Case M69

Judges:
MB Hogan Ch
P Gerber M
GW Beck M

Court:
No. 3 Board of Review

Judgment date: 12 September 1980.

---

M.B. Hogan (Chairman); Drs. P. Gerber and G.W. Beck (Members)

The taxpayer is a registered medical practitioner who, in the two years now under review, was employed as an assistant in a General Medical Practice, doing five morning sessions from 9.30 a.m. to 12.30 p.m. She is married to a professional man. For some twenty years or so, taxpayer has engaged a housekeeper who commenced work at the home at approximately 8.30 a.m. and stayed till about 12.30 p.m., doing the ironing, washing and cleaning, and such mending as time permitted. She neither prepared nor cooked any meals apart from ``perhaps, a cup of morning tea''. In the return for the 1977 tax year, the claimant sought the full rebate ($500) permitted for a housekeeper under the conditions laid down in sec. 159L. In the 1978 tax year, the full relevant rebate was again claimed ($550); alternatively, the full amount of the expenditure was claimed under sec. 51(1). These claims were disallowed by the Commissioner. In the objections against the disallowance in the 1977 year, it is stated:

``Taxpayer had two children under sixteen years of age, one of which had a health problem, and this need also requires assurance that someone - such as a housekeeper - is at the home when taxpayer is absent. It is accordingly submitted that `special circumstances' do exist and that the rebate of $500 in respect of a housekeeper is an allowable rebate. Reference sec. 159L(1)(a).''

---

ATC 487

The objection in the following year repeats the ground set out above, adding ``alternatively, the amount of $1,884 is allowable under sec. 51(1)''.

2. The Housekeeper rebate provision (sec. 159L(1)) states:

``Where, during the year of income, a person (in this section referred to as a `housekeeper') is wholly engaged in keeping house in Australia for a taxpayer and in caring for -

• (a) a child of the taxpayer less than 16 years of age;
• (b), (ba), (c)...

the taxpayer is entitled, in his assessment in respect of income of that year of income, to a rebate of tax ascertained in accordance with this section.''

Subsection (4) of sec. 159L provides that "where a taxpayer is married and the housekeeper is not, during the year of income, engaged in caring for the spouse of the taxpayer, being a spouse in receipt of an invalid pension under the Social Services Act 1947-1975 -

• (a) he is not entitled to a rebate under this section in his assessment in respect of income of the year of income unless the Commissioner is of the opinion that, because of special circumstances, it is just to allow a rebate; and
• (b)..."

3. It appears to us that in order to qualify for the rebate, it is a condition precedent that the housekeeper ``is wholly engaged in keeping house''. Applying this view of the section to the facts of this case, we are unable to conclude that the housekeeper in this reference - working only four hours in the morning on five days a week - satisfies the description of someone ``wholly engaged in keeping house''. In other words, ``wholly'' is not so much descriptive of the nature of the work but its quantum. It conjures up the notion of an entirety, to the exclusion of everything else. It follows that part-time domestic help can never qualify for a rebate - in whole or in part - in reliance on a section which affords relief only to the engagement of a person who ``is wholly engaged in keeping house''; cf. the housekeeper in Coleman's case 77
ATC 579, on appeal 78 ATC 4355, where the housekeeper ``lived in the taxpayer's house, looked after the taxpayer's son and attended to the full range of household duties, including the preparation of meals'' (78 ATC 4355 at p. 4357). Put in another way, a person engaged for merely four hours a day is not ``wholly engaged in keeping house'' notwithstanding that the duties performed may be exclusively ``domestic''.

4. An alternative argument, presented on behalf of the taxpayer in the 1978 tax year, viz. that the whole expenditure is an allowable deduction in reliance on sec. 51(1) is quickly disposed of, having been foreclosed by the decision of Mason J. in
Lodge v. F.C. of T. 72 ATC 4174; (1972) 128 C.L.R. 171. In that case, the appellant - a law cost clerk - sought to deduct the cost of sending her young daughter to a nursery whilst she devoted herself to her work. Alas, the claim was disallowed by the Commissioner and appealed to the High Court. In dismissing the appeal, Mason J. stated (at ATC p. 4176; C.L.R. p. 175):

``The expenditure was incurred for the purpose of earning assessable income and it was an essential prerequisite of the derivation of that income. Nevertheless its character as nursery fees for the appellant's child was neither relevant nor incidental to the preparation of bills of cost, the activities or operations by which the appellant gained or produced assessable income. The expenditure was not incurred in, or in the course of, preparing bills of cost.''

5. Finally, the taxpayer sought to derive some comfort from the fact that at some period of the 1978 tax year, one of the taxpayer's children spent some months at home recuperating from an illness. However, since the taxpayer frankly conceded that she had the same domestic help for some twenty years or so, this period of the child's convalescence can only be seen as an incident, albeit an additional one, to the part-time nature of the domestic help. This argument must fail for the same reason as the principal submission fails, viz. that it cannot be demonstrated that this taxpayer had at any relevant time engaged a person who was ``wholly engaged in keeping house'', which is the threshold question which governs all of the provisions of sec. 159L, including subsec.

---

ATC 488

(4). This is sufficient to dispose of this reference. However, since much time was taken up in argument in reliance on Coleman's case (supra) on the assumption that it was a signpost pointing to the new millennium, we propose to deal briefly with that decision.

6. It will be recalled that in that case, the taxpayer was a Senator for the State of Western Australia, her husband being described as a ``busy person''. The couple had one young child still residing at home. Evidence was tendered to demonstrate that a parliamentarian who was also a specialist in Consumer Affairs and who conscientiously carried out her duties found it impossible to fulfil her obligations (for want of a better word) as a housekeeper and mother. This dilemma was resolved by the engagement of a domestic. It was submitted these facts constituted ``special circumstances'' so as to permit the rebate provided for by subsec. (4) of sec. 159L. The Commissioner remained unpersuaded and the matter was referred to a Board of Review where a majority (Messrs. Todd and Voumard, Members) were able to discover ``special circumstances'' ``in the extremely busy public life of the taxpayer and the need to maintain, through the housekeeper, a continuity of stable home life for the taxpayer's son''. An appeal to the Supreme Court of Western Australia was dismissed on a preliminary objection that the Board's decision did not raise a question of law. It goes without saying that this taxpayer sought considerable comfort from Coleman's case.

7. The first thing to observe is that, however persuasive a decision of another Board may be, it is not a precedent. Again, it must be noted that the majority of the Board were at pains to point out that they were not laying down any fixed criteria as to what constitutes ``special circumstances'' and that their decision ``must of force be one confined to its special facts''.

8. While in no sense critical of the Coleman decision, we would merely observe that a ``busy public life'', in conjunction with a desire to maintain ``continuity of stable home life'' does not, in our opinion, ordinarily constitute ``special circumstances'' within the meaning of sec. 159L(4). We would adopt with approval what was said by a Member of this Board (as then constituted) in 11 T.B.R.D. where the following useful passage appears at pp. 29-30:

``It seems to me that an increasingly large number of married women, with children of tender years, go to work to augment the family income and a housekeeper becomes necessary if they are to continue thus. Such a circumstance must be almost too commonplace to warrant special comment, and thus, to my mind, it could scarcely be regarded as unusual. Moreover, if the legislature had intended to benefit what must be a comparatively numerous class of husbands with small children, whose wives work as well, I think that a general clause embracing their housekeepers could readily have been inserted in the Act.''

(Per Mr. McCaffrey.)

9. Finally, it was submitted on behalf of the Commissioner that even if the Board were to find ``special circumstances'', it would not be just to allow a rebate of the facts of this case (``... unless the Commissioner is of opinion that, because of special circumstances, it is just to allow a rebate''; sec. 159L(4)(a)). This argument, as we understand it, was based on the proposition that because the taxpayer's husband reaped some of the benefits of the housekeeper, the latter was not wholly engaged for the benefit of the taxpayer but rather for the taxpayer and her husband. This point was first raised by Mr. Bock (Member) in
5 T.B.R.D. Case E41 and received some support in the later dicta of Wickham J. in Coleman on appeal (supra). As the Commissioner pointed out, any other view could lead to an eccentric result that, in the case of a working couple, each would be entitled to rebate. It is a choice between Scylla and Charybdis - between an unattractive interpretation and an equally unattractive result. Fortunately, since it is unnecessary to decide the point on this reference, we prefer to leave it to some other time when it may be critical to the determination.

10. For the above reasons, we would uphold the Commissioner's decision on the objection.

Claim disallowed