Case H37

Members:
JL Burke Ch
RE O'Neill M
CF Fairleigh QC

Tribunal:
No. 1 Board of Review

Decision date: 6 September 1976.

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J.L. Burke (Chairman): In his return of income for the year ended 30 June 1971 the taxpayer, a senior university lecturer, disclosed, in addition to his salary, the receipt of $1,594 in respect of employment by a commonwealth department for the period 14 December 1970 to 15 February 1971. The taxpayer seeks a deduction under sec. 51(1) of the Income Tax Assessment Act 1936 (as amended) for the air fare ($58) to and from Canberra and for living expenses ($832 - 64 days at $13 per day) incurred during the period of his employment in Canberra.

2. Prior to taking up his university appointment in May 1969 the taxpayer had been granted an overseas scholarship by the Commonwealth under which he was paid allowances totalling $6,000 over the period September 1963 to August 1965. The scholarship was subject to a bond that the taxpayer should, at the end of his overseas studies, continue employment with the Commonwealth for a period of two years. The terms of the bond were breached and of the amount consequently due to the Commonwealth by the taxpayer all but $1,537 had been repaid by December 1970.

3. By arrangement with the Commonwealth the taxpayer undertook a special assignment in Canberra during the period 14 December 1970 to 15 February 1971 and the salary that was due to him in respect of his services for the said period was, to the extent of $1,537, set off against the amount owing by him to the Commonwealth thus extinguishing the ``bond'' debt.

4. The taxpayer had his ordinary residence in the city in which the university at which he lectured was located. He was paid his university salary during the period of the long vacation. He said that, as a matter of practice, apart from a period of two or three weeks, a full-time lecturer is available on call to the university during the long vacation.

5. In the instant case the taxpayer was granted special leave (with pay) by the university from 14 December 1970 to 9 February 1971 and the work which he undertook in Canberra was approved both by the vice chancellor and the professorial head of his department. While he was in Canberra the taxpayer's written opinion was sought by his professor on the merits of the writings of an applicant for a lecturing position at the university.

6. In order to be allowable as a deduction under sec. 51(1) of the Act the outgoings to which the taxpayer was subjected must satisfy the description of outgoings incurred in gaining or producing the assessable income and must not be of a capital, private or domestic nature.

7. Although the taxpayer did not sever his

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ATC 314

connexion with the university for the period during which he was employed by the Commonwealth the expenditure on the air trip to and from Canberra must be viewed as the cost associated with the taking up of a separate and distinct employment and, so seen, the air fares are clearly not allowable on the principle applied by Menzies J. in
F.C. of T. v. Maddalena 71 ATC 4161 . Furthermore there is nothing special about the employment which would change the character of the living expenses borne by the taxpayer whilst in Canberra from private or domestic outgoings which, by their very nature, do not qualify for deduction under sec. 51(1) of the Act.

8. For the foregoing reasons I would uphold the Commissioner's decision on the objection and confirm the assessment the subject of review.