from exposure. It is worth adding, as indicative of the conditions, that her clothing under the protective clothing in issue included a spencer, long johns, jeans and (usually) two jumpers. The situation is thus not that of the person who, perhaps unwillingly, wears at work clothing of a kind stipulated by his or her employer or imposed by the customs of a profession, which clothing is however clothing of a conventional kind. The situation here is rather one of a person who in the course of her work had to wear additional clothing to protect herself from the rigours of a harsh climate.
8. The clothing in question was used exclusively on the job. The jumper ``got ruined pretty quickly'', and the applicant said that the
ATC 552jacket acquired the smell characteristic of the kind of construction site in question.
9. The claim included the costs of dry cleaning and laundering the protective clothing. As with the main claim, the quantum of the cost of dry cleaning and laundering was not in dispute.
10. It is undoubted, as the Commissioner's representative argued, that for the applicant to succeed it is necessary that it be established that the relevant expenditure was incurred in the process of carrying out the duties of her employment: See
F.C. of T. v. White 75 ATC 4018. Brief reference was also initially made to the exceptive provisions of sec. 51(1) applicable to expenditure of a capital, private or domestic nature.
11. A ``principle'' was evolved, and came to be applied, in decisions of the Taxation Boards of Review that required, in order that the cost of clothing acquired for use at work be deductible that a ``test'' be satisfied expressed as "whether or not the expenditure was on or in respect of clothing `necessary or peculiar to his occupation'. We have adopted this test from the obiter dicta of Mr R.R. Gibson (Case No. 23,
12 C.T.B.R. 379)" - Case A45,
69 ATC 270 citing Case H61,
(1958) 8 T.B.R.D. 287 at p. 289.
12. It is often a harmless enough course to evolve a test which is seen as useful in applying, to the facts of the particular case, a statutory test which is expressed in generalised terms. But such a test cannot replace either a statutory expression or judicially expressed statements of principle in relation to such expression. The essential question under sec. 51(1) in the present case is whether the expenditure in question was ``incurred in gaining or producing the assessable income''. Judicial statements too well known to bear much repeating have dealt with the meaning of this expression, but as far as the so-called ``first limb'' of sec. 51(1) is concerned it is enough to refer to the statement of Dixon J. (as he then was) in
Amalgamated Zinc (De Bavay's) Ltd. v. F.C. of T. (1935) 54 C.L.R. 295 at p. 309:
``The expression `in gaining or producing' has the force of `in the course of gaining or producing' and looks rather to the scope of the operations or activities and the relevance thereto of the expenditure than to purpose in itself.''
Lunney v. F.C. of T.; Hayley v. F.C. of T. (1957-1958) 100 C.L.R. 478 at p. 499 Williams, Kitto and Taylor JJ. said:
``Whether or not [expenditure] should be so characterised depends upon considerations which are concerned more with the essential character of the expenditure itself than with the fact that unless it is incurred an employee or a person pursuing a professional practice will not even begin to engage in those activities from which their respective incomes are derived.''
13. A good example of the distortion that can occur when a new ``test'' is purported to be created is exemplified in Case A45 itself, where the Chairman referred to the ``necessary and peculiar'' test in what seems to me to be a very extreme way, saying at p. 271:
``Mere discomfort, being the lot of perhaps countless workers, would have to be discounted, but once the elements of (a), the existence of danger in his job, and (b), the need for a kind of clothing that will avert or minimise that danger, are proved, then in my opinion that clothing would have to be regarded as necessary to the occupation, and satisfying the first part of the `necessary and peculiar' test. By `danger', I mean a continuing, high level of danger, such as arises in the particular process in which this taxpayer was involved, and not the mere statistical risk of injury that may be run by employees in general, for example, by those engaged in road transportation.''
In my opinion there is nothing whatsoever in sec. 51(1) that requires the application of so harsh a test.
14. The Commissioner's principal argument in the present case was that the clothing in question was conventional clothing and that it remained so even if used for work purposes; that it had not been adapted from conventional clothing so as to distinguish it therefrom; and that it had no peculiar characteristics as protective clothing.
15. It seems to me clear that these considerations are not applicable having regard to the evidence given in the present case. The clothing was acquired for use in the extreme conditions offered by the applicant's employment. It was used for no other purpose.
ATC 553While broadly comparable clothing could be purchased elsewhere, it was purchased from the company store and was clothing considered by the company to be necessary for males working in the conditions encountered by the applicant. The pretext given for not providing it to her was that she was not covered by the right award, which confirms that legalism is not confined to lawyers. The fact is that she was not working in the shelter of the office, and that the clothing, as used for the purpose for which it was used, had a distinct occupational character. It would in my opinion be wrong to regard a claim such as this to be allowable only if all of the features upon which the Board of Review relied in Case A45 were required to be satisfied. Two of such features were of course satisfied here, namely that the clothing was used exclusively for work, and that it had, in the circumstances here present, a distinct occupational character. The wearing of it was not only appropriate for her work, it was part and parcel of her carrying out her duties in a harsh climate.
16. Some other cases were relied upon by the Commissioner.
- (i) In Case P111,
82 ATC 577 the taxpayer was employed by the Snowy Mountains Authority at Cabramurra and received a zone allowance under the relevant award. The allowance was intended to subsidise expenditures on various matters including clothing. The case mainly concerned the effect of the allowance having been granted which is of no relevance here. As to the taxpayer's claim in relation to additional clothing, the Commissioner had partially allowed this claim, and the partial allowance was upheld on review. The case is still not comparable with the present because the taxpayer there spent most of his time in his office with occasional outings on ``inspections etc.''.
- (ii) Case T103,
86 ATC 1182 was a case in which boots and overalls, shirts, shorts and socks were worn by the applicant solely in and exclusively for purposes of work. What that work was is not described in the report, but the Commissioner had allowed the claim in respect of boots and overalls but not otherwise. Dr Gerber (Senior Member, as he then was) held that the other clothing was not ``protective clothing of the kind specifically allowable as a deduction pursuant to sec. 51''. The taxpayer had given evidence that if he did not wear such clothes he would suffer damage to his skin. It was held that this did not suffice to convert ``what I am compelled to conclude are simply shorts and shirts into protective clothing''. In the next paragraph however, reference is made to
Mallalieu v. Drummond (1983) 1 All E.R. 801 (the case of the lady barrister's black conventional clothing) and this reference leads me to think that Case T103 really went off on the point that the clothing in question was simply ordinary clothing rather than on failure to comply with what seems to me to be a third ``test''.
- (iii) The Commissioner's representative sought to distinguish Case R80
(1966) 16 T.B.R.D. 388 in which a coalminer successfully claimed deductions in relation inter alia to the purchase and cleaning of overalls and the purchase of mining boots, but I find much of what the Board there said applicable here, in particular the statement at p. 390 that the taxpayer's ``work and conditions of work stamp his wearing of overalls with an occupational character rather than with the private character which ordinarily attaches itself to the wearing of conventional clothing''. The Board then went on to say that the ``necessary and peculiar'' test was satisfied, but in my respectful opinion their conclusion was best founded in the passage which I have quoted.
17. As far as the dry cleaning costs are concerned, this claim in my opinion falls to be dealt with in line with the main issue. The clothing was used in difficult conditions and was, being outer clothing exposed to the conditions described, required to be cleaned. The Commissioner's representative referred again to Case R80 especially at pp. 390-391 where it was said:
``We find also that the work he did, and the conditions in which he worked, made his overalls soiled with grease and dirt. In these circumstances it follows, we think, that the cost of cleaning the overalls is truly incident to the performance of the duties of his employment which was the source of his assessable income. The work he did was the immediate cause for the soiling so that the expenditure on cleaning was occasioned by
ATC 554his work which was productive of his assessable income. The soiling was not of the kind which conventional clothing suffers in the course of ordinary day-to-day wear at work so as to characterize the expenditure on cleaning as of a private nature.''
18. The passage quoted, taken from the reasons given by what was a very strong Board (Mr J.L. Burke (Chairman), Mr R.C. Smith Q.C. and Mr R.E. O'Neill (Members)), in my opinion in fact advance and apply to the applicant's case. The miner's clothing may have been more dramatically soiled, but in terms of principle the case is the same.
19. There was also a capital aspect of the matter, but apart from giving me a reference to three Board of Review decisions the Commissioner's representative said that he did not press the point.
20. In all the circumstances the objection decision under review should be set aside and the applicant allowed a deduction of $225 as claimed.