KERRY v FC of T

Members:
P Gerber DP

Tribunal:
Administrative Appeals Tribunal

Decision date: 31 August 1998

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Dr P Gerber (Deputy President)

The applicant in this reference was at all relevant times employed by AWA Wagering Systems Pty Ltd as a casual on-course totalisator (``tote'') operator, available to be rostered for duty at Randwick, Rosehill, Canterbury, Warwick Farm, Gosford and Wyong racetracks. She also is available for roster duty for day-time trotting meetings at Fairfield and evening meetings at Harold Park, albeit being employed by a different company, Racecourse Totalisators.

2. The applicant travels to these race meetings by car from her home at Gosford transporting various chair and posture support equipment as recommended by an occupational health and safety specialist to assist with her hip condition while sitting for long periods as a tote operator. Her duties involve operating a tote machine, accepting bets from on-course punters and paying out on winning bets. While performing duties at these various day-time race meetings she may be called upon to do a double shift and go to the ``dogs'' (greyhound racing) at Wentworth Park, these meetings being held as a rule on Monday and Saturday nights. The applicant maintains she is an ``itinerant'', and hence entitled to claim the whole of the travel expenses on each occasion she uses her car to go from one of these racetracks to Wentworth Park. There is no dispute with travel to race meetings at one location where one shift is undertaken. In the result, she claimed the whole of her expenditure from home to the first racetrack, from that track to Wentworth Park, and thence back to her home in Gosford. It is conceded that in the 1996/1997 tax year, the applicant travelled from the various racetracks

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ATC 2296

to Wentworth Park on 48 occasions, clocking up some 789 km between racetracks (a ``mileage'' agreed to at the hearing), which, at 53.1 cents per kilometre comes to $419, an amount the Commissioner is prepared to concede). The employer provides a fixed travel allowance, which varies for each track. Thus the applicant receives $5 for her travel to Randwick and a mere $1 if the meeting is at Gosford.

3. Two matters can be quickly disposed of. I find on the evidence that the applicant's home is not her work base as alleged since she does not conduct any employment-related duties as a tote operator at home. Again, to the extent that it is said that her back condition necessitates her carrying ``bulky equipment'' to the various racetracks, this is likewise quickly disposed of since this ``equipment'' consists of the personal accoutrements noted in paragraph 2 above, items personal to the taxpayer and essentially of a private nature. This ``equipment'' is clearly not required in doing the work, as is the case of, for example, with aircraft engineers, who require their own tools to carry out their job at their workplace; see
Crestani v FC of T 98 ATC 2219 and Case P31,
82 ATC 141 (Gilbert v FC of T).

4. The sole question therefore comes down to this: Is the applicant an itinerant on the occasions she is required to travel to two racetracks, in which case she is travelling in the performance of her duties of employment from the moment of leaving home to the moment of her return to her home? (See
Taylor v Provan [1975] AC 194 at 221.)

5. Exhibit 2 is the TAB racing calendar for 1997, tendered to illustrate that all race meetings are scheduled well in advance. From this it is said to follow that the applicant would know beforehand the days she would be required to attend meetings at two racetracks. The applicant's response to this is that these meetings are subject to change at short notice, being cancelled or relocated to a different track, and in any event: ``not all employees are given all of those dates - we are classed as casuals, some dates we get, some dates we don't. We don't get every day that is on the calendar''. In any event, on my perusal of the calendar there appears to be a number of Sydney ``gallops'' race meetings on Saturdays from April to June 1997 omitted, so that I do not consider the calendar to be at all comprehensive, nor could it be relied upon by the applicant in determining her work schedule and location for her on- course employment commitments. Furthermore, the applicant stated that if working a day-time meeting, short notice may be given on that day of the requirement to work the evening Wentworth Park race meeting, presumably based on the staffing decisions made during the course of the day and the anticipated demand and race attendances for the greyhound meeting.

6. Turning to the law, the starting point of all travel cases is the seminal decision in
Lunney & Hayley v FC of T (1958) 11 ATD 404; (1957-1958) 100 CLR 478, where, in a joint judgment, Williams, Kitto and Taylor JJ stated:

``... It is, of course, beyond question that unless an employee attends at his place of employment he will not derive assessable income and, in one sense, he makes the journey to his place of employment in order that he may earn his income. But to say that expenditure on fares is a prerequisite to the earning of a taxpayer's income is not to say that such expenditure is incurred in or in the course of gaining or producing his income. Whether or not it 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.''

(at ATD p 413; CLR pp 498-499)

7. The fons et origo of this view of the law is somewhat archaic, going back to the days when most people lived and worked in the same place: ``... The tradesman lived over the shop, the doctor over the surgery, and the barrister over his chambers, or at any rate, close enough to walk to them or ride on his horse to them'', per Denning LJ
Newsom v Robertson (1953) 1 Ch 7 at 15-16. As modes of transport quickened, those who could afford it moved out into the suburbs or the country, hence their travel expenditure was said to be a matter of ``choice'' and characterised as ``private and domestic'' for tax purposes, Lord Denning distinguishing the purpose of travel as arising either for professional purposes or for the purposes of travelling to and from home when there is some distance involved. In order to decide which category to assign such travelling

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ATC 2297

expenses, he considered that one must look to see what the base is from which the trade, profession or occupation is carried out.

8. That the ghosts of the past continue to rattle their medieval chains is amply demonstrated by subsequent travel cases which classically illustrate how the law clings tenaciously to long worn-out concepts and ignores the fact that the reasons for them have long since ceased to be relevant to contemporary conditions. This slavish adherence to precedent led Dixon CJ to observe in Lunney's case:

``... that if the matter were to be worked out all over again on bare reason, I should have misgivings about the conclusion.''

(at ATD p 405; CLR p 486)

9. That so inflexible a rule could, in some instances, produce a ludicrous conclusion has long been recognised by the Courts, Boards of Review and this Tribunal. Thus in
FC of T v Vogt 75 ATC 4073, a professional musician who ``entertained'' local RSL clubs with his electric bass, an instrument as large and heavy as it is loud and raucous. The taxpayer's claim for motor vehicle expenses attributable to humping this instrument and other instruments and amplifiers to the various clubs was disallowed at first instance, save for the amount - as in this case - that could be shown to have been incurred for travelling between clubs. On appeal, the Court held that for purposes of s 51(1) of the Tax Act, the essential character of the expenditure was such that it should be regarded as ``having been incurred in gaining or producing the assessable income''.

10. A case much relied on by the applicant in the hearing before me was
FC of T v Wiener 78 ATC 4006, involving a teacher whose duties demanded that she teach at five different schools each day, spending about an hour at each institution, which required her to keep an exacting timetable. Again, as in this case, the Commissioner allowed her car expenses for travel between schools, but denied her a deduction for the first and last limb, i.e. from home to the first school and from the last school back home. When regard is had to the origin of the rule, the Commissioner's interpretation of the law must sound archaic to contemporary ears. In the result, the court rejected the Commissioner's contention and dismissed the appeal from the Board of Review, which had held that travel was a fundamental part of the taxpayer's work, and that the nature of the job itself made travel in the performance of her duties essential, concluding that it was a necessary element of the employment that transport be available at whichever school she commenced her teaching duties. In other words, the taxpayer was viewed as an ``itinerant'' worker.

11. The Commissioner placed much reliance on the decision
FC of T v Genys 87 ATC 4875. In that case, the taxpayer was a registered nurse who used an employment agency to seek relief work at various hospitals. When a hospital was in need of additional staff, it would contact the agency, which would then contact the taxpayer. In her 1984 return, the taxpayer claimed the car expenses incurred in travelling to the various hospitals, a claim which the Commissioner disallowed. The taxpayer's appeal was dismissed by the Federal Court on the basis that the taxpayer's employment could not be described as ``itinerant'' since she did not travel between two places of work after the commencement of her duties, but simply drove from home to work and back again. This case is yet another illustration of how far we have travelled from the origin of the rule, and it is perhaps ironic that had this claim been decided at the time income tax was introduced some 200 years ago, this taxpayer would have been allowed depreciation on her horse and buggy on the basis that she could not be expected to live near - let alone above - all the hospitals to which she provided her services.

12. I find that Geny's case does not assist the Commissioner. In passing, Northrop J noted (at 4879) that ``... where the taxpayer travels between home and shifting places of work, [that is] an itinerant occupation''. In reaching his conclusion on the law, his Honour noted with obvious approval the dictum of Brightman J in
Horton v Young [1972] 1 Ch 157 (at p 164):

``... where a person has no fixed place or places at which he carries on his trade or profession but moves continually from one place to another, at each of which he consecutively exercises his trade or profession on a purely temporary basis and then departs, his trade or profession being in that sense of an itinerant nature, the travelling expenses of that person between his home and the places where from time to time he happens to be exercising his trade or profession will normally be... wholly and

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exclusively laid out or expended for the purposes of that trade or profession. I have used the adverb `normally' because every case must to some extent depend on its own facts.''

13. It is true that Brightman J's observation refers to self-employed people, whereas in this case (as in Geny) the taxpayer is an employee. Again, it may be said that in the instant case, the applicant's places of employment from which she carries out her work, are ``fixed'', albeit variable. However, on mature reflection I find these distinctions immaterial in that they fail the litmus test which identifies the itinerant. Nor have I been persuaded that it is a material fact that this taxpayer was merely travelling between two racetracks as distinct from five hospitals, as in Wiener, or that her places of employment are ``fixed'' as distinct from unknown, as in the case of, say, a casual builder's labourer. Nor is it relevant, in my opinion, that this taxpayer may have had advance notice that she was required to service two racecourses on the 48 occasions in dispute.

14. Ultimately, the question of whether an employee's work is itinerant is one of fact to be determined according to individual circum- stances. The facts in this case satisfy me that the applicant is an ``itinerant'' as that term is understood, travelling between home and shifting places of work - on the 48 days involved in this dispute: (i) she was dispatched to several racecourses, (ii) travelling directly from home to her first race meeting, be it Rosehill, Randwick or Fairfield, and (iii) was required to travel between racecourses on a regular basis. On those facts I find that travel is an essential feature of her duties; cf
Taylor v Provan [1975] AC 194 at 215.

15. The Commissioner placed heavy reliance on Taxation Ruling TR 95/34, dealing with allowances for employees carrying out itinerant work. To the extent that my decision differs from his ruling, I disagree with it.

16. The decision on objection is set aside and the matter remitted to the respondent to recalculate the applicant's entitlement to car expenses on a finding that on the 48 occasions now in issue, the taxpayer's total travel expenses were wholly and exclusively laid out for the purposes of her work.