Case T7

Members:
HP Stevens Ch
TJ McCarthy M
PM Roach M

Tribunal:
No. 1 Board of Review

Decision date: 17 March 1986.

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H.P. Stevens (Chairman)

The questions for decision in this reference relate to claims for deductions made by the taxpayer, a part-time musician, in her return of income for the year ended 30 June 1982.

2. In her return it was disclosed that the taxpayer was in casual employment during the period July to December 1981 and had also received other income from three ``establishments'' (A, B and C) totalling $9,258. In a schedule deductions totalling $7,882 were claimed and this total was made up as follows:

                                                         ``$         $

      Sheet Music                                                  240

      Arrangements                                                 500

      Records                                                      356

      Cassette, Tapes                                              214



      Stage Clothes

      Glomesh Tops                                       300

      Dress materials for stage outfit                   426

      Made to wear clothes                               286

      Dressmaker                                         133

      Shoes                                              178
        

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ATC 152

                                                         $         $

      Hosiery Gold 
&
 Silver                               70

      Stage Jewellery                                     98     1,491

                                                         ---



      Hair Dressing

      Shampoo and Conditioners                           131

      Hair Dos 5x24                                      120       251

                                                         ---



      Make-Up

      Eye shadow, and lipstick (10 colours)               86

      Creams and Moisturisers                            194

      Rouge and Colours, Mascara                          58

      Make-Up Remover                                     37       375

                                                         ---

      Stationery for Musical Arrangements corresp.                 190

      Postages on letters and portraits                             35

      Portraits 
&
 Developing                                        49

      Telephone Calls (373) 1/2                                    186

      Trains and Buses                                             165

      Travelling Corolla 15,488 kil. @ 20c                       3,098

      Musicians' Union                                              66

      W.V. King 
&
 Associates                                        25

      Singing Lessons Voice Production                             510

      Microphone and Stand                               250

        20%                                               50        50

                                                         ---

      Entertaining Band (6) twice                                   45

              ... Singers (4) once                                  36   $7,882

                                                                 -----   ------''
        

It was noted that in addition to the three named ``establishments'' there were ``other casual engagements'' at D whilst the travelling claimed comprised the following mileage:

                                     $         $

      A twice per week             5,000

      B 6 nights 6 weeks           1,080

      C 5 nights p/w 22 weeks      4,200

      D                              528

      Conservatorium 3 days

        per week                   4,680     15,488

                                   -----     ------
      

3. Upon assessment a number of items were allowed whilst of others only 50% was allowed and for the remaining items nothing was allowed. The items at issue are as set out in the objection which was as follows:

``We hereby object to assessment 259080/032 which issued on 9th March 1983 on the grounds that it is excessive and erroneous for the reasons that the following have been wrongly disallowed as private expenditure half allowed.

                                     $          $

      1. Records                     178

      2. Cassettes and Tapes         107

      3. Stage Clothes               745

      4. Hair Dos                     60

      5. Make-Up                     187      1,277

                                     ---

         Fully disallowed

      6. Shampoo and Conditioner     131

      7. Train and Bus Fares         165

      8. Motor Vehicle Expenses    3,098      3,394

                                   -----      -----

                                              4,671

                                              -----
          

Dealing with the disallowance you are advised the taxpayer plays and acts mainly with a group at Clubs, Restaurants etc. as well as other casual solo engagements while at one time she was demonstrating the Yamaha Organ wherever requested which necessitated playing in homes or centres for demonstrations, this requires the use of her car to carry record player, recorder, Yamaha Organ, Microphone, music etc. too heavy to be carried by public transport. The records and cassettes were used in production of

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ATC 153

background music and as accompanyst [sic] music. Detailed statement of mileage incurred are in a schedule attached to the accounts.''

The items totalling $1,277 were each half allowed and those totalling $3,394 each totally disallowed.

4. Following the receipt of the objection further details were requested in relation to the motor vehicle expenses claim and the taxpayer's handwritten answers (tendered after the taxpayer was recalled) to the various questions forwarded to her agent indicated, inter alia:

• (a) 1972 Corolla acquired October 1981 $2,500
• (b)(i) business use - Auburn to A 92m x 2 x 52 weeks = 4,784 miles
  • (ii) private use - no records kept.
• (c) Fuel $1,040, oil $120, tyres $290, registration $234.95, driver's licence $15, insurance $437.86, repairs $240, parking station costs $416
• (d) Total costs $5,293.81 (including $2,500) deduction asked $3,098.

The agent's reply to the request (also tendered at the recall) repeated (a), (b)(i) and (c), and added for (b)(ii) private use 1,530 miles and depreciation $512. Total expenses were then $3,426 and the reply concluded with:

                                             ``3,426

      Est Private             1530

                              ----

                              6314             831

      Business                               2,595

                                             -----

                                             3,426

      On Rates per Mile bus                  3,098    Claimed

                                             -----''
      

The reply did not attempt to reconcile the mileage 4,784 with that claimed in the return - nor to explain the $2,595 business calculation with the return claim of $3,098.

5. Subsequently the objection was disallowed and the request for reference to the Board followed.

6. It should be said at the outset that the evidence adduced was not as complete as it might have been. As a result it is not possible to be precise as to dates and the like. Documentation was said to have been initially supplied to her tax agent but his files had been ``cleared'' and it is now apparently not available - nor a schedule of what was made available and then ``cleared''. Again the witness was imprecise as to dates of graduation from university and of engagements whilst her evidence (except for two items) was in terms so far as amounts were concerned of what was fair and reasonable. I should also state that, although I found the witness generally frank and open and not trying to put on a facade of preciseness when faced with the lack of details available, I did find her answers in relation to the details in (b)(i) para. 11 (didn't have return available) unconvincing as she in (d) para. 11 exactly stated the amount claimed in the return.

7. Born in 1957 the taxpayer attended Sydney University (obtaining a Bachelor of Music) and then went on to teachers' college for a Diploma of Education. The exact dates were uncertain but it would seem she finished teacher's college at the end of either 1980 or 1981. She then enrolled at the Conservatorium as a full-time student to study for an Associate Diploma in Jazz Studies (a two year course) - she had had a leaning to the 30s to 50s era in solo piano and jazz studies would be of assistance (also as ``arranging'' was part of it). It would seem this course occupied 1981 and 1982 - in any event during the whole of the year ended 30 June 1982 she was a full-time student at the Conservatorium. In this regard the details furnished with the return were somewhat misleading in so far as the Conservatorium was concerned whilst the claim singing lessons voice production $510 which the Commissioner allowed and which was not dealt with in evidence appears to have related to the full-time studies.

8. At some unknown date the taxpayer heard from a fellow student that D needed teachers and she went to see them. As a result she obtained employment teaching a small group of a Tuesday and Friday afternoon. When this employment began she could not say but it ended in December 1981. The statement in the objection that she needed for this D employment to carry Yamaha organs in her car is incorrect for she readily conceded that she didn't need to carry any equipment for D. Unless she was to go from D direct to A (Friday see later) the taxpayer used public transport.

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ATC 154

9. Also at some imprecise time the taxpayer was engaged to play solo piano at C (Monday to Friday nights) - although uncertain at first it was acknowledged later C must have been before the A engagement which was also Friday (still later it was suggested she could go from C to A but as the hours at each were never given I have difficulty in accepting this and prefer the earlier evidence). At C the taxpayer needed an amplifier (can just lift it), a microphone and stand, music and stage clothing. She did not own a car until query October 1981 (insurance proposal dated 2 October 1981 but as from 8 September 1981) and when in address it was pointed out motor vehicle expenses were claimed (4,200 km) the taxpayer was recalled. She indicated that before owning a car she borrowed her parents' car paying for petrol usage. This initially seemed feasible because on the evidence previously given she was living at home with her parents until early 1982. However in recall it became apparent she moved back in with her boyfriend sometime in 1981 and how she borrowed her parents' car (they living 4 km away) whenever needed was not explained. During the year she apparently worked at C for 22 weeks.

10. Turning now to A a company which contracted to provide bands to clubs was providing one to A. The piano player in this band was sacked and through the boyfriend (a member of that band) the taxpayer obtained the position of piano player some time in October 1981. As well as piano playing she also sang and did some arranging for the whole band. A was approximately 60 km return from the residence of herself and the boyfriend and the band was engaged Friday (some exceptions) and Saturday evenings. There were no storage facilities for instruments at the club and it was necessary to take the same range of items as for C. The basis of her payments was imprecise - $170 per weekend before tax or $144 after tax but tax not taken out in that year whilst the number of nights worked was also imprecise. The $5,760 shown as earned from this source at $170 per weekend represents 34 weeks and it was only when it was pointed out 34 † 22 for C exceeded the number of weeks in the year that the concept of going from C to A (para. 9) was raised. In October 1981 the Corolla was acquired making the use of her parents' car unnecessary. Despite both being in the band and living together it was said the taxpayer rarely travelled with the boyfriend to A since both lots of instruments and equipment would not fit into one car.

11. Whilst working at A the taxpayer was approached by an agent - not on an agent's books nor seeking work as studies were most important - to play solo piano six nights per week at B. She got time off from A and worked there for six weeks (earning $1,400) after which she resumed at A. Although this was the initial evidence in recall the taxpayer said (in attempting to establish the mileage use re A) that B was Monday to Friday and Sunday so that she only got off Friday at A for six weeks. As the taxpayer has no engagement books for the period the precise engagement times for A, B and C could not be checked. At B the taxpayer did not need an amplifier or microphone nor the same range of stage clothes but she needed to carry in her car music, microphone stand and clothing. B was about 23 km from her residence.

12. Turning now to the individual items concerned it is convenient to deal with them in the same order as set out in the objection (para. 3). The first is records, cassettes and tapes and was said to relate to A. At A the emphasis is upon Top 40 material - not the taxpayer's cup of tea - and she regularly buys singles, records them on cassettes (one over and over again) and plays these tapes so as to memorize the material and to produce arrangements for herself and the other members of the band. She said she would average two singles per week ($3 each) and go through 30/40 tapes ($2.50 to $3.00 each) - when finished with the singles etc. are not kept in a library but given away. She also purchases jazz and classical records but has not claimed any of these. No documentary material establishing purchases was produced and during cross-examination the taxpayer conceded that, as the total claims were $356 and $214 respectively, she could have overlooked the fact she did not start at A until October 1981. Having regard to this concession and the absence of any supporting material I am unable to find that it has been established that any further entitlement exists in relation to these items.

13. The item stage clothes $745 is one-half of the total $1,491 set out in para. 2, and only the item Glomesh tops $300 was documented before the Board. The dress materials were made up into glittery evening gowns which

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ATC 155

could be worn to formal occasions (first nights etc.) if the taxpayer was so inclined (but is not) whilst the shoes could be similarly worn but are not. All items (except no doubt the hosiery) are still owned and held and some are still used on the stage. The evidence indicates the claims are not in respect of replacement items for an existing stage wardrobe nor (except hosiery) have such a short effective life that it can be disregarded. In the circumstances I cannot agree that the one-half allowance should be increased to a total allowance. In fact I would think that the one-half allowance is excessive.

14. In so far as the hair dos and make-up are concerned I am also unable to find that a greater amount should be allowed. Whilst not disputing that the taxpayer would prefer not to wear make-up and have the hair dos I cannot see her position as any different to others, who by virtue of the nature of their employment have to be better dressed and groomed, than if they were not so employed (see Case R54,
84 ATC 408 ). The hair dos were not of the special kind as in Case P90,
82 ATC 431 where particular hairstyling for a specific role was allowed.

15. The item shampoo and conditioner represents the total of the amount claimed and, apart from the quantum aspect, I would regard it as being of a private nature. Hair needs to be washed regularly (frequency can be debated) and I am unable to differentiate between e.g. a coal miner who needs to wash every day and a member of a band. Both need to take steps to protect their natural attributes.

16. The items train and bus fares represents nothing more than trips to the Conservatorium for her full-time studies and to D for her employment there (i.e. when car not used) and is clearly not incurred in gaining or producing her assessable income. It was claimed the taxpayer should be regarded as carrying on a business but I am unable to accept such a claim. The taxpayer was a full-time student who no doubt hoped to later carry on business but was not so doing in the period involved. There is no evidence that in working at A, B and C the taxpayer was other than an employee and the definition of ``business'' excludes ``occupation as an employee''.

17. Turning now to the final item motor vehicle expenses I have found this to be the most difficult issue. Not so much in relation to principle but in respect of quantum. I accept, as did the Commissioner's representative, that in view of
F.C. of T. v. Vogt 75 ATC 4073 the taxpayer is entitled to a deduction in respect of those occasions on which it was necessary to carry the amplifier etc. to her places of performance, but the difficulty is to identify those occasions, to ascertain the total mileage involved and then to place a $ figure on the amount to be allowed. It was for this reason that it was suggested the taxpayer should be present when addresses resumed and why, when she wasn't, that I allowed her case to be reopened on another day in respect of this aspect. It is fair to say that the reopening did not produce the certainty that had previously been lacking.

18. Although I concede it is a matter of degree I am not satisfied that the material to be carried to B justifies a conclusion that the principle in Vogt applies thereto. In relation to C I am unable to conclude other than that employment there was prior to the purchase of the Corolla by the taxpayer. This means the only ``allowable'' use of the Corolla relates to A. Whilst any use of the parents' car in relation to C would qualify under Vogt and therefore, give rise to some allowable deduction in relation thereto the evidence does not allow me to quantify it in any way and I must accordingly find that no claim has been established. I turn now to the use of the car re A.

19. Accepting the taxpayer was employed at A for 34 weeks (para. 10) during the year and accepting some six weeks off to work Fridays at B (para. 11) it is still difficult to get a precise figure for the number of times the Corolla was used in relation to A. Mention was made of some casual Sunday engagements there as well as some possible Friday night cancellations whilst there is also the aspect of possible use of the boyfriend's car. Doing the best I can I am prepared to find that the items mentioned in the last sentence cancel one another out and that we are left with 62 trips to A using the Corolla. At 60 km per round trip (accepting going from D on occasions does not affect the mileage) this gives an allowable figure of 3,720 km. However what does this finding mean in terms of dollars? Normally one would take ``allowable'' mileage over total mileage of total expenses and one therefore proceeds to consider these.

20. Dealing firstly with the question of total mileage the return (para. 2) refers to a mileage

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ATC 156

of 15,488 (private not mentioned) but this obviously includes the use of the parents' car whilst para. 4 gives a total figure of only 6,314 (home to A 4,784 plus private 1,530) which just as obviously excludes travel to the Conservatorium, to B and to D. For B for six nights per week for six weeks at 46 km return the mileage would be 1,656 km and for D which ended in December 1981 only a small amount would be involved (say 200). This leaves the Conservatorium which was 20 km from home. Paragraph 3 gave a figure of 4,680 for the whole year which, at the stated three days per week at 40 km per time, covers a period of 39 weeks i.e. a full academic year, not just the period of the car's ownership in relation to academic terms. It would not be unreasonable to accept the car was used for 24 weeks during the year concerned yielding on the stated basis a mileage of 2,880 km. Putting these figures together i.e. private 1,530, to A 3,720, to B 1,656, to D 200 and to Conservatorium 2,400 we get a figure for total mileage of 9,986 km (say 10,000) of which only 3,720 is ``allowable''.

21. Turning now to the total expenses in relation to the Corolla (excluding parking costs) those comprise depreciation $512, petrol $1,040, oil $120, tyres $290, registration and licence $250, insurance $438, repairs $240 - a total of $2,890. In so far as depreciation is concerned no explanation of the calculation thereof was given - $2,500 at DV rate 22 ½ % would be $562 and taking into account acquisition in October only $421. The next item petrol is obviously an estimated figure. Since the figure initially came from the taxpayer to the agent one could be pardoned for thinking it represented an estimated $20 per week regardless of the car being owned for a shorter period even though the agent incorporated it in his reply as being the petrol cost for 6,314 km. I am unable to accept that it cost approximately 16 cents per km (or 10 cents per km on a 10,000 km mileage) just for petrol. Although it is not evidence before the Board Choice magazine in May 1980 gave the running costs of a Toyota Corolla i.e. petrol, oil, servicing, routine replacement of parts etc. on the basis of 16,000 km as 5.30 cents per km (or $888 in total cost) and this supports my inability to accept the above rates per km for petrol only. In the circumstances the petrol (and oil) figures are in my opinion very much overstated. No details were given in relation to the state of the car when purchased, nor as to the dates when the tyres were replaced and the other repairs made whilst no documentary material re actual payments was available. However I am prepared (albeit with some hesitation) to accept the tyre and repair figures.

22. I have in the past said that it is not the function of a Board to ``guess'' a figure when acceptable evidence is not placed before the Board and I adhere to this view. However in this case evidence has been given from which some figures e.g. insurance, can be positively established although, in respect of other figures, it is clear they have been overstated. Doing the best I can (without resorting to pure guesswork) I am prepared to accept a total expenses figure of $2,000 (petrol and oil at $376). This gives for 10,000 km a mileage rate of 20 cents per km and for 3,720 km a figure of $744 (same as if $2,000 apportioned between ``allowable'' and ``non allowable'' mileage).

23. For the above reasons I would reduce the taxpayer's assessment for the year ended 30 June 1982 by an amount of $744.