CASE Z9

Judges:
P Gerber DP

Court:
Administrative Appeals Tribunal

Judgment date: 18 February 1992

Dr P Gerber (Deputy President)

There are two applications before the Tribunal, one by ``W'', the other by ``D'', which, by consent, were heard together. Both applicants are employed by Shell Company of Australia Limited (``Shell'') as ``classified'' (i.e. non- union) staff. Each commenced employment with Shell pursuant to an oral contract of employment. At all relevant times, employees, whether classified or non-classified, were entitled to one day off per fortnight (``rostered day off'' or ``RDO''). However, in or about early February 1988, Shell unilaterally varied the terms of employment with respect to both applicants by terminating their right to RDOs and increasing their formal working hours from 35 to 38 hours per week (in effect an increase from a 9 day fortnight to a 5 day week). There was also an increase of 11 minutes in the daily lunch break (from 43 to 54 minutes). Both the employer and the two applicants agreed that the increase in the formal working hours had no practical effect on the amount of hours actually worked by classified staff. As the directors saw it:

``the Board did not consider this to be a material issue as it was generally recognised that the majority of staff involved worked hours well in excess of the 38 hours projected.''

Each applicant was to receive compensation for the loss of the RDOs by way of a lump sum equal to three months salary, payable in three instalments, the first instalment to be paid in April 1988, the second in January 1989 and the final instalment in January 1990. Similar variations were made to the terms of employment governing most other ``classified staff''. These two applicants were selected as ``test cases'', their particular selection being due to the fact one had used virtually all his RDOs, whilst the other had not.

2. The issue in this case is whether the payment of the first instalment, received by each of the two applicants in April 1988, formed part of their assessable income for that year of income. The effect of the decision will, of course, govern the character of the later payments.

3. In the letter informing the applicants of the change in the condition of their employment, dated 19 February 1988, each was advised that the extra months' salary was ``non-pensionable, but subject to income tax at the appropriate rate''. In addition, both applicants had sought a Ruling from the commissioner as to the character of these payments. D was advised on 29 November 1988 that each instalment was ``fully assessable''. There is no record of a response to W's enquiry.

4. Each of the applicants filed an affidavit (supplemented by oral evidence), giving his respective perception of the change in his lifestyle caused by the removal of the RDOs. In the case of W, he deposed:


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``The compensation amount I received for the loss of my RDO entitlements had no impact on my pension terms, annual leave payment entitlements or long service leave entitlements.

The increase in my formal working hours and the loss of my RDO entitlement was, and remains, a major concern to me.

The reality is that my actual working hours did not significantly change as a result of the change in formal working hours. Prior to the increase in formal hours I was actually working 70-80 hours per fortnight. I kept records of the overtime worked by me. These indicate that I worked 75 hours per fortnight on average. I did not receive overtime payments for the additional hours worked, as classified staff have no overtime entitlements. For a short period following the implementation of the increased formal working hours I took the attitude that I would not work overtime. However, I now tend to work 76-80 hours per fortnight.

Although there has been no significant change in the actual hours I work, I believe I am entitled to extra salary because I am required to be at Shell for longer formal hours. The compensation amount was not a payment for the additional hours I am required to work. The actions of the management of Shell in relation to this issue made me so angry that for the first time in my life I wished I belonged to a union. However, as I did not, and as I was not prepared to seek alternative employment, I had no choice but to accept the changed position. At first I did consider seeking alternative employment, but decided not to pursue that option as I have a career with Shell and I would have had to reestablish myself if I changed employers.

I was more upset about the loss of my RDO entitlements than about the increase in formal working hours. Prior to commencing employment with Shell in 1979 I was employed by a Government Department and enjoyed the benefits of flexitime. When I commenced with Shell I had RDO benefits. The value of these benefits became apparent to me during the early term of my Shell employment, at which time I decided I would not leave Shell for a position not offering the benefits of either flexitime or RDOs.

I generally made full use of my RDO entitlements - taking between 23-26 RDOs per annum. There was a fixed roster for determining RDO entitlements, but there was some flexibility in my Department. You could arrange your RDOs around your work commitments to suit yourself. Usually the day before an RDO, and sometimes the day after an RDO, I would work later and/or through my lunch hour to ensure my work commitments did not suffer as a result of my RDO entitlements.

I used my RDOs to attend to various personal matters, including shopping, attending school and kindergarten activities of my children, looking after my children so my wife could take a break and mid-week skiing. I also run my own computer consulting business. I was able to do approximately 50% of the computer consulting business on my RDOs, or simply use those RDOs to recover from late night sessions resulting from deadlines imposed by that business.

I have had to restructure my affairs since the removal of my RDO entitlements. I now have to work one additional night per week on computer consulting assignments to complete the tasks that would normally have been achieved in the course of an RDO. The hours I am required to devote to my computer consulting have not changed. However they are harder hours. Also I have no capacity to see people I need to communicate with in respect of the computer consulting assignments during ordinary business hours.

Further, to take advantage of mid-week skiing and other off-peak activities I have to take an annual leave day. Likewise, to see my children's teachers or activities that my children are involved in, I have to take an annual leave day. Shopping has to be crammed in on Friday nights and Saturday mornings.

My family and I have suffered as a result of the loss of my RDO entitlements as:

  • (a) My health has suffered due to reduced sleep and increased stress.

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  • (b) I have less time to spend with my family. RDOs were good for family activities and communication as we were together during the day, whereas on weekdays I now see my children only in the evenings, when they tend to be tired and irritable. Also, I now tend to sleep during the middle of the day on weekends - reducing further the time for family activities.
  • (c) I have less time to attend to the educational matters affecting my children - for example conferring with my children's teachers.
  • (d) I can no longer take advantage of undertaking off-peak activities - for example mid-week skiing.

Not all employees of Shell lost their RDO entitlements. Although the number of people with RDO entitlements has reduced since 1988, some people I work closely with continue to have RDOs. I feel particularly aggrieved when they take their RDOs. I feel that Shell has discriminated against classified employees - being the employees that had no union/award/ contractual basis to prevent Shell eliminating the RDO entitlement.

I verbally protested against the removal of my RDO entitlements. I believe a petition against the change was signed by most affected employees. I do not recall seeing the petition. However If I had been given the opportunity, I definitely would have signed it.

I received the following three payments - $3,633 in April 1988, $3,916 in January 1989 and $4,116 in January 1990 as compensation for the removal of my right to take RDOs. The instalment of $3,633 I received in April 1988 is the subject of this dispute. I believe the amounts received comprised one lump sum of $11,665 paid in three instalment amounts and that the payment was structured that way to minimise the cost to Shell.

I do not believe that I have been adequately compensated for the loss of my RDO entitlements. If I was able to choose between taking the money or having RDOs, I would elect to have the RDOs. I would even consider giving up salary to have the right to one RDO per month.

I do not believe that the compensation amount constituted consideration for the increase in formal working hours required under the new employment conditions as:

  • (a) The payments were `one off'. If they were compensation for extra hours they would have been on-going. We are still required to work the longer formal hours though no compensation has been received since January 1990.
  • (b) The additional formal hours require us to work beyond the hours previously agreed to and therefore are of an overtime nature. If we were being paid for working additional hours that payment should be calculated at higher rates to reflect the overtime nature of the additional formal hours.
  • (c) My actual hours of employment did not vary significantly. The nature of my employment is task oriented not hour oriented.
  • (d) I understand that persons receiving payments in the course of a year who terminated their employment with Shell prior to the completion of that year were not required to refund the whole or a proportion of the compensation payment. If the payment was consideration for working additional hours, those additional hours would not have been worked, given the early termination of employment, and an adjustment to termination payments (reducing the compensation amount) would have been expected.
  • (e) The compensation payments were not pensionable.
  • (f) The compensation payments were not relevant in determining annual leave loading entitlements.
  • (g) I believe employees commencing employment after 12 February 1988 received the same salary entitlements as existing employees - no increment was included in salary levels to reflect the additional formal hours.

I believe the compensation amount was a bribe to stop employee resignations and mass discontent as a result of the loss of their RDO entitlements. Therefore I believe that the compensation amount was paid to me as compensation for the removal of my


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right to take RDOs. I have formed this view on the following basis:
  • (a) The management of Shell represented the payment to be made in consideration of the loss of RDO entitlements.
  • (b) I did not receive additional salary. I received a lump sum payable in three instalments.
  • (c) The compensation amount was not pensionable or relevant in determining annual leave or long service leave entitlements.''

5. D deposed to much the same effect, albeit with less pathos than W with the following variations:

``... the loss of my RDO entitlement was of significant personal concern to me. This was not so much because I took full advantage of my RDO entitlements, but rather because I considered I had lost the flexibility to take advantage of those RDO entitlements as and when I required, and the ability to personally control a certain part of my working times.

During the period in which I was entitled to one RDO per fortnight, I did not take all of my entitlement. On average I took 5-7 RDOs per annum. This included 3-4 RDOs throughout the year plus 2-3 RDOs taken with my annual leave entitlements. My limited use of RDOs was occasioned by my work commitments and my attitude to my work. I generally would not arrange for an RDO unless my work commitments permitted it and I considered I had some special purpose for taking it. The amount of work I was required to put into the projects I worked on, limited the time I considered I could take off as an RDO. Further, I did not regard the RDO as a routine day off, but rather as an entitlement to time off when I had some particular personal needs to attend to during the normal working week.

Given my limited use of my RDO entitlements, I did not follow the prescribed system for the selection of the day taken off. However, if I had taken my RDOs as prescribed, the day would have been determined under a system whereby RDOs were rostered on a different day each fortnight, based on a 10 week cycle. Within this system there was flexibility to arrange your RDOs to suit both business and personal requirements by arranging, if suitable to the Department, to vary the actual day taken.

I used my RDOs taken to attend to various personal matters such as to go to the dentist, the hairdresser and the Blood Bank, to shop for building material, and to attend school events that my children were involved in. I was able to arrange my affairs to ensure the benefits of my time were maximised. As a result of the elimination of the RDOs, I no longer have the flexibility to arrange my affairs to ensure that the benefits of my time are maximised.

...

I was able to understand Management's perspective. In particular, that the Company and the country could ill afford the productivity loss from the widespread taking of RDOs, particularly when so many other countries with whom we compete do not have such entitlements. Given this, I was prepared to accept the compensation offered in return for loss of my right to the RDO. However, at that time I believed the lump sum compensation to comprise a non- taxable amount. If this is incorrect, and the amount is in fact taxable, I do not believe the amount received by me in the three instalments is adequate to compensate me for the loss of my RDO entitlements....''

6. In cross-examination by Mr Shaw QC, of learned senior counsel, who, with Mr G Davies, appeared for the Crown, D admitted that he received a letter from the employer, dated 18 February 1988, foreshadowing the changes in the terms of employment. This letter stated, inter alia, that:

``It is recognised that such change may cause some inconvenience and disruption to your personal arrangements. Therefore in consideration of this change of conditions, for each of the next three years of employment you will be paid an extra month's salary, non-pensionable, but subject to income tax at the appropriate rate.''

When asked whether he understood that these payments were ``going to be subject to income tax'', he replied:

``I understood that the company had sought a ruling, and that ruling was that the Taxation Commissioner had considered that it would be subject to income tax.''


ATC 149

He was pressed by Mr Shaw that:

``... at the time of the first payment, you had no reason to think that it wasn't taxable, did you? - Not from what I had been told from the company, no.''

7. The witness W gave evidence to like effect.

8. An affidavit of one Peter John Smedley, Executive Director, Down Stream Oils & Chemicals, Shell, was tendered, the Tribunal being advised that he ``was not available''. Mr Shaw, limiting himself to expressions of regret at being deprived of the opportunity of cross- examining the witness, did not otherwise object to the tender. So far as relevant to these proceedings, the deponent stated:

``... the Board acknowledged that the removal of the RDO entitlement would cause inconvenience and disruption to employees. It was therefore considered appropriate to compensate the employees for the removal of the RDO entitlements. Various forms of compensation were considered and it was finally determined that a cash payment was most appropriate. The Board deliberated on what was a reasonable amount, taking into account the potential costs to the company and perceived employees' expectations. It was decided that a payment equal to 3 months' salary would be made to staff who would be required to work a 10 day fortnight rather than a 9 day fortnight. No other benefit was to accrue to employees in relation to this matter.

To spread the potential cost (approximately $21 million) and impact on the company's cash flow, it was also decided by the Board that the amount would be paid in 3 instalments.

The first instalment was paid to staff who were employed by Shell at 12 February 1988 - being the date of the announcement of the change. Subsequent instalments were paid to staff who received the original instalment, provided they were still employed by Shell at the time those instalments were due to be paid. Employees commencing employment after 12 February 1988 were not entitled to compensation payments. The salaries paid to new employees were calculated on the same basis as salaries paid to employees employed at 12 February 1988. That is, new employees did not receive additional salary to take into account the fact that they would be working a 10 day fortnight and/or an extra 3 hours per week.''

9. It is submitted on behalf of the applicants that, given the reason for the payment, the context in which it was made, the form of the payment, and its character in their hands, it did not constitute ``income'' according to ordinary concepts.

10. I am satisfied that prior to the change in the terms of employment, the applicants had a contractual right to their RDOs, and that it was perceived by them to be a substantial benefit attached to their employment - what is colloquially referred to as ``part of the package''.

11. When the nature of the benefit is looked at, it becomes at once obvious that the additional payment is not for the additional hours worked - Smedley's affidavit makes it clear that the increase in formal working hours from 35 to 38 hours per week was not considered by the Board ``to be a material issue as it was generally recognised that the majority of staff involved worked hours well in excess of the 38 hour week projected'', to which I might add ``and without additional remuneration''. D conceded that ``the compensation amount was not a payment for the additional hours I am required to work'', although he believed that he was ``entitled to extra salary because I am required to be at Shell for longer formal hours''.

12. On the basis that this payment, being part of a lump sum payable in instalments, is not a reward for extra hours worked, but compensation for the cancellation of a valuable part of the employment ``package'', Mr Pose, solicitor for the applicants submitted that the payment is of a capital nature and not assessable.

13. In
Bennett v. FC of T (1947) 8 ATD 265; (1947) 75 CLR 480, a lump sum payment, payable in instalments, was made to the managing director of a broadcasting company as compensation for removing him from the absolute control he had previously exercised pursuant to an indenture and, instead, re- appointing him ``to perform such duties and exercise such powers as might from time to time be assigned or vested in him by the directors of [the broadcasting company]''. As in the instant case, the Commissioner treated the


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instalment payments as income. In upholding the taxpayer's objection, Williams J held:

``But the substance of the matter is that the sum of £12,255 was a lump sum payable by instalments as compensation for the cancellation of the indenture of 24th August, 1935, and such payments are of a capital nature unless the compensation is some form of equivalent for the loss of the income which the taxpayer would have earned under the agreement but for its cancellation, as in the case of the payments in
Commissioner of Taxes (Vic.) v. Phillips (1936) 55 C.L.R. 144; 3 A.T.D. 330. The payments in the present case are simply payments made as part of the consideration for the appellant agreeing to cancel one agreement under which he had certain rights and entering into a fresh agreement under which he had different rights. Adapting the words of Lord Macmillan in
Van Den Berghs Ltd. v. Clark [Inspector of Taxes] [1935] A.C. 431 at 443, the congeries of the rights which the appellant enjoyed under the agreement and which for a price he surrendered was a capital asset.''

(at ATD p 268; CLR p 485)

14. Mr Pose also sought comfort from the decision of the Full Federal Court in
FC of T v. McArdle 89 ATC 4051, where Davies, Gummow and Lee JJ stated in a joint judgment:

``Before the trial judge and again on appeal, reliance was placed on sec. 25(1) of the Act. We need say no more about this matter than did the trial Judge, namely, that it was a capital receipt, being received as consideration for the surrender of valuable rights. The sum was not received by way of a reward for services and was negotiated as the consideration for the surrender of valuable rights.''

(at p 4059)

15. If the sums in dispute here are indeed consideration for the surrender of valuable rights, and thus of a capital nature - as I believe them to be - it cannot affect their character because the consideration was not negotiated, but determined unilaterally on a ``take it or leave it'' basis. Nor have I been persuaded by Mr Shaw's submission that the payments constitute ``income'' because in its letter to its employees, dated 18 February 1988, it stated that because of the change in conditions, ``you will be paid an extra month's salary'' for the next three years. A payment does not become ``income'' simply by being labelled ``salary''. Having satisfied myself that the payments are of a capital nature, ``salary'' is here simply being used as the quantifier of each man's entitlement.

16. Unfortunately for the applicants, that is not the end of the matter. The question must still be asked: Are the payments ``income'' pursuant to sec 26(e), which includes in assessable income ``the value to the taxpayer of all allowances, gratuities, compensations, benefits, bonuses and premiums allowed, given or granted to him in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by him...''?

17. On this aspect, the High Court has on several occasions shown a diversity of views. Thus, in
Hayes v. FC of T (1956) 11 ATD 68; (1956) 96 CLR 47, Fullagar J opined:

``I doubt very much whether s. 26(e) has the effect of bringing into charge any receipt which would not be brought into charge in any case either by virtue of the general conception of what constitutes income or by virtue of the definition of `income from personal exertion' in s. 6.''

(at ATD p 71; CLR p 54).

18. Much the same sentiment was expressed by Windeyer J in
Scott v. FC of T (1966) 14 ATD 286; (1966) 117 CLR 514 where, when dealing with sec 26(e), his Honour noted:

``The enactment does not bring within the tax-gatherer's net moneys or moneys' worth that are not income according to general concepts.''

(at ATD p 293; CLR p 526)

19. More recently, the matter came again under review in
Smith v. FC of T 85 ATC 4699, 86 ATC 4463, 87 ATC 4883, illustrating - given the diversity of views expressed by the various judges entertaining the appeals - that the issue has still not been finally resolved. In that case, the taxpayer was a bank officer. The employing bank, in an effort to encourage further study by its officers, paid the applicant $570 under its ``encouragement to study'' scheme. The Commissioner treated it as assessable income under both sub-sec 25(1) and sec 26(e). At first instance before Yeldham J, the claim was allowed, being held to be neither ``income'' under sub-sec 25(1) nor a payment ``for or in relation directly or indirectly to any employment of'' the taxpayer within sec 26(e). On appeal to the Full Federal Court, the appeal


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was allowed by majority. Neaves and Wilcox JJ, in a joint judgment, held that once it was accepted that the payment would not have been made if the relationship of employer and employee had not existed, it was impossible to deny that the employment was ``one contributory cause'', hence the payment was causally connected to the employment by the bank and was assessable under sec 26(e). In dealing with the relationship between sub-sec 25(1) and sec 26 the majority noted:

``In
Reseck v. F.C. of T. 75 ATC 4213; (1975) 133 C.L.R. 45 at ATC pp. 4214-4216; C.L.R. (pp. 47-49) Gibbs C.J. discussed the relationship between sec. 25 and 26 of the Act, noting that it has been said that sec. 26(e) - unlike some of the other paragraphs in that section - does not bring into charge any receipt which is not income according to general concepts. If that is so, it is because the items specified in para. (e) are all items which, by their very nature, fall within the concept of income, as that word is generally understood. The scheme of the Act does not subordinate either section to the other. If an item is caught by any provision of sec. 26, it is assessable income whether or not it also falls within sec. 25.

In the present case counsel for the appellant Commissioner rely upon both sec. 25 and 26(e) but the emphasis of their argument has been upon sec. 26(e), it being apparently accepted that, if the receipt is not within that paragraph, it would not be correct to regard it as being `income' according to general concepts, and so within sec. 25. Accordingly, it is convenient to concentrate attention upon the major question argued upon the appeal, namely whether sec. 26(e) applies to the case.

The leading authority upon sec. 26(e) is
F.C. of T. v. Dixon (1952) 86 C.L.R. 540, a case in which the Full High Court of Australia considered the assessability of `make up' pay provided by a soldier's peace time employer during the period of his war service. By majority, the Court held that the payments were assessable, as being `income' within the meaning of sec. 25; but all members of the Court held that sec. 26(e) was inapplicable. In their joint judgment two members of the majority, Dixon C.J. and Williams J., at pp. 553-554 said this of sec. 26(e).

`There can, of course, be no doubt that the sum of £104 represented an allowance, gratuity or benefit allowed or given to the taxpayer by Macdonald, Hamilton & Co. Our difficulty is in agreeing with the view that it was allowed or given to him in respect of or in relation, directly or indirectly, to any employment of or, service rendered by him. It is hardly necessary to say that the words ``directly or indirectly'' extend the operation of the words ``in relation... to''. In spite of their adverbial form they mean that a direct relation or an indirect relation to the employment or services shall suffice. A direct relation may be regarded as one where the employment is the proximate cause of the payment, an indirect relation as one where the employment is a cause less proximate, or, indeed, only one contributory cause. It may be conceded also that the proviso has an effect upon the construction of par. (e) of s. 26, but the effect is only to show that the allowance may be in consequence of a retirement from or termination of the office, not to show that a mere historical connection, as it may be called, is sufficient. We are not prepared to give s. 26(e) a construction which makes it unnecessary that the allowance, gratuity, compensation, benefit, bonus or premium shall in any sense be a recompense or consequence of the continued or contemporaneous existence of the relation of employer and employee or a reward for services rendered given either during the employment or at or in consequence of its termination.'

Two subsequent cases, each decided by single Justices of the High Court, emphasise that it is not sufficient to activate sec. 26(e) that there be, at the date of the receipt by the taxpayer of money or other benefits, a relationship of employee and employer or of provider and recipient of services between the taxpayer and the payer of the money: see
Hayes v. F.C. of T. (1956) 96 C.L.R. 47;
Scott v. F.C. of T. (1966) 117 C.L.R. 514. It is also necessary that the money be received by the taxpayer in such a capacity and not otherwise.''

(at pp 4466-4467)


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20. Sheppard J, although dissenting in the result, ``left open'' the question whether the dictum of Fullagar J in Hayes was correct (i.e. whether sec 26(e) had the effect of bringing into charge any receipt which is not otherwise income according to ordinary concepts).

21. When Smith reached the High Court, once again, the Court was divided. In the result the appeal was dismissed by Wilson, Toohey and Brennan JJ; Deane and Gaudron JJ dissenting. Only Brennan J dealt with the vexed question whether sec 26(e) brings to charge only those pecuniary benefits which are ``income'' according to ordinary concepts. Thus his Honour stated:

``With great respect for the view expressed by Windeyer J., I do not find in the context of sec. 26(e) any ground for holding that the scope and effect of that provision is limited to bringing into the tax net the value of those benefits which are, according to general concepts, of an income nature, being benefits received in kind rather than in money. If an allowance is paid to an employee in consequence of his employment, sec. 26(e) is attracted whether or not the allowance is of an income nature.''

(at p 4888)

22. Mr Pose submitted that ``in view of the state of authority, the AAT should here conclude that a capital receipt is not within section 26(e)''. True it is that ``the state of authority'', to adopt Mr Pose's phrase, is such that one can hardly claim with confidence that the last word on this contentious issue has been spoken. However, doing a headcount, there appear to be more judges at various levels in favour of the proposition that sec 26(e) renders payments that arise as an incident of the employment assessable even if, apart from the section, such payment might well escape impost as an affair of capital, than there are judges who support the view that items which are not income under ordinary concepts are not ``caught'' by sec 26(e). However tempting Mr Pose's invitation, I must, sitting as an administrative tribunal, decline an invitation to adopt the decision of Windeyer J in Scott (supra) and the dictum of Fullagar in Hayes (supra), in preference to more recent pronouncements by both the Federal Court and the High Court (Reseck (supra) Smith (supra) and
Haggarty & Ors v. F.C. of T. 89 ATC 4485), all of which have questioned the correctness of those earlier cases.

23. In the alternative, Mr Pose submitted that in the instant case, the payments ought to be regarded as ``connected'' with the employment, rather they should be seen ``as compensation related to loss of personal benefits''. He added that ``if it is a voluntary payment, it may be regarded as a gift to compensate for this''.

24. It is an imaginative submission, but it cannot succeed. To suggest that these payments are unrelated to the employment flies in the face of the evidence. Indeed, I am satisfied that fact of employment is the causa causans of the payment, it is not ``indirect'', or a mere causa sine qua non. In this regard, I gratefully adopt the statement by Brennan J in (supra) where his Honour noted:

``Employment is more than the activity for which an employee is remunerated: employment comprehends all aspects of the relationship of employer and employee in the particular case, save those aspects which are merely personal. If a distinction is to be drawn between the income-producing activity which is an aspect of employment and the entirety which constitutes employment, sec. 26(e) looks to the relationship between the entirety and the payment of the allowance.''

(at p 4888)

25. The above view, in turn, was cited with approval by Wilcox J in Haggarty (supra).

26. Nor can a ``gift'' - even assuming that these payments can be so characterised - save the payments from the tax net of sec 26(e) if they arise ``in respect of, or for or in relation directly or indirectly to'' the employment; cf Case No 13, 12 CTBR 303.

27. In summary, I am satisfied in the current state of the law that sec 26(e) is not restricted to bringing to tax receipts which are otherwise income according to ordinary concepts. On my finding in para 24 above, it follows that the receipts in issue are assessable income pursuant to sec 26(e).

28. The Crown did not seriously pursue the capital gains issue, submitting:

``that if we are wrong in the principle submission we have put in relation to section 26(e), we would submit that the payment is caught by section 160M(7) since:

`an act or transaction has taken place in relation to an asset or an event affecting an asset has occurred'


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that is to say in relation to the goodwill of Shell, and as a consequence:

`a person has received... an amount of money or other consideration by reason of the act, transaction or event...'

and it has the consequences which are set out. We would submit that
Hepples v. FC of T 91 ATC 4808 supports that submission.''

29. In the circumstances, I am not going to determine whether or not the payments are caught by the capital gains provisions of the Act. It is with no disrespect to the High Court to note that in the present divergence of views on the effect of sec 160M(6) and (7) as revealed in Hepples [v. FC of T 91 ATC 4808], I prefer to deal with the intellectual challenge involved in unraveling the mysteries hidden in the interstices of sec 160M(6) and (7) when a case comes before me where the point is fully argued, shielding behind the maxim volenti non fit injuria. It is therefore only for the sake of completeness and by way of obiter that I note in passing that sec 160M(6) and (7) appear to me to have no impact on this case as the effect of sub-sec 160ZA(4) would, in the circumstances, be such that any resultant capital gain would, in any event, be reduced to nil.

30. For the above reasons, both objection decisions are affirmed.


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