Bourke v Commissioner of Taxation

[1999] AATA 726

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(Decision by: J Block, Senior Member)

Re: DOUGLAS BOURKE, Applicant
And: COMMISSIONER OF TAXATION, Respondent

Tribunal:

Member:
J Block, Senior Member

Subject References:
INCOME TAX
Deductions
Travel expenses
Whether deductible
Whether Applicant an itinerant worker
Additional tax
Whether 'reasonable care' exercised

Legislative References:
Administrative Appeals Tribunal Act 1975 - the Act
Income Tax Assessment Act 1997 - the Act
Income Tax Assessment Act 1936 - the Act

Case References:
Federal Commissioner of Taxation v Genys - (1987-1988) 17 FCR 495; (1987-1988) 87 ATC 4875
Federal Commissioner of Taxation v Weiner - 78 ATC 4006
Federal Commissioner of Taxation v Kerry - 98 ATC 2295
Arnett & Ors v Federal Commissioner of Taxation - 98 ATC 2137
Case 34/95 - 95 ATC 319

Other References:
TR 95/34
IT 112

Hearing date: 22 September 1999
Decision date: 29 September 1999

Sydney

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Decision by:
J Block, Senior Member

REASONS FOR DECISION

1. The objection decision in this matter is the disallowance by the Respondent of an objection dated 20 November 1998 against an amended assessment issued on 11 November 1998 in respect of the year ended 30 June 1998 ("relevant year").

2. The Applicant was represented by Mr W.B. Newton of Newton & Associates, tax agents, (by telephone) while Mr Peter Hefford, an officer of the Respondent, appeared for the Respondent.

3. The Tribunal had before it the T Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975. There was no other evidence before the Tribunal and in particular the Applicant did not give oral evidence.

4. The facts fall within a narrow compass and can be set out as follows:

(a)

The Applicant was, during the relevant year, employed on a casual basis; as such he worked in a number of jobs; at page 66 of the T Documents those jobs are described in the following terms:

"-

labour work at the railway;

-

labour work as an assembler at the warehouse;

-

delivery driver;

-

driver of light vehicles."

(This description is taken from the Applicant's objection.)

(b)

The Applicant was represented, or perhaps employed, by Manpower Pty Limited ("Manpower"). Manpower would contact the Applicant by telephone on the day before any assignment and direct the Applicant to go directly to the place at which the work was to be performed.

(c)

The Applicant maintained a vehicle log book which is set out at pages 37-48 and pages 52-65 of the T Documents. That log book indicates that on occasions an assignment would endure for one day only and on that day the Applicant would travel from home to the work site in the morning and then return home that evening. On other occasions an assignment would endure for two or more days; in that event the Applicant would also travel from his home to work in the morning and then return home that evening.

(d)

The log book records indicate that there were days when the Applicant did not work and when presumably there was no assignment for him.

(e)

Page 38 of the T Documents is set out in order to illustrate the manner in which the log book was maintained as follows:

VEHICLE LOG BOOK - Vehicle number ............................

Throughout the relevant year there were two occasions only on which the Applicant travelled from one work place to another. On 30 August 1988 he commenced work at RSA Chatswood and then travelled to RSA Artarmon, a distance of 3 kilometres. On 31 August 1988 he commenced work at RSA Hornsby and then travelled from RSA Hornsby to RSA Turramurra, a distance of 8 kilometres. The total distance travelled "between work sites" was thus 11 kilometres.

(f) Mr Newton was not clear as to precisely what services were performed by the Applicant. But it would appear that he was, in respect of his assignments, and put in broad terms, a driver or a labourer.

(g) It was Manpower who paid the Applicant for his services. However, at any given work site he would take directions from the officers in charge at that particular site. I do not think anything turns on the question of who precisely was the Applicant's employer, and whether it was Manpower or otherwise.

(h) Page 68 of the T Documents (and which forms a part of the Applicant's objection) contains a contention (in response to an assertion by the Respondent that the equipment the Applicant carried was not bulky) in the following terms:

"ATO CONTENTION TR 95/34 63 & 67 to 70 Appendix 2.

'The equipment he has to carry is not considered bulky'.

This consisted of hard hat, ear muffs, goggles, gloves, safety vest, rain coat, gum boots.

The ATO contends that the above is similar to the equipment carried in the dufflebag in the cases quoted in TR 95/34 - 67 & 68.

Clearly this is not so. There is no similarity between the equipment of a flight Sergeant in the RAAF with the above.

Unlike the Sergeant, our client had no Locker provided on his varied job sites. Nor was carriage of protective equipment a matter of personal choice. He was not allowed on job sites without it.

TR 95/34 - 69 supports our clients' case "the requirement to ..transport... equipment is a reflection of the practical necessity for the tools of trade to be readily available at each work site".

TR 95/34 - 70 supports our clients case because the equipment does not have to be bulky to qualify for itinerancy and the practical necessity for his safety equipment to be readily available is the criterion which he meets."

Even assuming the Applicant needed all of his gear (and including the hard hat and other items) for each assignment, they cannot be considered bulky (and whether within TR 95/34 or otherwise) and Mr Newton elected, in my view correctly, not to press this aspect of the objection.

(i) In framing the Applicant's claim for the relevant year, Mr Newton calculated his travel deductions only in relation to assignments which endured for no more than one day. In respect of each assignment which endured for two days or more, no claim was made. The claims are summarised at page 79A of the T Documents which contains a handwritten note reading "only claimed 4854".

Mr Newton took the view, apparently, that the Applicant was an itinerant in respect of those assignments which endured for one day only but not otherwise. Put in other words, the Applicant was, for the purposes of his claimed travel deductions and in accordance with Mr Newton's contention, sometimes itinerant and sometimes not. The Tribunal considers that that distinction was, having regard to the case authorities, incorrectly drawn.

5. Mr Newton said that in framing the Applicant's return he relied on:

(a) Tax Pack 99 at page 37 and in particular the following words: "You can claim the cost of using your car to travel from your home to an alternative workplace for work purposes and then to your normal workplace or directly home";

(b) IT 112; and

(c) Section 81 of the Income Tax Assessment Act 1936.

Mr Newton said on a number of occasions that "the Respondent must stand behind the Tax Pack"; he said also that he obtained advice from a tax officer in Penrith.

6. Mr Hefford cited in particular the decision of Northrop J in Federal Commissioner of Taxation v Genys (1987 - 1988) 17 FCR 495 ; 87 ATC 4875 . That decision is of such relevance that I think it desirable to cite a number of passages therefrom:

(a) At FCR page 497 (ATC 4878) Northrop J commenced with a reference to the High Court decision in Lunney v Federal Commissioner of Taxation (Cth) (1958) 100 CLR 478 as follows:

"The starting point for a consideration of the principles regarding the deductibility of travelling expenses is Lunney v Federal Commissioner of Taxation (Cth) (1958) 100 CLR 478 . In that case, the Court settled the question of the deductibility of travel expenses as it arises in the simple case of an employee travelling day by day from his home to a sole place of work and back again by holding that such expenses were not "losses or outgoings" within the meaning of s 51(1) of the Tax Act. In coming to this decision, Williams, Kitto and Taylor JJ in a joint judgement, adopted the test which was formulated and developed in Amalgamated Zinc (De Bavay's) Ltd. v Federal Commissioner of Taxation (1935) 54 CLR 295 ; W. Nevill & Co. Ltd. v. Federal Commissioner of Taxation (1937) 56 CLR 290 and Ronpibon Tin N.L. and Tongkah Compound N.L. v Federal Commissioner of Taxation (1949) 78 CLR. 47 that expenditure is invested with the requisite character if it is "relevant and incidental" to the derivation of assessable income. However, they held that a decision as to the deductibility of travelling expenses could not be arrived at by adopting the process of reasoning that unless travelling expenses are incurred in getting the taxpayer from his residence to his place of employment and back again, the taxpayer would not be able to engage in the activities from which his assessable income is derived, and that therefore, the expenditure is "relevant and incidental" to the gaining or producing of such income. Whether or not such expenditure is deductible, depends not on its purpose or whether it is an essential prerequisite to the derivation of income, but on whether the essential character is relevant and incidental to such derivation."

(b) There are, however, exceptions. See in particular, the comments of Northrop J as follows (FCR 498 to 501; ATC 4878 to 4880):

"However, the general proposition laid down in Lunney (supra), notwithstanding that it remains good law, is not exhaustive. In Garrett v Federal Commissioner of Taxation (1982) 58 FLR 101 ; 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;

(b)

where the taxpayer incurs expenses for travel between two places of business or work; and

(c)

where the employment can be construed as having commenced at the time of leaving home.

A fourth situation, not enunciated in Garrett (supra), is where the taxpayer travels between home and shifting places of work, that is, an itinerant occupation.

Before embarking upon a consideration of Lunney (supra) 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 up 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 s 51(1) in given circumstances. Keeping this in mind, I now turn to consider whether the facts of the present case come within the general principles of Lunney (supra) or any of the qualifications thereto.

It is clear that the taxpayer does not come squarely within the principles laid down in Lunney (supra), since hers is not the simple case where there is a sole place of work to which the taxpayer commutes each day from home. However, counsel for the Commissioner argued that the fact that the taxpayer had a number of employments at various hospitals did not make her position inherently different from that of a person with an ordinary term of employment at one place. In order to determine whether this is so, it is necessary to look at the nature of the exceptions to Lunney (supra).

In particular, it is necessary to determine whether, first, the taxpayer could be said to have commenced her employment at her home, with the result that she would be engaged in her duties as an employee during her travel time or, alternatively, whether the taxpayer's occupation could be described as itinerant.

Counsel for the taxpayer argued that because the taxpayer received her work instructions from the agency over her home telephone - indeed this was their only method of contacting her - the taxpayer's home doubled as her work base. Hence, when the taxpayer set out in her car to travel to and from a particular hospital, she was travelling between one place of business and another. During the course of the hearing, the Court was referred to several cases where a deduction was permitted for the expenses of travel between home and work. It is not necessary to refer in detail to each of these cases, but three, in particular, are worthy of mention.

First is the case of Owen v. Pook [1970] A.C. 244 , where the taxpayer was permitted a deduction for travelling expenses incurred between his home and work. The taxpayer was in practice as a general medical practitioner and was on standby duty at specified times to deal with emergency cases at the hospital. During these periods, he was required to be accessible by telephone. Upon receiving a telephone call, the taxpayer usually gave instructions to the hospital staff as to the treatment to be given to the patient, and then set out for the hospital (although it was not always necessary for him to travel to the hospital). His responsibility for the patient being immediately upon receipt of the call. A majority of the House of Lords held that the taxpayer performed the duties of his office in two places, namely the hospital and the place where he received the telephone call, at which time his duties commenced. Therefore, the travelling expenses were incurred in the performance of his duties and accordingly, were deductible.

Second is the case of Federal Commissioner of Taxation v Ballesty (1977) 77 ATC 4181 , a decision of the Supreme Court of New South Wales constituted by Waddell J. In that case, the taxpayer was employed as a purchasing officer by a social club and was also a part-time employee professional footballer. The taxpayer claimed a deduction for car expenses in travelling from the social club at the end of his day's work to training and between his residence and matches, whether played on his home ground or on grounds other than his home ground. The taxpayer argued that he was entitled to a deduction because, inter alia, he had with him his football gear which weighed up to 20lbs and also because of temperamental factors (for example, stress) which necessitated travel by car and not public transport. He argued that he was under a contractual obligation to travel to and from training and matches in a manner which would enable him to perform at his best. Therefore, the activity was productive of assessable income. He further submitted that his place of residence was his base of operations and that the cost of travel between his home and matches and training was necessarily an expense incurred in gaining the assessable income.

The Court upheld the taxpayer's claim for a deduction under s 51. Waddell J accepted that it was necessary for the taxpayer to travel by car in order to produce his best form and thereby fulfil the terms of his contract. He also held that the taxpayer had embarked upon the activities by which he earned his assessable income when he left home to travel to a training session or a match and as continuing in those activities on this journey home. Hence, his residence could properly be regarded as his base of operations.

Finally, in Collings (supra), which the Tribunal treated as binding on it, the taxpayer was employed as a computer consultant. In addition to her normal duties, the taxpayer was on call twenty-four hours a day, seven days a week for the duration of a special project involving a major computer conversion operation. It was usual for her to receive telephone calls at her home requesting her advice whenever trouble arose. For this purpose her employer had installed a portable terminal at her house which was connected to the work computer through the telephone line. If the taxpayer could not solve the problem using her portable terminal, she was required to return to the office in order to revive the computer. The taxpayer estimated that she made several extra telephone calls and one additional trip per day, including weekends. The taxpayer sought a deduction for travel expenses between home and work outside her normal daily journey. The Court held that such expenses were incurred in gaining or producing her assessable income and accordingly were deductible. The Court held that the taxpayer had a double work location, which was not merely "colourable", but a necessary obligation arising from the special nature of her duties. When the taxpayer set out for the office after her normal hours, she was travelling between one place of work and another, since her duties began at home. The Court made some important observations on Lunney. At (1976) 76 ATC 4254 at 4261-4262 Rath J said:

"It seems to me that the proposition that expenses of travel between the taxpayer's residence and his place of work are not allowable deductions under s 51 has its basis in a specific viewpoint that such expenses are of a private nature, and not in any compulsion of the words 'incurred in gaining or producing the assessable income' or in any of the criteria formulated for applying those words in particular cases. That such expenses are essentially of a private nature has derived from a view that a man's choice of a home in a location different from his work is a decision relating to his private living ...

Thus the question in the present case resolves itself into whether a principle, that appears to (be) grounded in history rather than in reason, should be extended to a case such as the present when a business element is present in the journal from home to work, if not from work to home. I am not concerned with those normal daily journeys that have their sole relation to a person's choice of his place of residence; I am concerned with journeys which begin as a result of performance of the duties of the employment at the taxpayer's home. The journey from home to the office is undertaken, not to commence duty, but to complete an aspect of the employment already under way before the journey commences. The journey home again has not this same character, but it might be looked upon as the completion of a process that began when the taxpayer whilst at home (or perhaps elsewhere, such as at a cinema) was called upon to resolve some problem of malfunction of her employer's computer. On the other hand, the taxpayer was free to choose her place of residence (provided, at all events, that it was in Sydney), and to the extent that her expenses of travel reflect her exercise of that choice it is arguable that they are personal living expenses, and that there is no difference in principle between the ordinary and special journeys."

(d) His Honour remarked, in considering the question of whether the taxpayer's home could be said to be her place of work, as follows (FCR 501; ATC 4881):

"Hence, the fact that one's residence is one's choice does not prevent the residence being regarded as a place of work. The element of choice is the location of one's residence and except in the simple case of a regular daily journey, does not automatically deny a taxpayer a deduction. To interpret s 51(1) of the Tax Act in this manner is to read into it a "preconceived limitation".

The question that falls to be decided by this Court is whether, on the facts of the present case, the taxpayer's home could be said to be her place of work. Whether a home constitutes a taxpayer's place of work necessarily depends on the nature and extent of the activities undertaken by the taxpayer in the home. In the present case, I am of the opinion that the mere receipt of telephone calls from the agency requesting the respondent to work a particular shift is not sufficient to constitute the respondent's home a place of work. The respondent is under no obligation to accept the offer of work, hence, accessibility at home is not something that could be said to be required of her in the course of her employment. Nor does the respondent commence her duties upon receipt of the call, as did the taxpayers in Owen v Pook (supra) and Collings (supra). In those cases, the taxpayers gave advice and instructions from the home, so that if it was necessary for them to travel to their places of work they could be said to be travelling on their work, not merely to their work. Here, the taxpayer's duties did not commence until her arrival at the hospital.

I am not helped by the argument that the taxpayer had to travel by car in order to keep her travel time to a minimum and that if she went by public transport she would not be fulfilling the requirements of her particular employer. I am of the opinion that the taxpayer, despite the short notice she was often given, and the exigency of car travel, was in a similar position to those "thousands of employees" that Lord Donovan referred to in Owen v Pook (supra), who have to be on standby duty at their homes and are required to obey a summons to cope with some emergency. Such employees do not have two places of employment and neither, in my view, does the taxpayer.

The decision in Ballesty (supra) seems unduly wide and difficult to reconcile with the clear principles stated in Collings (supra)."

(e) The other exception to Lunney is that of whether the Applicant can be said to be engaged in itinerant employment. See in this context the following passage from the judgment of Northrop J (at FCR 502 to 503; ATC 4881 to 4882):

"I now turn to the other exception to Lunney (supra), namely whether the taxpayer is engaged in itinerant employment. If so, it is not essential in order to qualify for a deduction that the taxpayer establish that the home is a place of work, because the deduction is allowable not because the home is a place of work but because the expenses are a consequence of the different locations of work. Again, Lunney (supra) has no application because the expenses cannot be described as a consequence of the taxpayer's choosing to live away from her work.

The best statement of this principle is to be found in Horton v Young [1972] Ch 157 , where Brightman J said at 163-164:

"There are, however, some occupations in which the self-employed person does not have any location which can readily be described as his place of business but, rather, a number of places at which from time to time he exercises his trade or profession. It seems to me that there is a fundamental difference between a self-employed person who travels from his home to his shop or his office or his chambers or his consulting rooms in order to earn profits in the exercise of his trade or profession and a self-employed person who travels from his home to a number of different locations for the purely temporary purpose at each such place of there completing a job of work, at the conclusion of which he attends at a different location. I do not think it matters in the latter type of case whether the taxpayer does nor [sic] does not effectively carry on any trade or professional activities in his own home. The point is that his trade or profession is by its very nature itinerant. When the chimney sweep leaves his home in the morning and goes from house to house with the aid of his car or van, it appears to me unrealistic to deny that he incurs all such travelling expenses wholly and exclusively for the purposes of his trade. There must be plenty of other self-employed persons whose jobs are similarly itinerant. The test cannot be whether the job keeps the taxpayer at a particular location for perhaps two hours, as in the case of the chimney sweep, or three weeks, as in the case of Mr Horton.

In my view, 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, and are in the case before me, wholly and 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."

The Court of Appeal dismissed the Crown's appeal against the judgment of Brightman J, but found in favour of the taxpayer on the ground that his home constituted the base from which the taxpayer carried on his business - indeed, it was the only point at which he could be contacted.

At the hearing before this Court counsel for the Commissioner sought to establish that the taxpayer's employment was not of an itinerant nature, because the essential nature of the duties of a nurse does not involve travel, as do the occupations of, for example, a travelling salesman, bricklayer, plumber, etc. Also, the taxpayer is not required to travel in the course of her work - once she arrives at a hospital she undertakes no further travel during the shift. Her travel was not, therefore, of sufficient frequency to enable it to be regarded as part of her employment.

Counsel contrasted the facts in Wiener (supra). There, the taxpayer was a schoolteacher in Western Australia. From Monday to Thursday, she was required to teach at five different schools each day spending approximately one hour per day at each school. The taxpayer sought to deduct her car travel expenses not only for travel between schools, but for travel between her home and the first school, and from the last school to her home. The Court allowed the deductions, finding that the nature of the job itself made travel in the performance of its duties essential and it was a necessary element of her employment that transport remain at her disposal throughout the day. The Court held that travel expenses claimed by the taxpayer fell into the first of Lord Simon's categories in Taylor v Provan (supra) at 221, namely "where the office or employment is of itself inherently an itinerant one, so that the taxpayer may be said to be travelling in the performance of her duties from the moment of leaving home to the moment of return, the expenses are deductible".

(f) Mr Hefford cited the last three paragraphs from the judgment (FCR 503 to 504; ATC 4882 to 4883) which are included as follows:

"After anxious consideration, I have come to the conclusion that the taxpayer's employment cannot be regarded as 'itinerant'. The main distinction, which I draw, between this case and the factual situations referred to in Horton v Young and Weiner (supra) is that here, the taxpayer does not travel between two places of work after the commencement of her duties; she simply drives from home to work and back again.

By contrast, in the situations referred to in Horton v Young (supra), the taxpayer (whether a salesman, plumber, chimney sweep, etc.) travels from home to work, but also travels from that first place of work to other places of employment throughout the course of the day before his return home. This was also the case with the schoolteacher in Weiner (supra), where the taxpayer travelled to five different schools per day, not one school per day for five days (which would make it comparable to the present case).

In conclusion, in my opinion, the mere fact that the taxpayer in this case does not have a regular place of employment in the sense of a permanent employment at one hospital, is not sufficient to take her outside the general principles expressed in Lunney (supra)."

7. It is clear that the Applicant cannot contend that his work starts at home; his home is merely the place at which (as was the case in Genys) he received instructions as to where he would be required to work on any given day.

8. Nor, in my view, can it be said that he was itinerant. Throughout the relevant year he travelled to and from home to one or other place of work. On two occasions only, at the end of August 1998, he travelled distances of three kilometres and eight kilometres respectively between two RSA offices. These two exceptional cases (which are of a de minimus nature) cannot, in my view, have the effect that he is thereby categorised as an itinerant.

9. Mr Newton placed great emphasis on the decision in Federal Commissioner of Taxation v Weiner 78 ATC 4006 . See in this regard clause 54 of TR 95/34 (set out at page 27 of the T Documents) as follows:

"54.

In Weiner's case there was no uncertainty of location as the taxpayer was aware of the locations and times to attend each school in advance. However, the taxpayer was successful in being characterised as engaged in itinerant work by establishing other fundamental elements relevant to her case, including:

(a)

travel was a fundamental part of her work;

(b)

there was a 'web' of workplaces in her employment structure and continual movement from one work site to another (she attended at least four schools each day);

(c)

she carried bulky teaching equipment in her car; and

(d)

her employer paid her an allowance in recognition of the need to travel in the course of her duties."

The circumstances of the taxpayer in Weiner's case are entirely distinguishable from that of the Applicant in the present case.

10. Nor, in my view, does the decision in Kerry v Federal Commissioner of Taxation 98 ATC 2295 assist the Applicant. See in this context clause 2 of Deputy President Gerber's decision as follows (at page 2295):

"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 race tracks 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 race track, 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 race tracks to Wentworth Park on 48 occasions, clocking up some 789 km between race tracks (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."

11. In this matter, the Applicant travelled on two occasions only (and the distances involved were comparatively short) between places of work in contrast to the teacher in Weiner who travelled between schools constantly, and the tote operator in Kerry who travelled on numerous occasions between race tracks. It follows then that the Applicant cannot be treated as falling within the 'itinerant exception'.

12. Additional tax was originally levied at 50% but reduced on objection to 25%. The Applicant in his objection, and as to 'reasonable care', said (at pages 69 and 70 of the T Documents): "H. OTHER SECTIONS OF TR 95/34.

Quoted in our objection, appendix 3, & not refuted by the ATO in appendix 2.

10. Itinerancy, as proved for our client, means travel between home and work is deductible.

16. Itinerancy, as applies to our client, means "travel from place to place for duty or business".

19. The example applies to our client who "travels directly from home to a different site each day to start work" and is therefore an itinerant worker.

28. Our client "performs work at a single site and then moves to other sites on a regular basis". Therefore a web of work places exist.

34. Our client meets the criterion of "continual unsettled travel from one work place to another - nominated by the employer - the travel being a necessary condition of employment".

35. Our client falls within case T106 86 ATC 1192 ; AAT case 17 (1987) 18 ATR 3093 (case T106) in that he was "continuously dispatched to sites at various locations. He often attended different sites on successive days". The tribunal agreed his employment was itinerant.

47. Our client falls within this description, "uncertainty of location is generally another distinct characteristic of itinerant employment".

48. Re 47 above, Maddalena's case supports our client regarding "uncertainty of location".

50. Re 47 above, Senior Member Roach (ATC at 1194, ATR at 3095) supports our client's case "he does not work to any regular pattern, there is no long term plan by which he can predict what will be required of him in the future - No certainty as to the range of work sites he may be called on to attend ... his occupation is.. itinerant".

53. We note that "work my [sic] be itinerant although" the degree of uncertainty is minimal".

54. We hold that Weiner's case applies to our client in that;

(a)

Travel was fundamental at short notice and to varying work sites, therefore vehicle travel costs were unavoidable.

(b)

There was a "web" of work places and continual movement from one to the other.

(c)

Equipment was carried in his car. (see F above)."

As has been demonstrated in previous clauses of these Reasons some of the factual content was incorrect; by way of one example, the statement as to "continual movement from one to the other" was incorrect; moreover, and having regard to the log book maintained by the Applicant, it was known to be incorrect, or should have been recognised as such.

13.(a) In Arnett & Ors v Federal Commissioner of Taxation 98 ATC 2137 , Senior Member Pascoe said in clause 8 (at page 2140):

"8. The additional tax imposed by way of penalty under section 226G of the Act applies where there is a failure to take reasonable care. "Reasonable care" is not defined but the explanatory memorandum to the Taxation Laws Amendment (Self Assessment) Bill 1992, which introduced the section into the Act, states that: 'The effort required is one commensurate with all the taxpayer's circumstances, including the taxpayer's knowledge, education, experience and skill.' In a decision of this Tribunal, reported as Case 34/95, 95 ATC 319 , the Tribunal stated (at page 324):

"Given that the taxpayer's return was prepared by experienced tax agents, who objectively should have known, or at the very least, had the resources to find out, the requirements in respect of the deduction of superannuation contributions ... it is difficult to find that reasonable care has been experienced."

In these cases the tax agent had six former employees of Coliban whose employment had been terminated during the year of income. The evidence was that the agent had a further nine clients in the same position whose returns were lodged in July and early August 1996. After receipt of the copy of the letter from Coliban, it was thought likely that some of the former employees could have received a redundancy payment. However, they did not ask a question of the respondent or request the respondent to obtain information that they had not been able to obtain. The attachments and requests for amendment made a positive statement. There were, effectively, four variations in the wording used. The requests for amendment and attachments stated "the amount ... shown as Lump Sum A should not be included", "employees have been advised not to include Lump Sum A amounts on there [sic] income tax returns" or "the amount shown on group certificate at Lump Sum A should be shown at Lump Sum D and therefore non taxable". All of the statements referred to advice from the office or an officer of the respondent. I am unable to perceive how any returns processing officer [could] see the attachments as anything other than an explanation of a difference between a group certificate detail and the income tax return with the group certificate being incorrect. I cannot accept the submission by Mr Brass that the wording used could be seen in any way as seeking resolution of a doubt on the way in which the lump sums should be taxed. They were excluded from assessable income in the returns lodged and the wording of the attachment stated the alleged reason why this was correct. To make the statements which were made on the basis of a letter which said that employees "could receive" concessional treatment under section 23F does not appear to me to indicate a tax agent taking care to have his clients comply with the Act. While the taxation of termination payments has changed on a constant and regular basis over recent years the position with bona fide redundancy payments is not particularly complex. Section 27F was inserted in the Act in 1984 and has always defined a bona fide redundancy payment in the same way. Prior to 30 June 1994, only 5% of a bona fide redundancy payment was included in assessable income. In relation to payments after that date, section 27CB exempts payments up to the tax-free amount set out in section 27A(19) and any balance may be subject to a rebate under section 159SA. On what basis the letter from Coliban could be seen as saying, or even implying, that the lump sums shown as A on the group certificate should be exempt under section 27CB completely escapes me. I can understand that the question might be raised but, in the absence of any further details, that is how it should have been treated - as a question. The tax agent should have been expected to know or, at least, found out about possible treatment of the lump sum payments. It is unreasonable to have assumed that no amounts should be included as Lump Sum A."

(b) The Tribunal considers, in line with Senior Member Pascoe in Arnett and Senior Member Beddoe in Case 34/95, 95 ATC 319 (cited and quoted in Arnett (supra)), that this is a case where the taxpayer's return was prepared by experienced tax agents who should have known, or at the very least had the resources to ascertain, the correct position.

(c) Mr Newton did not correctly distinguish between one day assignments and others. Nor, in my view, did he correctly interpret the Tax Pack to which he referred, and on which he sought to rely or the decision in Genys which is directly in point.

(d) On balance then, I am of the opinion that the circumstances of this case do not warrant any further remission of the additional tax penalty.

14. The Applicant's attack on the Respondent alleging "proven attempted intimidation" was unsupported by any evidence whatsoever and, in the event, was entirely unjustified.

15. Curiously enough, Mr Newton, in his reply to Mr Hefford cited passages from Genys perhaps not appreciating that the decision in Genys (and the respective positions of the Applicant and the taxpayer in Genys are comparable) went against the taxpayer.

16. Mr Hefford conceded an allowance of $6 for the two trips between RSA offices. Excepting only for this concession, the objection decision under review is affirmed.