Case R99

Judges: HP Stevens Ch

TJ McCarthy M
PM Roach M

Court:
No. 1 Board of Review

Judgment date: 27 September 1984.

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T.J. McCarthy (Member)

The dispute which the Board is asked to resolve arose in this way. The taxpayer, an electrical mechanic, who resided with his parents in Sydney, was told by his employer in June 1981 that there was not much work available for him in Sydney but that the firm could use his services in connection with the electrification of the railway line between Wyong and Newcastle. Being anxious to remain employed, the taxpayer accepted the move. Although it was originally envisaged that the taxpayer would be engaged on that project for only 6 weeks, in fact he was so engaged for a period of 13 months commencing around the middle of June 1981. During that period he stayed with friends in Avoca and travelled each working day to Ourimbah and other areas where he performed electrical work at section huts. Subsequently he was forced to accept work nominated by his employer at such places as Muswellbrook, until eventually he was retrenched in April 1983. At the time of the hearing of this reference in August 1984, the taxpayer had found work in Sydney, although the home of the taxpayer and his wife was then elsewhere.

2. During his stay with friends in Avoca the taxpayer kept most of his belongings in his bedroom at ``home'', that is, the residence in Sydney owned by his parents. On most weekends during the year ended 30 June 1982 the taxpayer returned home; his mother did his washing and ironing and the taxpayer saw his girlfriend who lived in Sydney. The taxpayer and his girlfriend were married in November 1982.

3. During the year ended 30 June 1982, which is the relevant year of income, the taxpayer received ``Living-Away-Allowances'' from his employer pursuant to the Electricians (State) Award: $98 per week for 35 weeks and $121.80 for 12 weeks, a total amount of $4,891.60.

4. In his return the taxpayer treated the amount of $4,892 as assessable income and claimed a deduction of $4,788 under sec. 51A. He also successfully claimed a deduction for ``home insulation expenses'' in connection with insulation materials purchased for a residence the construction of which commenced in August 1981. No doubt the place where the residence was being constructed did not escape the assessor's notice; it was Avoca. Instead of

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ATC 655

supplying further details in the return in order to explain the genuineness of the situation in which the taxpayer found himself, the agent did not supply any details in relation to the sec. 51A claim other than the place where the taxpayer was located (Avoca), the rate of allowance (shown as $94.07 weekly), the number of weeks (shown as 52) and the amount claimed ($4,788). Furthermore, the amount of $4,788 was calculated by reducing the total amount of the allowances received during the year by $104 (52 x $2) instead of by $94 (47 x $2) which would have left a balance of $4,798. Thus we can see how the dispute arose: a lack of care on the part of the taxpayer's agent and a healthy scepticism of extraordinary coincidences on the part of the assessor.

5. At the hearing the taxpayer gave evidence and I accept him as a witness of truth. The only issue in dispute before the Board is the location of the taxpayer's usual place of abode during the year ended 30 June 1982. This is a question of fact to be determined in the light of all the circumstances. If, as the taxpayer submitted, his usual place of abode was his parents' home in Sydney, the Commissioner conceded that a deduction of $4,788 was allowable under sec. 51A, and further (in response to a question which I asked at the hearing), that if the point was open to the taxpayer by virtue of his objection, the amount conceded to be allowable was $4,798. However, the Commissioner claimed that the taxpayer's usual place of abode during the relevant year of income was his friends' residence in Avoca.

6. I shall deal with the objection point first. In his notice of objection (which was drafted by his agent) the taxpayer said, inter alia, ``Living-away-from-home allowance should be allowed as a deduction''. On one view the taxpayer seems to be claiming a deduction for an amount which represents the total amount of the allowances received during the year, i.e. $4,892. However, I think the better view is that this is not the case. Of course, a taxpayer may claim in his objection a different amount from that claimed in his return, or even a deduction for an item which is not mentioned in his return at all. But in this case one has to put the objection and the return together in order to see what is covered by the objection, and when this is done, it is clearly seen that the taxpayer is claiming a deduction of $4,788 under sec. 51A.

7. In support of his submission that the taxpayer's usual place of abode during the relevant year of income was his friends' residence in Avoca, the Commissioner's representative referred to a number of factors: the age and marital status of the taxpayer, the length of time away from Sydney, the fact that the taxpayer did not return to Sydney every weekend, the taxpayer's proposed residence at Avoca and the installation by the taxpayer of the electrical wiring therein, and the fact that the residence in Sydney was not owned by the taxpayer. However, the factors which I have set out in para. 1 and 2 above clearly establish to my mind that the taxpayer's usual place of abode during the relevant period was his home in Sydney. Accordingly, the taxpayer is entitled to the deduction of $4,788 claimed.

8. As the proper construction of sec. 51A is not in issue before the Board, I refrain from commenting thereon.

9. For the above reasons I would reverse the Commissioner's decision upon the objection and amend the assessment so as to reduce the taxable income of the taxpayer by $4,788.