CRESTANI v FC of TMembers:
J Block SM
Administrative Appeals Tribunal
J Block (Senior Member)
In respect of the year ended 30 June 1997 (the ``relevant year'') the Respondent, by notice dated 16 October 1997 issued an amended assessment, disallowing the Applicant's claim for a deduction in respect of his travel expenses by motor car to and from work. The Applicant objected by notice of objection dated 23 October 1997; the Applicant's objection was disallowed by notice dated 14 November 1997 and the Applicant referred the objection to this Tribunal by notice dated 31 December 1997.
2. The Applicant was represented by Mr KS Purba, a tax agent, and the Respondent was represented by Mr SW Gibb, of Counsel, instructed by Mr D Stokes of the Australian Government Solicitor.
3. The Tribunal received in evidence the T Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act; it also received a number of exhibits and statements of witnesses.
4. There are two matters of a preliminary nature which can conveniently be dealt with at this juncture:
(a) This objection decision was referred to the Tribunal after the amendment of Taxation Administration Act 1953 (``TAA'') by No 34 of 1997, s 3 and Sch 16 item 7, effective 17 April 1997. Section 14ZZE of the TAA now provides that an application to the Taxation Appeals Division of the Administrative Appeals Tribunal will be heard in public unless the applicant requests that it be heard in private. No such request was made in this instance and after
ATC 2221some initial confusion, Mr Purba, on behalf of the Applicant, agreed that the matter is not to be treated confidentially.
(b) There is no issue of substantiation before the Tribunal, so that if this objection decision is decided in favour of the Applicant, he is entitled to receive the deduction claimed by him.
5. Oral evidence was given by the Applicant and also, and on his behalf, by Messrs Barry Holloway and John Graeme McWhae. Oral evidence was given on behalf of the Respondent by Mr Peter Horscroft, Line Maintenance Manager of Ansett Transport Industries Limited (``Ansett'') and by Mr Clive Thomas, an officer of the Respondent who took certain relevant photographs, and which are attached to his statement.
6. Although the hearing took up two days and included a site inspection at the premises of Ansett in Sydney, the factual issues fall within a comparatively narrow compass. They resolve themselves into three issues as follows:
- (a) the first factual issue is as to whether the Applicant's box of tools is aptly described as ``bulky'';
- (b) the second factual issue is as to whether Ansett provides a secure area in which boxes of tools can safely be left overnight;
- (c) the third factual issue (which is bound up with the prior issues) is as to whether the Applicant travels to and from work in his own car as a matter of personal choice; this particular issue is perhaps more aptly described as a related issue and referable in particular to paragraph 138 of Taxation Ruling TR 95/19.
7. (a) As to the first issue, the Applicant's box of tools, which is comparable in size with many others, is 10[inch ] wide, 10½[inch ] high and about 22½[inch ] long. It weighs approximately 27 kilograms; the Tribunal finds that it is not easy to lift, and could not, in the opinion of the Tribunal, conveniently be carried for any distance.
(b) I do not think that the term ``bulky'' should be construed to refer only to an article which is of large size, such as the musical instruments which were the subject of the decision in
FC of T v Vogt 75 ATC 4073. The term is, in my view, more aptly to be construed as similar to ``cumbersome'' in the sense that it is not easily portable. The box of tools in question appears to be comparable with the tool boxes which were referred to in Case U107,
87 ATC 650, a decision of this Tribunal given by DP Breen (Deputy President), Dr P Gerber (then a Senior Member) and KL Beddoe (Senior Member). I shall have occasion to refer again to this case later in these Reasons.
(c) I find, as a matter of fact, that the Applicant's box of tools is bulky within the meaning of that term contained in paragraph 138 of Taxation Ruling TR 95/19.
8. In respect of the second issue:
(a) The Applicant during the relevant year was employed by Ansett as an aircraft engineer at Ansett's Sydney terminal; his employment schedule required him to work four-day cycles which consisted of two day shifts followed by two night shifts.
(b) The Applicant drove to and from work from his home in Gymea Bay; he generally parked his car in a car park some few hundred metres from a gate which could be entered either with a card or through personal identification by the attendant.
(c) His box of tools was conveyed in his car to and from his home. He acknowledged that he did not use the tools at home.
(d) The Applicant would generally convey his case of tools on a trolley, from his car through the gate and (at least initially) into the tarmac room where he would store the case of tools on a metal storage rack.
(e) Ansett, as a matter of policy in relation to its aircraft engineers, required each engineer to remove his case of tools from the tarmac room at the end of his shift, and there were no security arrangements of any kind for tool boxes in this area. Tool boxes are stacked on top of each other until moved or removed.
(f) When on day shift, an engineer might often perform an aircraft maintenance task on the runway and for which purpose he would take one or more tools (such as for example spanners), from his tool box for this purpose. When on night shift, he might be performing a substantial task on an aircraft in the hangar and for which purpose he might need his box of tools.
9. Further as regards the second issue:
(a) Ansett employed approximately 170 engineers in its domestic terminal in Sydney. Some 46 chains were provided in the hangar (but not in the tarmac room) for use by the
ATC 2222engineers and to enable them to leave their tool boxes at the airport overnight. The chains are neither very long nor very thick and so that to saw through them would not be a task of any great difficulty. In fact the chains were used to a minor extent only and so that a supply of 46 chains, while on the face of it an under-supply, was in fact more than sufficient. In general terms, the aircraft engineers do not use them.
(b) In respect of those few aircraft engineers who did use the chains, some would use padlocks in conjunction with the chains.
(c) The Applicant gave evidence as to his fear of theft. He stated that entrance to the airport facilities is by no means confined to engineering and mechanical staff and that in fact large numbers of contract workers of one kind or another find it comparatively easy to gain access. For a catering contractor by way of example, entrance would be obtained through the gate; the driver of the vehicle would then be asked to wait in a designated car area for an escort, but in fact could quite easily continue on and in fact gain access to the airport facilities and buildings with comparative ease.
(d) The Applicant referred to an Ansett Inter- Office Memo forming part of additional documents tendered by the Applicant (and referred to as Exhibit A1.2) entitled ``Missing Tools'', the third paragraph of which reads:
``This trial should help to apprehend those persons responsible for acts of vandalism and theft of your property. Over recent times we have had reports of some 16 padlocks cut from various engineers' toolboxes and lockers in hangars 91 and 145. Once this trial has been set in place we will be seeking the assistance of engineers in these areas to evaluate the effectiveness of these measures.''
It transpired though that that document relates to Melbourne and not to Sydney.
(e) The Applicant stated that he feared that leaving his tool box at the airport would result in it being stolen. There was little evidence of actual theft of tools.
(f) Mr Horscroft gave evidence on behalf of the Respondent; his evidence is set out at page 93 and following of the transcript for the first day's hearing. During the course of that evidence he said:
- (1) his own tool box had been stolen from his car a few years ago and that he could not afford to buy ``those quality of spanners'' (transcript 98);
- (2) the following question and answer appears at page 99:
``Mr Purba: To the best of your knowledge - if you can only stock 40 toolboxes in the hangar in the racks there, what's happened to the other 136 boxes which are not in use, which belong to the other engineers? - Mr Horscroft : I've got no idea.''
(3) and then at transcript pages 99 to 101:
``Mr Purba: Is it possible that they would have taken it home, because you do not provide a secure environment? - Mr Horscroft: Two questions there, it certainly is possible that they could have taken them home and you want an opinion of whether I believe we provide a secure environment?
Mr Purba : Yes? - I believe that we as a company provide - Mr Horscroft: We haven't been asked to provide anything more secure than there is provided already.
Mr Purba: The toolboxes that you actually saw in the hangar area? - Mr Horscroft: Last week?
Mr Purba: Last week on the visit of the ATO, were there actually any empty toolboxes down there, did you observe any empty toolboxes or they were all chained and locked and you did not have access to them? - Mr Horscroft: I didn't see any empty toolboxes. I think from memory there was possibly about five to eight toolboxes there. I believe from memory that there was - I think only may be one or two that was chained.
Mr Purba: So a total of only five or eight toolboxes were seen in the hangar area? - Mr Horscroft: I believe from memory - once again, I didn't actually count them.
Mr Purba: And they are actually a provision of 46 chains? - Mr Horscroft: Yes, I think so.
Mr Purba: So most engineers do not actually want to leave their toolboxes there? - Mr Horscroft: I really haven't - I can't really comment on that. I haven't asked them, that would be a reasonable assumption.
Mr Purba: In your knowledge does Ansett provide any insurance for the loss or theft of engineers' personal toolboxes? - Mr Horscroft: No, not to my knowledge.
Mr Purba: Does Ansett provide any compensation for loss or theft of engineers' toolboxes? - Mr Horscroft: I don't - I don't think we do - maybe I should know but I don't think we do.
Mr Block: How many incidences of theft do we know about of a toolbox, leaving aside your own from your case, with the car? - Mr Horscroft: Two.
Mr Block: When did that happen? - Mr Horscroft: One was just before I came to Ansett which was 1991 and the only other one, Mr Block, that I am aware of is the one approximately 1993 that was reported to me from the shift controller.
Mr Block: ... If there are only 43 chains, does it not follow - and given the directive - that toolboxes must not be left in the tarmac office? - Mr Horscroft: Yes.
Mr Block: A stricture which is sometimes obeyed more in the breach but perhaps obeyed quite a bit - does it not follow that roughly two thirds of your engineers have no option but to take their toolboxes home simply because there aren't enough chains? - Mr Horscroft: If you - if you looked at it that way, yes. If you looked upon the fact that we would have about 40 or 50 toolboxes in the tarmac - tarmac area for people who were on duty then that would leave approximately 100 people that weren't on duty and I was asking them not to leave their toolboxes down there then you may well say, `Well, where are they supposed to put them seeing that we've only got 43 chains'.
Mr Block: That is exactly what I'm asking you, where are they supposed to put them? - Mr Horscroft: I don't know.''
- (4) And then at p 106 of the transcript:
``Mr Block: Mr Crestani has explained to us how one gets in to what is described as the flight area. It doesn't sound all that difficult and apparently the number of people who can get into the flight area at any given time may be quite large and especially having regard to caterers, builders, renovators and...? - Mr Horscroft: Hundreds.
Mr Block: Hundreds, indeed. And what is more, in fact, I think Mr Crestani says there was more than that. In addition, people who arrive on business, say couriers, are asked at the gate what their business is and they're told, go and park in the parking area and we'll send an escort for you? - Mr Horscroft: Yes.
Mr Block: But the long and the short of it is that for someone to get into the flight area is not really all that difficult? - Mr Horscroft: It's reasonably difficult for somebody that shouldn't be there to get into there even though, of course, if there's somebody who really wants to get in he can but it's very easy for somebody that has an ID card or an access pass to get in. I mean, it's what the passes are there for.
Mr Block: This is the nub of my question, how big - to what extent are the engineers tools at risk? Either when they're sitting in the tarmac office and from which they're supposed to be removed and to what extent are they at risk if they are left on a chain overnight? - Mr Horscroft: It's my personal belief that if somebody wanted to steal a toolbox of one of our engineers there would be - it would be very easy to do so for that person and I know that because air conditioners have actually been stolen from out of the wall. So if people really want to steal something they will. They, in fact, haven't stolen that many but if somebody wanted to steal a toolbox then it would be very easy for them to do it.
Mr Block: And do you have a view as to why toolboxes haven't been stolen? Is it perhaps because their commercial value to a thief is limited? - Mr Horscroft: Well, I believe that their commercial value is not that limited that they're probably the best tools that man can buy. Whether they know what they're stealing or whether they know what's available to be stolen I don't know because I'm not thinking through the eyes of the thief.''
(g) It does not appear to be in dispute that an engineer's tools are valuable, that insurance is either difficult to obtain and that Ansett does not pay compensation for stolen tools.
10. In respect of both of the second and third issues:
(a) Ansett does provide each aircraft engineer with a locker which is designed specifically for his or her wet weather gear. The Applicant in fact stores home brewing materials, amongst other things, in his locker.
(b) The Applicant could not, even if he wanted to, store his tool box in his locker because it would not fit if placed in the locker in upright fashion. It might be capable of being squeezed in if stored on its side, but in such event the tools would fall out and their careful storage and maintenance is a matter of some importance.
(c) The Applicant could also, if he stored his tools in two smaller tool boxes, place both of them in his locker. To do so would, of course, require him to acquire smaller boxes. It is to be noted, as set out previously, that his own tool box is of standard size. I do not think that the issue of personal choice goes so far as to require him to make different arrangements as regards his tool box and in other words to dispose of his current (and standard-sized) tool box and acquire two smaller tool boxes. While the lockers are more secure than the chains they too are, at least to an extent, vulnerable. Mr Horscroft said in his evidence that Ansett does not provide the lockers for any purpose other than the storage of wet weather gear.
11. Specifically in respect of the second issue, I find as a matter of fact that in respect of the relevant year, Ansett did not provide a secure area for the storage of tool boxes. The fact that the aircraft engineers generally do not use the chains leads me to infer that they do not consider them secure. The mere fact that Ansett provides chains for less than one third of its engineers reinforces this inference. It was not suggested in evidence that the aircraft engineers do not use the chains and rather use their cars, simply because they can thereby obtain travel cost deductions. Deductions in any event, and depending on marginal rate, relate to less than half of the relevant expenditure, which can depending on distance, and over a whole year, amount to a substantial sum. It is much more likely, in my view, that the engineers transport their tool boxes because, having regard to the lack of a secure area for the storage of their tool boxes, they have no real option but to do so.
12. As to the third issue:
(a) Mr Gibb argued that the trolley used by the Applicant would enable him to use public transport. I do not think that this argument is tenable. Railway station platforms are not usually at ground level, so there would, of necessity, be a need to move the trolley with its cumbersome and heavy cargo up and down levels. This is so to a lesser extent when one considers the need to get on and off trains and buses. Suffice it to say that in my view the use of public transport, even with the help of a trolley, is not a viable option.
(b) The Applicant in his evidence admitted that he would use his car in any event, that is, even if he were not obliged to transport his tool box. This frank admission (described by Mr Gibb as fatal) led to a contention by Mr Gibb that the Applicant uses his car as a matter of personal choice thus defeating any claim to which he might otherwise be entitled in respect of a deduction. But I do not think that such an argument can be correct. The fact that that the Applicant would, even if he had no heavy box of tools, use his own car (and in which event he would be denied a deduction) does not result as a matter of logic in his having exercised a personal choice to do so when his box of tools must be carried, and when in reality he does not have any real choice.
13. The decision in
Kenneth Edmund Lunney v FC of T (1958) 11 ATD 404; (1958) 100 CLR 478 is always the starting point in travel deduction cases. In general terms, travel from home to work is not deductible under section 51(1) of the Income Tax Assessment Act 1936, in that it is not incurred in the derivation of assessable income but is rather incurred in order to enable the taxpayer to derive assessable income.
14. In Vogt's case, a deduction was allowed in respect of the travel expenses of a musician who conveyed bulky instruments which could not conveniently be carried in public transport. It would seem, having regard to that decision, that a deduction would not have been allowed for a violin; see in particular in this regard the following passage of the judgment by Waddell J at page 4078 (and in respect of which emphasis has been added by the Tribunal) as follows:
``Having regard to the various expressions of opinion mentioned above I consider that the first step in determining whether the expenditure in the present case is deductible
ATC 2225under sec. 51(1) is to state what are the relevant aspects of the operations carried on by the taxpayer for the production of his income. These are that he earnt his income by performing, at several places, on musical instruments and associated equipment upon terms that he brought the instruments and equipment to the place of performance; the instruments and equipment were of substantial value; they were of a bulk which meant they could be transported conveniently only by the use of a motor vehicle; the taxpayer kept the instruments and equipment at his residence for justifiable reasons of convenience and for the purpose of practising on them . This step must be taken in order to take the next step which is to determine what was the essential character of the expenditure itself. Three matters are, I think, relevant to this character. Firstly, the expenditure was incurred as part of the operations by which the taxpayer earnt his income. Secondly, it was essential to the carrying on of those operations: there was no other practicable way of getting his instruments to the places where he was to perform. Thirdly, in a practical sense, the expenditure should be attributed to the carriage of the taxpayer's instrument rather than to his travel to the places of performance. The mode of his travel was simply a consequence of the means which he employed to get his instruments to the place of performance, that is by carrying them in the motor vehicle which he drove. In the light of these matters it is my opinion that the essential character of the expenditure was such that it should be regarded as having been `incurred in gaining or producing the assessable income'.
In the course of argument reference was made to the analogy of a violinist who kept his violin at home and took it with him to various places where he played. It was submitted for the Commissioner that clearly in such a case the expense of the violinist travelling from his residence to the place of performance could not become deductible because he took with him his violin which he kept at home for safe keeping and for the purpose of practising . This is, I think, clearly correct. The reason why such expenditure would not be deductible is that it could not be said to arise from, nor could it be attributed to, the necessity of getting the violin to the place of performance. Another example, not mentioned in argument, which illustrates what I consider to be matters relevant to the proper categorisation of the expenditure, is that of a concert pianist who insists upon playing on his own piano. If he were to keep this at a studio where he practised, the expense of carrying it from the studio to the place where he was to perform should clearly be regarded as a business expense and deductible under sec. 51(1) . Would it be any the less deductible if he were to keep it at home and travel with it in the same vehicle to the place of performance? I think not. There may well be cases where, as a matter of fact, the size and bulk of an instrument or the reasons for keeping it at home may make it difficult to determine whether expenditure incurred in circumstances similar to the present is deductible. However, I do not think that such hypothetical difficulty indicates that the approach which I have taken is wrong.''
Garrett v FC of T 82 ATC 4060 Lusher J said at page 4063 (emphasis again added):
``A qualification to the above general proposition is that where the taxpayer, for example, keeps necessary equipment or instruments reasonably at his home and which he needs for the purpose of performing his work at his various places of work and, by reason of their bulk or otherwise, these need to be transported by vehicle from the home to such places, and where the equipment was used at home for purposes of practice , the expenditure was deductible within the section, even though the taxpayer was also thereby transported. This is because the expenditure incurred was part of the operations of earning the income and was essential to the carriage of the instruments rather than to the taxpayer's own travel.''
16. It is an issue of some uncertainty as to whether, in order to claim a deduction for travel expenses on the ground of transportation of bulky instruments or tools, it is necessary for the home to be a base of operations.
On the one hand, and as the Respondent pointed out, Lusher J in Garrett treated Vogt as authority for the proposition that where the taxpayer keeps bulky instruments at his home
ATC 2226and which he needs for the purpose of performing his work at his various places of work and these need to be transported from the home to such places, and where the equipment is used at home for the purpose of practice, the expenditure is deductible.
Northrop J in
FC of T v Genys 87 ATC 4875 appeared to endorse that interpretation of Vogt when he stated at 4878:
``However, the general proposition laid down in Lunney, notwithstanding that it remains good law, is not exhaustive. In
Garrett v FC of T 82 ATC 4060, the Supreme Court of New South Wales constituted by Lusher J held that it had no application to the following situations:
- (a) where the taxpayer keeps necessary equipment or instruments at his home which he needs for the purpose of performing his work, and by reason of its bulk, such equipment needs to be transported by vehicle from the home to his place or places of work and where the equipment is used at home;
On the other hand, the courts have often cautioned against the danger of placing, as barriers to deductibility, tests and requirements which do not appear in s 51(1) itself. As Hill J stated in
Kidston Goldmines Ltd v FC of T 91 ATC 4538 at 4546:
``... there is a danger in substituting for the words of the sub-section language which does not appear in it. The statutory issue is whether the interest outgoing was incurred in (ie in the course of) the income producing activity...''
This point was emphasised by Northrop J in Genys. Immediately following his enunciation of four situations to which it has been held by various courts that Lunney does not apply, Northrop J stated at 4879:
``Before embarking upon a consideration of Lunney and the qualifications thereto outlined above, it is emphasised that neither the decision nor the qualifications are statutory law and should not be construed as though they were the words of an Act of Parliament. The question which this Court is called upon to decide is whether the travelling expenses incurred by the taxpayer are `losses or outgoings' incurred in gaining or producing the assessable income. The various categories referred to above are mere examples of how courts have applied sec. 51(1) in given circumstances.''
17. Therefore it is possible to argue that far from being a ``necessary precondition'' for deductibility in the context of a deduction for the transportation of bulky items and tools, the fact that the home is a ``base of operations'' provides only one instance where the inference that the expenditure was incurred in gaining or producing assessable income could be raised. Each case must turn on its own facts, and there may arise situations involving home to work travel expenses in cases of bulky instruments in which the expenditure is incurred in the production of income notwithstanding that the home is not a base of operations. Thus the decision in both Case U107 (previously referred to) and Case U29,
87 ATC 229 therein referred to, do not state that the workmen concerned did or did not use their tools at home. See in particular in this regard Case U107; paragraphs 2, 6, 7 and 8 of the decision in that case read (emphasis again added) as follows:
``2. The hangar in which the taxpayer does the bulk of his work can be lawfully entered by the large population of airport personnel who have been issued with an appropriate identification tag. In theory, the hangar had been rendered `public proof'. The employer provides open steel racks for storage of its employees' tools. No lockers are provided. Apart from the general security system which operates at the airport, including the hangars, there are thus no means by which staff can secure their tool boxes against theft. It was acknowledged by the assistant maintenance superintendent in evidence that one tool box had, in fact, been stolen in the past. This theft took place well over a decade ago and the witness `surmised' that it was stolen by a member of the public which, at that time, was not effectively barred from access to the hangar. The evidence suggests that petty theft in the security area is rife and both the taxpayer and another witness employed in the same capacity deposed that they had, on occasion, lost some tools, although neither was able to say positively that such loss was either attributable to theft and/or would not have occurred if there had been lock-up facilities at work. It would seem that the occasional loss of some tools is simply an occupational hazard which we
ATC 2227have not taken into consideration in coming to our conclusion .
6. It is sufficient for present purposes for us to paraphrase the headnote in Case U29, a decision of Mr P.M. Roach (Senior Member):
- The taxpayer was a carpenter employed by a mining company. He generally worked at one site for four days a week and at a different site for the fifth day. The principal site of work varied from time to time.
- The taxpayer travelled to work by car and carried his own tools with him. The tools were bulky and for safety reasons could not be left at the site overnight.
- The taxpayer received a travelling allowance under an award and included the allowance as assessable income and claimed a corresponding deduction for his travel expenses. The Commissioner disallowed the deduction and the taxpayer objected.
- It was held that the expenses claimed by the taxpayer were allowable deductions under sec. 51(1). The employment created the need, as a matter of practical necessity, for the taxpayer to transport his tools from his home - where he was able to keep them safely - to his place of work. It was in practical terms necessary for him to transport them by car and it was appropriate that the car should be his own. His position was like the professional musician in F.C. of T. v. Vogt 75 ATC 4073, who needed to transport his instruments to the places where he performed .
7. The Commissioner sought to meet the problem created by this decision by asserting that there were only two circumstances where travel from home to work was an allowable deduction:
- (i) where the employee's work was inherently itinerant, as in
Taylor v. Provan (1975) A.C. 194 (see also Case S29,
85 ATC 276, where Board of Review No. 3 allowed a shearer the travel costs between home and the various shearing sheds on evidence that the nature of the work required shearing equipment - supplied by the worker - of a bulk which could not reasonably be transported other than by the use of the worker's private vehicle); and
- (ii) where a worker has two or more places of employment, of which
F.C. of T. v Wiener 78 ATC 4006 is the locus classicus.
The respondent placed heavy reliance on the fact that in both Vogt and Case U29, the employee was engaged on more than one work site. It is an imaginative submission, but it cannot succeed. We are satisfied that the fact that there were various work sites in both cases was merely incidental to the decision rather than constituting a material fact and forming part of the ratio decidendi. We are in agreement with Mr Roach's decision in Case U29, viz. that where the employment creates the need, as a matter of practical necessity, for a worker to transport his own tools of a bulk which makes it impractical (or indeed illegal) to carry them on public transport, the expense thus incurred constitutes an allowable deduction .
8. Mr Robb of counsel for the applicant, submitted faintly at the conclusion of his address that if the Tribunal were against him on the major issue, arguably there was here a twofold purpose in travelling between home and work by car, one of which was `private' or `domestic', the other work- related, so that the expenditure could justifiably be apportioned. This tentative concession was not taken up by Miss Wilson, of learned counsel for the respondent - properly so in our view. We do not believe that this is an appropriate case for apportionment. This taxpayer is one of those fortunate few who is able to hitch a free ride to work on his tool box - `free' in the sense that the cost of transporting this magic box from home to work and back again constitutes an allowable deduction incurred in the course of gaining the taxpayer's assessable income .''
Nonetheless, given the provisions of Taxation Ruling TR 95/19, it is not necessary to arrive at a final conclusion in this case on the question of whether, in order to obtain a deduction for travel while transporting cumbersome items or tools, it is a precondition that the home is base of operation. I should
ATC 2228indicate, however, that in my opinion this issue is one which should be resolved by a superior court.
18. (a) Paragraph 138 of Public Ruling TR 95/19 reads as follows:
``A deduction is allowable if the transport costs can be attributed to the transportation of bulky equipment rather than to private travel between home and work (see FC of T v Vogt 75 ATC 4073; 5 ATR 274 and Case U29, 87 ATC 229; AAT Case 32 (1987) 18 ATR 3181). If the equipment is transported to and from work by the airline employee as a matter of convenience or personal choice, it is considered that the transport costs are private and no deduction is allowable. A deduction is not allowable if a secure area for the storage of equipment is provided at the work place (see Case 59/94,
94 ATC 501; AAT Case 9808 (1994) 29 ATR 1232).''
(b) TR 95/19 is a Public Ruling and thus applies against the Respondent even if the result is that the taxpayer pays less tax applying that Ruling than he otherwise would.
(c) The essence of paragraph 138 of the Ruling is that:
- (1) in the first instance a deduction is allowed if the transportation is attributable to the transportation of bulky equipment;
- (2) however, the deduction will be denied where the transport occurs as a matter of convenience or of personal choice; and
- (3) furthermore, the deduction will not be allowed where the employer provides a secure area for the storage of equipment at the workplace.
19. Mr Gibb argued:
(a) in respect of the third sentence of paragraph 138, the presence of the positive does not necessarily require an inference of the negative, or in other words, that a deduction will not necessarily be allowed if the employer does not provide a safe storage area;
(b) the first sentence of clause 138 must be read, so Mr Gibb contended, such that the word ``attributed'' is to be understood as meaning ``properly attributed'' by the fact finder upon application of the essential character test to the circumstances. Mr Gibb contended that the first sentence is of a general nature and that, notwithstanding that the Ruling is binding on the Commissioner, one should be cautious about reading such a statement as if it is a statute.
20. As to the first argument by Mr Gibb, it is not necessary for me to express an opinion. This is so because of my finding of fact that Ansett did not provide a safe storage area.
21. As to the second argument, my opinion is that the Ruling in its terms is clear and unambiguous, and that the circumstances in which the Applicant's travel expenses were incurred are in accordance with the arrangement outlined in clause 138.
The clarity of the Ruling and its clear application to the Applicant's travel arrangements preclude me from having to ascertain the essential character of the expenses in accordance with the principles laid down by the courts in interpreting s 51(1); it is for this reason that I need not determine whether Vogt and Garrett establish that a deduction for the transport of bulky items cannot be allowed where the home is not a base of use or practice. As Merkel J stated in
Bellinz Pty Limited v FC of T 98 ATC 4399 at 4412-4413:
``... In circumstances in which a public ruling in relation to an arrangement would apply in a different way from that in which the law would apply to that arrangement, the ruling will apply if it is more favourable to the taxpayer: see s 170BA(3).
Relevantly, a public ruling will only be binding in the sense that the Commissioner cannot depart from it in making an assessment where the ruling relates to `an arrangement' and the tax law relates to `that arrangement' in a different way. The ruling is binding as to the way in which a tax law applies to a person or class of persons in relation to an arrangement or class of arrangements. It is not binding in relation to the principles or reasoning stated in it. This distinction is significant in the present case. Accordingly, unless the particular arrangement is the same as the arrangement in respect of which the ruling was made, the Commissioner is not bound to assess the taxpayer in the same way.''
An appeal from the decision of Merkel J was dismissed by the Full Federal Court in
Bellinz Pty Ltd & Ors v FC of T 98 ATC 4634; Hill, Sundberg and Goldberg JJ stated at 4646:
``The binding quality which the legislation gives to a public ruling applies to the tax
ATC 2229consequences of the arrangement or class of arrangements to which the ruling relates, and not, as the appellants contend, to the underlying philosophy behind the ruling. That this is so follows inexorably from the language of s 14ZAAE to which reference has already been made.
In our view the scheme of Part IVAAA leaves no room for the operation of any doctrine of estoppel or the reintroduction of that doctrine through administrative law remedy. The public ruling operates as if it is the statutory basis upon which tax is to be levied. No question arises as to whether it is or is not relied upon.
It is unnecessary to set out in detail the various binding rulings upon which the appellants rely. It suffices to say that, while underlying the rulings a philosophy to permit depreciation in respect of hire purchase agreements may be gleaned, none of the rulings relates to an arrangement or class of arrangement precisely similar to the present arrangements.''
In my opinion, in the present case, the circumstances in which the Applicant's travel expenses were incurred fall squarely within the clear and unambiguous arrangement envisaged by clause 138 of the Ruling.
22. The evidence of Messrs Holloway and McWhae did not take the matter very much further. One of them gave evidence as to a theft of a tool box but neither was able to point to any particular prevalence of theft. Mr Thomas gave evidence as to the photographs which he had taken. I should note also that I found the evidence of both the Applicant and Mr Horscroft credible.
23. Accordingly, the objection decision under review is set aside, and the Respondent is directed to assess the Applicant in respect of the relevant year in accordance with these Reasons.