MB Hogan Ch
P Gerber M
GW Beck M
No. 3 Board of Review
M.B. Hogan (Chairman) and Dr. P. Gerber (Member)
In this case, our colleague, Dr. Beck, has fully set out the facts and his conclusion. We agree with both. Our only reason for adding our own comment is that the result in this case is contrary to a recent decision of Board of Review No. 1 (Case P32,
82 ATC 146) on facts which bear a striking resemblance to the facts in this case. That case, too, involved an air traffic controller who claimed the cost of his flying lessons under sec. 51. On the evidence in that case, the Board concluded that promotion was based on efficiency to do the job and not on whether the applicant held a pilot's licence. That is not the evidence given before us.
2. The taxpayer, who was unrepresented, asserted that he had been advised that having a pilot's licence was a factor taken into account in obtaining promotion. A Member of the Board then suggested that he would be well advised to call evidence in support of what at that stage was pure hearsay. After an overnight adjournment, the taxpayer introuduced a witness who was acting as the supervisor of standardisation and licensing of all traffic controllers in the State. This witness deposed that ``those who have had flying training would, on the whole, be more efficient than those who have not had flying training''. He added that when grading his controllers in order of merit, he certainly took flying experience into account ``because it does reflect on the controller's efficiency, which is taken into account for the order of merit selection''. He was further questioned by the taxpayer as to the effect his flying licence would have on his promotion to a Class IV at the A airport or Class IIIA at C. The witness replied:
``Certainly for the position at A it would have considerable weight. A being the main general aviation training area in this State, it would lend considerable weight in fact to anyone's selection for promotion to positions at A.''
This evidence was in no way shaken in cross-examination. He was asked -
``Would you nominate an officer who was not undertaking flying lessons or had a pilot's licence? - Yes.
On what basis? - Well on the basis of efficiency. As I said you know, the selection for promotion depends on the suitability for the job and the efficiency of the officer.
So does the fact that one air traffic controller has a pilot licence necessarily make him more efficient than one who has not got such a licence? - I do not think you would use the word `necessarily'. It could reflect in his efficiency, the fact that one controller has had flying experience. It would normally make him more efficient, therefore he would be regarded as being more efficient than one who had not.
But obviously a situation would arise that even though an air traffic controller has a flying licence he could still be rated below someone who did not have a flying licence. That must surely arise? - Yes.
So it would follow from that that you would not nominate an air traffic controller who was rated poorly even though he had a flying licence? - No.
The Chairman: I hope not.
So obviously you would not nominate an air traffic controller simply because he had a pilot's licence? - Not simply because of that reason, no.
As you have said, you would nominate the most efficient officer? - Yes.''
3. In this state of the evidence, it is clear that the taxpayer's claim for the cost of his flying lessons must succeed.
4. Whilst it is true that flying experience is not an express or implied term of employment for air traffic controllers, we do not consider the ``term of employment'' test to be exhaustive of deductibility under sec. 51. As we pointed out in our joint decision in Case P43,
82 ATC 203, it is not enough, to obtain a deduction under sec. 51(1), merely to show that an expenditure was voluntarily incurred on an activity which is likely to enable a taxpayer to carry out his work more competently; what must be demonstrated is that the expenditure was reasonably calculated to lead to increased earnings (cf.
F.C. of T. v. Smith 78 ATC 4157). In cases such as here, where it is shown that increased competence will lead to promotion (and, thus, higher earnings) the necessary nexus is established. On the other hand, cases such as Case N24,
81 ATC 131, illustrate that increased competence simpliciter is not enough. In that case, a history teacher undertook a trip to China which undoubtedly made her a better teacher. Unfortunately from a fiscal point of view, she had reached the top of her teaching classification. In no sense, therefore, could her trip to China be said to be reasonably calculated to lead to increased earnings - she did not spend money to earn more in the future. This taxpayer did and must succeed.
5. We have therefore concluded that the assessment should be amended by allowing an amount of $1,750 in respect of the cost of flying lessons.