Case Q104

Members: MB Hogan Ch

P Gerber M
GW Beck M

Tribunal:
No. 3 Board of Review

Decision date: 21 October 1983. Received from the Board 26 October 1983.

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Dr. P. Gerber (Member)

Dr. Beck has fully set out the facts of this case. I gratefully adopt them as an accurate summary of all the relevant issues.

2. I have concluded that the taxpayer must succeed as a matter of law, mindful that this conclusion is contrary to earlier decisions of Boards of Review (including my own). In reaching this conclusion, I have, I believe, returned to a ``fundamentalist'' approach to
Finn's case (1961) 12 A.T.D. 348 ; (1961) 106 C.L.R. 60 for no better reason than that it constitutes the only pronouncement on the subject by the Full High Court. If the law is to be changed, it can only be done by Parliament or a re-examination by the Full High Court. The post- Finn ``analyses'', ``explanations'', ``distinctions'' and exegeseis have left a jungle of single instances. As Lord Wilberforce observed in
Chaplin v. Boys (1971) A.C. 356 at pp. 391-392 :

``The general rule must apply unless clear and satisfying grounds are shown why it should be departed from and what solution, derived from what other rule, should be preferred. If one lesson emerges from the United States decisions it is that case to case decisions do not add up to a system of justice.''

3. In this case, the material facts as proved in evidence, come to this:

• (i) this taxpayer was at all relevant times a teacher of ancient history;
• (ii) she elected to utilize part of her annual leave to visit sites of earlier civilisations which are the subject matter of her teaching commitment;
• (iii) it is stated that this inspection and the accompanying expert commentaries made the taxpayer more intimately conversant with her subject. This is not a matter which requires further ``proof''. To visit the crumbling remains of the Herculaneum is done for much the same reason as Judges and jurymen have a ``view'' of the scene of an accident - to familiarise themselves with the evidence;
• (iv) I accept as axiomatic that a history teacher who acquaints herself first-hand with her subject matter is more likely than not to be a better teacher than one who is indifferent to the content of her classroom material and/or relies on picture postcards and Mommsen;
• (v) taxpayer asserted that she undertook the trip, inter alia:

``... to display to my superiors an attitude to be more involved and to keep myself up to date and to learn continually, since I think many of them now believe it is not enough to teach them year after year using perhaps the same old notes or textbooks or photographs, but it is important to have an attitude of inquiry and to develop yourself personally if you are going to be, in effect, a teacher. I felt that that would influence them in future promotions.''

4. I hope I will not be taken as being critical of earlier decisions if I commence my review of the law with a citation from Lord Hailsham L.C. in
Broome v. Cassell Co. Ltd. (1972) A.C. 1027 ; (1972) 1 All E.R. 801 ; where his Lordship stated at A.C. p. 1054; All E.R. p. 809:

``The fact is, and I hope it will never be necessary to say so again, that, in the hierarchical system of courts which exists in this country, it is necessary for each lower tier, including the Court of Appeal,

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ATC 525

to accept loyally the decisions of the higher tiers... It does not entitle it to question considered decisions in the upper tiers with the same freedom.''

5. What, then, did Finn decide? The facts are too well known to need recapitulation. Indeed, the case has constituted the prologue of every ``travel'' case for the last two decades. I analysed the case in detail in Case N24,
81 ATC 131 at pp. 131-134. A more recent analysis was undertaken by G.N. Williams J. in
F.C. of T. v. Wilkinson 83 ATC 4295 . Suffice it to say that Dixon C.J. concluded (at A.T.D. pp. 350-351; C.L.R. p. 67):

``From the facts that have been stated... it seems indisputable that the increased knowledge the taxpayer sought and obtained of his subject and the closer and more realistic acquaintance he secured of modern developments in design and construction made his advancement in the service more certain, and that in respect of promotion to a higher grade these things might prove decisive... so far as motive or purpose is material, advancement in grade and salary formed a real and substantial element in the combination of motives which led to his going abroad...''

Of equal significance is his Honour's observation (at A.T.D. pp. 348-349; C.L.R. p. 64) -

``It will be seen that the question involved in the case is of an important description. For it is indeed important that officers and employees engaged at a salary in the exercise of a skilled profession should not be in a worse position in respect of the costs of better equipping or qualifying themselves in point of knowledge and skill than are those exercising the same profession as a calling remunerated in fees paid by clients or by the members of the public who, under whatever style, enlist their services. But as the legislation stands such cases cannot, unfortunately, be determined by any very broad proposition of law.''

The remaining Judges concurred in the decision of the Chief Justice, each adding his own brief reasoning why the taxpayer should succeed. It is significant that Windeyer J. reemphasised the need of a professional to increase his knowledge and that - for tax purposes - it was irrelevant whether he is paid by fees or by salary. Thus his Honour stated (at A.T.D. p. 352; C.L.R. p. 70) -

``Generally speaking, it seems to me, a taxpayer who gains income by the exercise of his skill in some profession or calling and who incurs expenses in maintaining or increasing his learning, knowledge, experience and ability in that profession or calling necessarily incurs those expenses in carrying on his profession or calling. Whether he be paid fees by different persons seeking his skilled services from time to time, or be paid a regular salary by one person employing him to exercise his skill, matters not in my opinion.''

In this case, unlike Finn, there was no corroborative evidence that the overseas experience would materially assist in the derivation of increased income. I do not believe this to be a critical distinction. This taxpayer was, in fact, elevated from secondary to tertiary teaching soon after her return from abroad. She ``believed'' her overseas experience played a part in that promotion. It would be quite invidious to demand evidence from a selection committee as to what factors it took into account in promoting a candidate. This taxpayer was an honest witness and - whilst her belief as to the reasons for her subsequent appointment carries little evidentiary weight - I see no reason to doubt that she looked on the expenditure as reasonably calculated to earn increased income.

6. In the circumstances, it may be gratuitous to add that the so-called ``perceived connection'' with the derivation of income is invariably assumed where self-employed professionals attend conferences in remote corners of the earth. If senior partners of legal firms can rummage tax-free through the bazaars of Hong Kong in search of colourful bolts of silk, only to learn that, as Australian graduates, they have little contract, less equity and tort nothing (`` striving to better, oft we marre what's well '': King Lear ), I see no good reason why pedagogues trying to improve their teaching should not be granted a similar fiscal indulgence. The next legal convention, to be

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ATC 526

held in Italy, is already widely advertised. If self-employed lawyers can claim the cost of a professional visit to Rome, I can find no plausible reason why ancient history teachers should not be likewise tax free to roam. After all, Italy is at least as renowned for its antiquities as for its ancient common law tradition. It is part and parcel of the job. It has the nexus, and, for good measure, the perceived connection.

7. As pointed out in Dr. Beck's decision, the remainder of the claims were abandoned at the hearing and no decision is required.

8. I would reduce the assessment to allow a further deduction of $2,162.