Case K2

Judges: HP Stevens Ch
RE O'Neill M

CF Fairleigh QC

Court:
No. 1 Board of Review

Judgment date: 21 December 1977.

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C.F. Fairleigh Q.C. (Member): In his return of income for the year ended 30 June 1974 the taxpayer, a solicitor (employee), claimed a deduction thus: ``1 suit (used only in office) $110.'' In adjusting the income as returned the

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Commissioner disallowed that deduction. A notice of assessment issued accordingly. The taxpayer objected and the Commissioner decided to disallow the objection. That decision was referred to a Board for review.

2. The notice of objection by the taxpayer's accountants is directed to sec. 51(1) of the Income Tax Assessment Act 1936 (as amended) and contains the following paragraphs: -

``The taxpayer purchased the suit for the sole purpose of wearing it in his office and in court. He maintains that he never wears the suit in question on social occasions and was prompted to purchase it after being admonished by a judge for not wearing a suit in court. The taxpayer believes that the wearing of a suit is peculiar to his occupation and serves a similar purpose as other types of clothing worn by tradesmen.

He believes that his occupation makes it necessary for him to wear a suit in order to project a certain image which he considers necessary for his profession.''

There is also a notation in the return in respect of another matter that ``The taxpayer has an agreement with his employer whereby he receives a bonus which is dependent on the gross fees he generates towards his employer's practice. As a consequence the taxpayer... interview(s) clients at their premises,... visit(s) other law offices and... attend(s) court proceedings.'' The suit (with extra trousers) is of standard pattern with thin lines on a ``darkish'' blue material.

3. The (United Kingdom) Income and Corporate Taxes Act 1970 (sec. 130) speaks of ``money wholly and exclusively laid out or expended for the purposes of trade'' and of ``sums expended for... domestic or private purposes distinct from the purposes of the trade, profession or vacation''. In that context Templeman J. in
Caillebotte v. Quinn (1975) 50 T.C. 222 at p. 226 said: -

``The cost of protective clothing worn in the course of carrying on a trade will be deductible, because warmth and decency are incidental to the protection necessary to the carrying on of the trade.''

4. In
F.C. of T. v. White 75 ATC 4018 ; Helsham J. stated that the Commissioner did not base any argument on the fact that the claim related to travelling expenses, and this decision indicates that for the employee to be entitled to a deduction pursuant to sec. 51(1) of the Act it is of no avail simply to show a ``perceived connexion'' between the outlay and the course of gaining or producing income unless (as in
F.C. of T. v. Hatchett 71 ATC 4184 ; 25 C.L.R. 494 which is the origin of the phrase) there is, as Menzies J. said (at p. 4186; 498) an expenditure of money in reliance upon the conditions of employment. Condition here presumably means (as in
E.M.I. (Australia) Ltd. v. F.C. of T. 71 ATC 4112 at p. 4118; (1971) 45 A.L.J.R. 349 at p. 353 ) a term express or implied; and this also it would seem is the meaning to be given to the phrase ``expenditure... part and parcel of the employment'' ( White's case (supra) at p. 4022). The authorities are constant that the expression ``incidental and relevant'' is not an exclusive and exhaustive test for ascertaining the extent of the operation of sec. 51(1) see e.g.
F.C. of T. v. Ballesty 77 ATC 4181 at p. 4184 .

5. Dr. Gerber has pointed out ( Case H32,
76 ATC 280 ) that little, if any, assistance is given by such phrases as ``necessary and peculiar'' and ``abnormal expenditure on conventional clothing'' by which Boards of Review have, at times, he said, sought to introduce some vague principles of equity into a taxing statute. Such attempts to be innovative are doomed to fail as an administrative tribunal is not empowered to lay down a new principle of law.

6. Where the employee prefers one mode of attire and the employer insists on another (leaving aside such matters as uniforms, theatrical garb and protective clothing) it is not a matter within the positive limb of sec. 51(1), but simply a conflict as to preferred life styles, i.e., a conflict on a private and domestic matter which happens to be carried over to the area of work. So also where a judge, as in the present case, gave a direction to the taxpayer not as an officer of the court (cf. the mode of attire of the tipstaff and others who attend on the justices of the High Court) but as someone whose work impinged on the proceedings of the court. Exceptions to that general principle do arise. It has frequently occurred in one State that judges have given directions that barristers in robes must wear dress collars and this necessarily means wearing a plain white shirt which has no collar attached to it. The consequence is that some barristers retain in a locker in the robing room a shirt of that kind and in course of robing they change from the ``ordinary'' shirt (probably plain white with an

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attached collar) to the plain white with unattached collar; and change out of it again when they disrobe. Thus the shirt used with court robes is distinctively used for one purpose only and is much a part of a barrister's formal court attire as his robe is. Yet barristers would hardly regard a plain white shirt with unattached collar as being unconventional.

7. I do not regard the problem as being taken any closer to solution by reference to conventional or unconventional attire (again leaving aside uniforms, theatrical garb, protective clothing and the like). It is not a matter of semantics for all that any definition does (as H.W. Fowler says in the preface to his edition of the Concise Oxford Dictionary ) is to give a silhouette. What is conventional for one section of the community or for one age group or for one sex is or may be unconventional for another. Many truck drivers regard themselves as adequately attired when wearing a sleeve-less singlet, shorts and sandals. But no taxi driver could work in that attire. A truck driver may sit in his vehicle and eat a sandwich without reprisal. A taxi driver who does so runs the risk of a police court conviction and the loss of his livelihood. Yet that does not mean that the outlay by a taxi driver on a shirt or on a meal in a cafe gives rise to a sec. 51(1) deduction. To pursue this subject could lead to immersion in Carlyle's cryptic autobiography ``Sartor Resartus'' and his imaginary professor's treatise on the ``Spirit of Clothes'' (patterned on Montesquieu's ``Spirit of Law'') and the ``expounding of the moral, political and even religious Influences of Clothes''. The real issue here is the character of the expenditure.

8. The taxpayer has suggested that the facts may give rise to an apportionment: he wears the suit to and from work on certain days and concedes that on a public transport vehicle his attire would not attract any undue attention. Even leaving aside the main issue, the phrase in sec. 51(1) ``to the extent to which'' does not mean that all outlays are apportionable (vide Hatchett supra: Caillebotte supra) .

9. A claim by an employee to deduct an outlay on clothing is often a plea ad misericordiam and a favourable decision is the giving of alms as a solatium in disregard of the provisions of sec. 51(1); mere uniformity in dress even if a term of employment is inadequate. Uniformity is different from a uniform in the true sense.

10. For the employee to succeed on the first positive limb of sec. 51(1) (and that is the only provision on which an employee can rely) his claim that the outgoing is incurred in the course of gaining or producing assessable income requires acceptable evidence that the outlay (and being other than for a private matter vide para. 6 hereof or other excluded subject) was pursuant to a term express or implied of his employment; alternatively that the outlay had a direct and immediate result in increasing income. The evidence does not establish that proof. The taxpayer has asserted and may be taken to have proved that expenditure on a suit, worn by him during some occasions when he is at work, is likely to enable him the better to carry out his work. White's case supra shows that such proof is insufficient to establish a claim under the first positive limb of sec. 51(1), even where the exclusion provisions of sec. 51(1) are left aside.

11. The expenditure on the suit is an outlay of a private nature. I would uphold the decision on the objection and confirm the assessment.

Claim disallowed