Case Q11

Judges:
MB Hogan Ch
P Gerber M
GW Beck M

Court:
No. 3 Board of Review

Judgment date: 11 March 1983.

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M.B. Hogan (Chairman)

I agree in the decisions of my colleagues in these references.

2. I write these few words only to compare and contrast this decision with those in B.94/1982 [ Case Q10,
83 ATC 38 ] and B.89/1982 [ Case Q8,
83 ATC 29 ]. In B.94/1982 I found that the watch there in question could have had only the most minimal association with any income producing activity of the taxpayer. There was indeed no recognisable time-keeping content in the position which produced the taxpayer's assessable income. In B.89/1982 Dr. Gerber and I found that the motor car there in question was not used in the income producing operations of the taxpayer as a tax-preparer. Thus, in neither case was I prepared to find that the item in question was ``held... or used by [the taxpayer] for the purpose of producing assessable income''.

3. In this reference, the uncontested evidence of the taxpayer is that the watch was acquired by him with business usage in mind. It was a watch of a type commonly used by those participating in underwater sport with a facility for adjustment to measure an elapsed period of time. The taxpayer used the watch directly in his operations, e.g. when he was charging at an hourly rate or when he

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ATC 42

was paying assistants by the hour, and, indirectly, where the watch was used to check estimates of time (with a view to adjusting them if possible) where the work was being performed on the basis of an all-up quoted price. There is therefore a considerable element of time-keeping in the way the business operations of the taxpayer were carried on and the evidence is that the watch was bought and used for the purpose of that time-keeping. A wrist watch is normally an asset of a private or personal nature but there is no specific exclusion in sec. 53 of expenditure on repairs to private or personal assets where they are held or used for the specified purpose. It might be noted here that in
F.C. of T. Faichney 72 ATC 4245 , Mason J., in considering the operation of provisions in sec. 54 expressed in remarkably similar language, noted that that section ``does not exclude articles of a private or domestic nature'' (at p. 4251) and went on to allow depreciation on carpet and curtains in the taxpayer's study. It appears to me then that the watch, though inherently a personal or private asset, has, on the evidence, been at all times ``held... or used... in carrying on business for [the] purpose'' of gaining or producing assessable income. As there is no exclusion of allowance in respect of repairs to private assets and no provision for limitation of the allowance in respect of the expenditure to the extent of use in the income producing process, I agree that the full deduction must be allowed.

4. I might add that I do not share the reservations expressed by Dr. Gerber. It seems to me that, clearly, in the context of the Act, the watch can be seen to be an article for purposes of both sec. 53 and 54. To apply narrowly the ejusdem generis rule in interpreting sec. 53 could give rise to the situation where an item which qualified as an ``article'' for purposes of sec. 54 could be excluded as an ``article'' for purposes of sec. 53. The word ``articles'' is used in conjunction with the word ``plant'' in each section; in sec. 53 certain other items (all of which could be embraced by the word ``plant'' or the word ``article'') are inserted in the alternative between the words ``plant'' and ``articles''. I cannot accept that, in the overall context of the Act, the word ``article'' occurring as the last of these alternatives has to be read down as being limited in its nature by the three alternatives inserted between the word ``plant'' and the word ``article''. A natural reading of the Act as a whole requires that the words ``plant... or articles'' be given the same meaning in each section.