Case J3

Judges: MB Hogan Ch
N Dempsey M

P Gerber M

Court:
No. 3 Board of Review

Judgment date: 21 December 1976.

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Dr. P. Gerber (Member): I have had the advantage of reading the Reasons of my colleague, Mr. Dempsey. I entirely agree with the conclusion he has reached and his reason for same. On the uncontradicted evidence of the taxpayer - a professional footballer - he was found to be ``sluggish in movement'' by his coach, which, we were told, is an apparent handicap in a footballer. The cure, according to his coach, could be achieved by playing squash, and he was directed to do so. Under the terms of his contract, taxpayer was bound to obey the direction of his employer which he did. Surprisingly, this novel cure appeared to work, since taxpayer was subsequently selected to play for Australia, from which I presume that his ``sluggish movement'' was cured. Furthermore, taxpayer deposed that the winning bonuses during the year were a direct function of the fitness of players; to be unfit could jeopardize pre-selection. I would have thought that even without recourse to the authorities, the process of attaining a degree of fitness had a direct, immediate and demonstrable result in increasing income, so that the expenditure qualifies as an outgoing in gaining or producing income. It is no more ``any affair of capital'' (
F.C. of T. v. Hatchett 71 ATC 4184, 4186 ; 125 C.L.R. 494, 497 ) to equip the taxpayer's body as it is his mind, so that he may have a higher earning capacity.

2. Given these facts, none of which were successfully challenged, the Commissioner sought valiantly to establish that taxpayer ``enjoyed'' his games of squash, and hence there was a ``recreational'' element in these games which, it was solemnly submitted, deprived the activity of its nexus with the enjoyment.

3. I am not satisfied that this somewhat puritanical approach to the Income Tax

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ATC 44

Assessment Act is soundly based in law. To be effective, medicine need not taste bitter; nor does the test whether an expenditure incurred in gaining assessable income is or is not deductible depend on whether a taxpayer actually enjoys what he is doing. If that were the test, the loss in revenue would be catastrophic.

4. I would accordingly uphold the objection and direct that the assessment be reduced by $384 and an amended assessment issue on taxable income of $11,163.

Claim allowed