JOHN HOLLAND GROUP PTY LTD & ANOR v FC of T

Judges:
Edmonds J
Logan J
Pagone J

Court:
Full Federal Court, Sydney

MEDIA NEUTRAL CITATION: [2015] FCAFC 82

Judgment date: 11 June 2015

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Edmonds J:

INTRODUCTION

1. The issue in these appeals arises under the Fringe Benefits Tax Assessment Act 1986 (Cth) ( " FBTAA " ) in relation to residual fringe benefits (s 45 FBTAA) provided by the appellants in flying employees from Perth to Geraldton and back for a rail upgrade construction project on a railway line east of Geraldton ( " Midwest Project " ). Specifically, the issue is whether if the employees had themselves incurred and paid the expenditure in respect of the provision of those benefits, a deduction would have been allowable to the employees in respect of the expenditure under the general deduction provisions of s 8-1 of the Income Tax Assessment Act 1997 (Cth) ( " ITAA 1997 " ) so that the " otherwise deductible rule " in s 52(1) FBTAA was invoked to reduce the taxable value of the residual fringe benefits to nil.

2. There is no issue here other than the deductibility of the travel expenditure to the employees under the statutory hypothesis in s 52(1) FBTAA.

3. I have had the great advantage of reading the reasons for judgment of Pagone J in draft. I agree with his Honour ' s conclusion and his Honour ' s reasons. The reasons which follow are merely a product of approaching the issue from a different perspective.

4. By way of observation only, I note that s 47(7) FBTAA exempts from fringe benefits tax what are commonly known as " fly-in fly-out " ( " FIFO " ) arrangements. The concession extends, inter alia , to where an employee ' s usual place of employment is at a location in a State or internal Territory but not in, or adjacent to, an eligible urban area (see s 140 FBTAA) and where, having regard to the respective locations of the usual place of employment and the employee ' s usual place of residence, it would be unreasonable to expect the employee to travel between them on a daily basis on work days (s 47(7)(e)). If the terms of s 47(7)(e) manifest the policy underlying this concession, the Court was not informed why the concession was not applicable in the present case, but there is no utility to resolving the issue in the present case in speculating why not. It suffices to say that the proximity of the Midwest Project to Geraldton probably provides the answer.

5. So while the actual facts of this case do not fall for consideration within the stream of jurisprudence that has ebbed and flowed for over 55 years since the decision of the High Court of Australia in Lunney v Commissioner of Taxation of the Commonwealth of Australia ;
Hayley v Commissioner of Taxation (1958) 100 CLR 478 ( " Lunney " ), those facts as altered by the statutory hypothesis that is the " otherwise deductible rule " in s 52(1) FBTAA, certainly do.

6. In Lunney (at 485), the question of income tax law which Dixon CJ took " as settled for the last two generations " , and was not prepared to have " ripped up now " by the Court, was that:

[ T ] he fares paid by ordinary people to enable them to go day by day to their regular place of employment or business and back to their homes are [ not ] deductible expenses allowable against the assessable income earned by the employment or business.

7. His Honour went on to observe that both in Australia and England the view had always prevailed that expenses of travelling from home to work or business and back again are not deductible; and that an explanation of how this came about in England was given by Denning LJ in the Court of Appeal in
Newsom v Robertson (Inspector of Taxes) [ 1953 ] 1 Ch 7 at 15, 16; the explanation being that expenses of travel are incurred in order to enable the taxpayer to live away from his work. They are living expenses, not business expenses. His Lordship put it, thus (at 16):

A distinction must be drawn between living expenses and business expenses. In order to decide into which category to put the cost of travelling, you must look to see what is the base from which the trade, profession, or occupation is carried on. In the case of a tradesman, the base of his trading operation is his shop. In the case of a barrister, it is his chambers. Once he gets to his chambers the cost of travelling to the various courts is incurred wholly and exclusively for the purposes of his profession. But it is different with the cost of travelling from his home to his chambers and back. That is incurred because he lives at a distance from his base.

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It is incurred for the purposes of his living there and not for the purposes of his profession, or at any rate not wholly or exclusively; and this is so, whether he has a choice in the matter or not. It is a living expense as distinct from a business expense.

8. Dixon CJ in Lunney adopted the reasoning with " misgivings about the conclusion " , at least " if the matter were to be worked out all over again on bare reason " (at 486), and McTiernan J dissented. The other members of the Court (Williams, Kitto and Taylor JJ) accepted the reasoning without expressing any reservation (at 500). Their Honours, by reference to earlier decisions of the Court in
Ronpibon Tin No Liability; Tongkah Compound No Liability v Federal Commissioner of Taxation (1949) 78 CLR 47 and in
Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation (1956) 95 CLR 344 concluded (at 499) that " 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 such income " .

9. The relevant facts in Lunney were what might, these days, be colloquially described as " vanilla " . The fares in question were bus fares incurred by Mr Lunney in travelling from near his residence at Narraweena, a residential suburb of Sydney, to Wynyard station and return, Monday to Friday. The distance between his residence and the point where he boarded or alighted from the bus and the distance between the office of the company, where he reported, both at the commencement and at the completion of each day ' s work, and Wynyard station, he covered on foot. The only other relevant fact that appears from the stated case is what appears at para 2, namely:

He was required to report at the office of the company at No. 11 Darling Harbour, both at the commencement and completion of each day ' s work. From the said office he travelled at the expense of the company to various parts of the Port of Sydney to carry out his work.

The relevance of this fact to the case at hand will become apparent below.

10. Over forty years later, the High Court of Australia again had occasion to consider the question of the deductibility of travel expenses in the less " vanilla " factual context of a taxpayer who was employed as a pilot by an airline operating out of Sydney and who lived on a property in New South Wales where he conducted a deer farming business; he claimed the expenses he incurred in frequently travelling between his farm and Sydney Airport as allowable deductions under s 51(1) of the Income Tax Assessment Act 1936 (Cth) ( " ITAA 1936 " ). In upholding the Commissioner ' s appeal from a Full Court of this Court, the majority (Gleeson CJ, Kirby and Hayne JJ) in
Commissioner of Taxation of the Commonwealth of Australia v Payne (2001) 202 CLR 93 after referring to the approach of the plurality in Lunney referred to in [ 8 ] above said, at [ 14 ] and [ 15 ] :

  • [ 14 ] When, as here, the travel is between two places of unrelated income derivation, the expense cannot be said to be incurred " in the course of " deriving income from either activity. As the majority of the Full Court recognised in this case [ Payne
    (1999) 90 FCR 435 at 445 [ 41 ] ] :

    " The expenditure was incurred before [ the taxpayer ] began to perform his duties as a pilot, or after he had fulfilled those duties. Similarly, in relation to the deer farming business. "

    The expenditure was, as the majority of the Full Court rightly said, " not incurred in the course of his employment as a pilot, nor in the course of his deer farming business " [ Payne
    (1999) 90 FCR 435 at 445 [ 41 ] ] . The taxpayer ' s travel occurred in the intervals between the two income-producing activities. The travel did not occur while the taxpayer was engaged in either activity. To adopt and adapt the language used in Ronpibon , neither the taxpayer ' s employment as a pilot nor the conduct of his business farming deer occasioned the outgoings for travel expenses. These outgoings were occasioned by the need to be in a position where the taxpayer could set about the tasks by which assessable income would be derived. In this respect they were no different from expenses incurred in travelling from home to work.

  • [ 15 ] … The conclusion that the travel occurred in the intervals between the two income-producing activities, when the taxpayer was not engaged in either of them, denies the requisite connection between any part of the outgoing and the gaining or producing of assessable income.

11. In dissent, Gummow and Gaudron JJ were not prepared to conclude (see [ 51 ] ) that the " principle " to be derived from the holding in Lunney was determinative of an outcome that travel expenses are insufficiently connected with income derivation to attract a deduction under the first limb of s 51(1), at least where what is involved is the expenses of movement between two or more places of work or business activity; nor where the taxpayer also resides at one of those places.

12. While the factual context of the case at hand is very different from that in Payne , this case raises the same issue: that is, whether the " principle " to be derived from the holding in Lunney is determinative of an answer that the hypothetical expenses in question in this case are not deductible, as the primary judge concluded. With great respect, for the reasons which follow, I cannot agree with her Honour ' s conclusion.

THE FACTUAL CONTEXT

13. The primary judge found that there was no material dispute about the facts: Reasons ( " R " ) [ 4 ] . The respective notices of appeal raised identical grounds of appeal and none of those grounds put in issue findings of fact below or that the primary judge erred in not making a particular finding of fact on the evidence. And so much was common ground in the appellants ' and the respondent ' s ( " Commissioner " ) written outline of submissions relied on at the hearing of the appeals.

14. The John Holland group of companies (of which John Holland Group Pty Ltd ( " JHG " ) and John Holland Pty Ltd ( " JHPL " ) (collectively " John Holland " ) were members) conducted a large rail construction and maintenance business (known as " JH Rail " ) throughout Australia. At the time of the Midwest Project, JH Rail had a " pipeline " of projects over the following three or more years. To carry out its rail projects, JH Rail needed to be able to deploy skilled people to projects in locations (sometimes hundreds of kilometres distant) as those projects came on line. JH Rail could not satisfy its skilled worker requirements from the pool of available workers resident near each project. JH Rail thus sought to employ, train and maintain its own skilled labour force available for deployment on a project by-project basis. Where possible, JH Rail transferred employees from one project to another in order to maintain continuity of employment. Upon failing to identify a role on another project for an employee (but only then), the employee would be made redundant (with the prospect of being re - employed in the future).

15. Most employees of JH Rail ' s labour force in Western Australia lived in Perth. Most of JH Rail ' s projects in Western Australia were located in remote and regional areas, including the Midwest Project which involved a rail upgrade construction project on a railway line east of Geraldton in Western Australia between May 2011 and September 2012. Most projects lasted about a year, and employees commonly worked on a project for only part of its duration according to the skills and expertise required from time to time. Most areas in which a project was located did not have sufficient accommodation available to function as permanent accommodation for employees and their families.

16. John Holland ' s employees were designated as either " workforce " (who were paid by an hourly rate) or " staff " (salaried workers) - as to which see below. On the Midwest Project, JH Rail offered to relocate the residences of " staff " (but not " workforce " ). Consistent with the employees generally declining to relocate their residences to remote regions in which short term projects were undertaken, only one out of 31 staff employed on the Midwest Project from time to time accepted the offer to relocate his or her residence. The employees who lived in Perth and worked on the Midwest Project were FIFO employees (see below). FIFO employees on the Midwest Project generally worked a " 2 and 1 roster " - two weeks working at the project site, followed by one week of rest and recreation ( " R & R " ) at home in Perth.

17.

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John Holland arranged and paid for apartment style group accommodation for employees at a resort in Geraldton. It was suitable for employees but not for partners and families, who were not generally permitted to stay at the accommodation.

18. JHPL employed all work force employees and JHG employed all staff employees. There were approximately 91 workforce and 31 staff employees employed on the Midwest Project. All employees entered into individual employment contracts. Standard terms of employment were used for staff and workforce respectively.

19. ( " Workforce " terms of employment ): The terms of the employment contracts for workforce employees were prepared in conformity with the " John Holland Pty Ltd and RTBU - Rail Maintenance Agreement - 2009 - 2012 " ( " 2009 Rail Agreement " ). The Workforce employees commenced their " rostered-on " employment duties from the time of their arrival at Perth Airport ( " Point of Hire " ). Their travel on the flight from Perth Airport to Geraldton, and the return flight from Geraldton to Perth Airport, occurred during rostered-on work time, during which Workforce employees were remunerated at the applicable hourly rate. Ordinarily, workforce employees were entitled to 10 - 14 days ' notice of a change in project location.

20. ( " Staff ' terms of employment ): Staff employees were not covered by the 2009 Rail Agreement. Staff were paid an annual salary rather than wages, which salary was calculated to reflect the hours worked to complete the employee ' s responsibilities. The standard terms of employment provided that staff may be required to travel to project locations and to spend days away from the employee ' s usual place of work. The standard terms for the Midwest Project also provided that a Project Allowance of 25 % of the employee ' s annual salary was payable to compensate for the project location and " other disabilities associated with the [ Midwest Project ] " .

21. The terms of employment of both workforce and staff employees required them to act in accordance with directions from John Holland and to observe certain codes of conduct. During travel " on the employer ' s time … [ the employees ] were bound to comply with all JH Rail directives and policies, and disciplinary action [ including dismissal ] could result if an employee breached any such requirement during a flight " .

22. All travel between Perth Airport and Geraldton was controlled, arranged and paid for by John Holland. Employees had no control over their FIFO travel arrangements. Specifically, John Holland directed that the employees undertake the travel by requiring them to present themselves at the " point of hire " - i.e. Perth Airport - at a specified time on the last day of R & R to embark on a specified flight paid for by John Holland from Perth to Geraldton, being either a commercial flight or more commonly a flight chartered by John Holland exclusively for the employees. John Holland also directed the employees to travel on flights from Geraldton to Perth on the last day of the " rostered on " period.

23. Pursuant to the directions referred to above, and the terms and conditions of employment, the FIFO arrangements for the Midwest Project involved the following: (a) on the day on which they were to fly to Geraldton employees travelled at their own expense to the " point of hire " (Perth Airport) as directed by John Holland; (b) the employees embarked as directed on the flight from Perth to Geraldton arranged and paid for by John Holland; (c) John Holland arranged and paid for the employees ' transport from Geraldton Airport to the accommodation, which accommodation was also arranged and paid for by John Holland; (d) on the last day of the rostered-on period, John Holland arranged and paid for transport for the employees from the project accommodation to Geraldton Airport, and the employees embarked on a flight back to Perth, which had been arranged and paid for by John Holland; and (e) the employees made their way home from Perth Airport at their own expense.

24. Travel each way between Perth Airport and the project accommodation occurred during working time for which the employees were rostered-on, and paid.

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STATUTORY CONTEXT

25. Section 45 FBTAA provides:

A benefit is a residual benefit for the purposes of this Act if the benefit is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive).

26. The provision of flights by John Holland to the employees was the provision of a " residual benefit " and therefore a " residual fringe benefit " by virtue of the definition of that phrase in s 136(1) FBTAA.

27. Section 136(1) FBTAA relevantly provides that " external non-period residual fringe benefit " means " a non-period residual fringe benefit other than an in-house residual fringe benefit " .

28. The provision of flights by John Holland to the employees was the provision of an " external non-period residual fringe benefit " because it was not an " in-house residual fringe benefit " nor a " period residual fringe benefit " as these phrases are defined in s 136(1) FBTAA.

29. Section 52(1) relevantly provides:

30. It is common ground that the only question in this case is whether deductions for expenditure hypothetically incurred by the employees would have been allowed to the employee under s 8-1 of the ITAA 1997, which relevantly provided:

THE REASONING AND CONCLUSION OF THE PRIMARY JUDGE

31. The reasoning and conclusion of the primary judge is encapsulated in R [ 28 ] - [ 34 ] , the salient aspects of which are reproduced below:

  • [ 28 ] I find much in the applicants ' submissions persuasive. In particular, unlike the circumstances in Lunney , the employees are paid for the time during which they travel. As such, they are travelling not only for the purpose of, but also in the course of their employment. They are also directed to travel in a particular way and at particular times by their employer. Their travel, unlike the case in Lunney , is not at their discretion. To the extent that the Commissioner suggested that the employees, at their election, could control their own travel arrangements, the evidence is to the contrary. The employers arranged the flights and the transport to and from the airports. Although an employee could request some special arrangement (on one occasion, an employee drove to the project location), the general arrangement was that employees travelled in accordance with arrangements the employers made.
  • [ 29 ] …
  • [ 30 ] Untrammelled by authority, it is likely that I would find the features identified above sufficient to conclude that cost of

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    flights was incurred in each employee gaining or producing their assessable income within the meaning of s 8-1. Other considerations emphasised by the authorities do not permit me to reach this conclusion.
  • [ 31 ] …
  • [ 32 ] … In the present case, there was no suggestion in the evidence that the employees were doing anything other than travelling to their place of work. While they were being paid to travel, and thus travelling was undertaken as part of their employment, that was a result of the deal negotiated between the employers and the employees. Their place of work remained the project location. On the statutory hypothesis that each employee paid the cost of flights, their work productive of income remained the work they did at the project location.
  • [ 33 ] Third, while there were many difficulties with employees relocating to the project location for the duration of the project, relocation is an option which the employers offered. The fact that the overwhelming majority of employees opted not to relocate remained their choice. On this basis, it is difficult to see why the object of the travel was not to enable the employees to live where they chose, distant from the project location. On this basis, the case is indistinguishable from
    Newsom v Robertson (1953) 1 Ch 7 on which the High Court relied in Lunney .
  • [ 34 ] Fourth, while Lunney is not exhaustive, the fact that the travel is undertaken on a periodic rather than a daily basis does not seem a relevant distinguishing feature. The important distinguishing features are that in the present case the travel is undertaken at the employer ' s direction and the employee is paid for the period of travel. But the character of the outgoing, assuming that the employees had paid for their own flights, remains the same. To the employee the cost of the flights would be incurred because they had chosen to live away from their place of work, the project location. If, as Northrop J said in Genys , the question is the " essential character " of the outgoing, then, on the hypothesis of payment by each employee, the character of the outgoing is too similar to that in Lunney to reach a different conclusion, particularly when regard is had to the caution of Dixon CJ in that case. While I do not consider the important distinctions in this case to be " refined and rather insubstantial " , as his Honour referred to in Lunney at 486, I also do not consider them sufficient to reach a different conclusion from the view which, as Dixon CJ put it (at 485), " has always prevailed that expenses of travelling from home to work or business and back again are not deductible " .

ANALYSIS OF THE PRIMARY JUDGE ' S REASONING

32. With great respect to the learned primary judge, the difficulty I have with her Honour ' s conclusion is that it is at odds with her Honour ' s findings of secondary fact. For example, at R [ 28 ] , her Honour found that the employees were travelling " in the course of their employment " . That finding is totally at odds with the finding of the plurality in Lunney that the expenses which the taxpayer incurred in travelling on the bus from near his home at Narraweena to Wynyard Station and return, were not incurred in travelling in the course of his employment.

33. Again, for example, her Honour found, at R [ 32 ] , that the " travelling was undertaken as part of their employment " , but, somehow, that was to be discounted because " that was a result of the deal negotiated between the employers and the employees " . I do not understand how that deal has anything to do with the answer to the question posed by the statutory hypothesis.

34. At R [ 32 ] , her Honour found that the employees " work productive of income remained the work they did at the project location " , but that overlooks her Honour ' s finding two paragraphs later (at R [ 34 ] ) that " the travel is undertaken at the employer ' s direction and the employee is paid for the period of travel " . As her Honour observed, they are " important distinguishing features " from what I have called the " vanilla " factual context considered in Lunney .

35. For example, if an employed solicitor in a Sydney law firm was required by his employer to travel to Melbourne to have the

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carriage of litigation in that city on behalf of a client of his employer, with the employer picking up the tab for the employee ' s air fares, it could not be seriously suggested that under the statutory hypothesis in s 52(1) FBTAA, the employee solicitor would not be entitled to an allowable deduction for the full cost of his airfares, irrespective of whether he travelled to Sydney Airport from his house or from his office and irrespective of whether on arrival in Melbourne he went to a hotel or straight to court. True it is that the main purpose of his travel is to conduct the litigation in Melbourne, but it is somewhat artificial to say that that is what is productive of the employee ' s income. He is being paid for performing his duties as an employed solicitor and those duties include complying with the directions of his employer, including travelling to Melbourne (and returning to Sydney) to conduct the litigation there. That was certainly the approach of the majority in
Commissioner of Taxation of the Commonwealth of Australia v Day (2008) 236 CLR 163 , in particular at [ 20 ] and [ 30 ] - [ 33 ] .

36. At R [ 34 ] , her Honour said: " [ W ] hile Lunney is not exhaustive, the fact that the travel is undertaken on a periodic rather than a daily basis does not seem a relevant distinguishing feature " . But the difference does, with respect, point to the costs of such periodic air travel on paid time being more likely characterised as an " incident of the employment " :
Roads and Traffic Authority of New South Wales v Commissioner of Taxation (1993) 43 FCR 223 at 240 per Hill J, than the day to day bus travel of Mr Lunney before he " clocked on " and after he " clocked off " each day.

37. Finally, at R [ 34 ] , her Honour concluded that while she did not consider the " important distinction " in this case to be " refined and rather insubstantial " , as Dixon CJ referred to in Lunney at 486, she did not consider them sufficient to reach a different conclusion from the view which, as the Chief Justice put it at 485, " has always prevailed that expenses of travelling from home to work or business and back again are not deductible " . In coming to this conclusion, her Honour relied on what was said by Northrop J in
Commissioner of Taxation v Genys (1987) 17 FCR 495 at 498:

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.

38. This, of course, was taken from what the plurality said in Lunney at 497:

In Ronpibon Tin N. L. and Tongkah Compound N. L. v. Federal Commissioner of Taxation the passage quoted above was immediately followed by the observation " The words ' incurred in gaining or producing the assessable income ' mean in the course of gaining or producing such income " . Thereafter, it was said: " In brief substance, to come within the initial part of the sub-section it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income or, if none be produced, would be expected to produce assessable income " . In the context in which they have been used the expressions relied upon by the appellants have been intended as a reference, not necessarily to the purpose for which an item of expenditure has been incurred, but, rather, to the essential character of the expenditure itself.

And later at 498, 499:

It is, of course, beyond question that unless an employee attends at this 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.

39.

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Of the above passages from the joint judgment in Lunney , Professor Parsons wrote ( Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting (Law Book Company, 1985) at [ 8.62 ] :

It appears that the determination of " essential character " makes possible a conclusion on relevance. The determination of essential character involves the adoption of a description of the expense which affords an answer to the question of relevance. The description in effect asserts the relevance or want of relevance of the expense. The analysis tends rather to cloak than to reveal the process of decision. No analysis can deny the evaluation that must be made in concluding that an expense is relevant or irrelevant.

40. Notably, the majority in Payne did not refer to the " essential character " of the expenditure in coming to the conclusion they did, while the minority quoted the extract from the learned Professor ' s work in support of their statement at [ 47 ] that:

In various fields of the law the actual process of decision is obscured rather than displayed by reference to the criterion of essential character.

See too Day at [ 29 ] where the majority said that reference in some cases to the expenditure having an " essential characteristic " " … is perhaps better understood as a statement of conclusion than of reasoning " .

41. In my view, the " essential character " of the expenditure is a distraction to the task of determining whether it is relevant to the income derivation mandated by the statute, namely, whether it is in, or in the course of, gaining or producing such income; if not, it is irrelevant, and not deductible. The " essential character " test has an affinity with the reasoning of Denning LJ in Newsom v Robertson and his Lordship ' s dichotomy between living expenses and business expenses. Such a test may be apt with respect to the text of the United Kingdom legislation of whether " an outgoing is wholly and exclusively paid out or expended for the purposes of a trade or profession " ; it does not seem to me to be apt where the test is, as it is in this country, the relevance of the expenditure to income derivation and where the statutory test of relevance is textually expressed in terms of the expenditure being in, or in the course of, gaining or producing income.

CONSIDERATION AND CONCLUSION

42. Whatever the differences and similarities between the expenditure of the employees on air travel under the statutory hypothesis in s 52(1) FBTAA in this case and the expenditure of Mr Lunney on the bus travel in his case, as her Honour the learned primary judge found, the former are not, to use the terminology of Dixon CJ in Lunney , " refined and rather insubstantial distinctions " (at 486).

43. The expenditure in this case is more akin to the expenditure in Lunney referred to in para 2 of the stated case, and referred to in [ 9 ] above, namely, the expenditure incurred by the company in transporting Mr Lunney to various parts of the Port of Sydney to carry out his work after he first reported to the office of the company at No 11 Darling Harbour and returning him to that office from the work sites at the end of each working day. The provision of such travel would be a residual fringe benefit and, on the Commissioner ' s argument, Mr Lunney would not be entitled to an allowable deduction for the cost of such travel under the statutory hypothesis in s 52(1) FBTAA because it was incurred in travelling to the work sites on the Port of Sydney, and it was his work at the work sites, not his travel to them, that was productive of his income. With respect, the argument does not withstand close scrutiny. True it is that there are differences of degree between the extent and cost of the travel in transporting Mr Lunney to the various parts of the Port of Sydney as against transporting the John Holland employees to Geraldton in this case, but the principle by reference to which the issue must to be determined, remains the same.

44. In my view, there is no reason why Perth Airport should not be a point at which the employees duties and remuneration for performance of those duties both commences and ceases. The contract of employment so provides. The fact that Perth Airport is not an area or premises owned or leased by John Holland, is irrelevant. In this respect, there is no difference between Perth Airport and No 11 Darling Harbour.

45.

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From the time the John Holland employees, both Workforce and Staff, checked in at Perth Airport they were travelling in the course of their employment, subject to the directions of John Holland and being paid for it. That situation subsisted until they disembarked the plane at Perth Airport at the end of their rostered-on work time. At no time during that period were they travelling to work; they were travelling on work and the cost of doing so under the statutory hypothesis in s 52(1) FBTAA would be an allowable deduction to them under s 8-1 of the ITAA 1997.

46. For the foregoing reasons, I would allow the appeal with costs.

 

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