Case T48

Judges: HP Stevens Ch

TJ McCarthy M
PM Roach M

Court:
No. 1 Board of Review

Judgment date: 20 June 1986.

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T.J. McCarthy (Member)

My colleague Mr Roach has stated the basic facts in these references and I turn to the issues involved. I summarise my notes of the positive and negative features, so far as the taxpayer is concerned, as follows:

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Positive Features

• (i) Taxpayer had a field position involving the maintenance and storage of certain records in connection with his job. He was also required to compile reports and attend to correspondence. No provision was made for office accommodation and it was expected that he would carry out these activities in a part of his private dwelling to which business correspondence would be addressed. He was required to make provision to receive and initiate business telephone calls from this address.
• (ii) Taxpayer was expected to interview applicants for positions as service station proprietors and he was expected to monitor credit risks of current and proposed distributors.
• (iii) The room used as the office (i.e. the particular area used from time to time) was used exclusively and extensively for income-producing purposes.
• (iv) The nature of the work carried out at home was not merely contemplative, such as reading journals, etc.
• (v) The taxpayer's office was the sole base of his income-producing operations.
• (vi) On the evidence no provision was made by the employer for office accommodation; the local depot was unavailable; and there was no suggestion that the employer might or would have been prepared to modify its premises so that such could be used for the purpose and it should be inferred that the employer would not do so. Thus the home was not used as a matter of domestic convenience.
• (vii) There is a strong argument for the view that the expenditure on rent, interest, insurance and rates can be seen to have a dual character in the circumstances, and that some part was not of a domestic character. Unlike F.C. of T. v. Faichney 72 ATC 4245 the room (i.e. the particular area used from time to time) was the sole base of the taxpayer's income-producing operations and was used extensively for this purpose.

Negative Features

• (i) The High Court decisions in the home office cases of
  Handley v. F.C. of T. (1980-1981) 148 C.L.R. 182 and
  F.C. of T. v. Forsyth (1980-1981) 148 C.L.R. 203 have effectively grouped together work that is (a) merely contemplative (cf.
  Commr of I.R. (N.Z.) v. Castle (1971) 2 A.T.R. 481 ) and (b) productive work that is performed at home as a matter of domestic convenience, as distinct from part of the premises being in a real sense business premises.
• (ii) Taxpayer did not really need to use his home to interview applicants on those relatively few occasions when he did so; he could have interviewed applicants in their homes as he did on some occasions; he could have also used his lounge room for this purpose.
• (iii) Arguably the area used was not really a business office, more a storage area for records and a place where telephone calls were received and made. On the other hand the taxpayer needed to attend to correspondence, etc., and to have access to his records.
• (iv) The room was completely integrated with the rest of the residence and there was no external sign to indicate that it was a business office rather than a residence.
• (v) The taxpayer was an employee and the premises were not used as a place of business in relation to any business carried on by the taxpayer.
• (vi) It was expected, but not required, that the taxpayer would work at home.
• (vii) The taxpayer had the kind of job which could be conveniently done from home, similar to a university lecturer at various institutions (part time at each, no office provided) who spends most of the day at home preparing his lectures, who keeps his library at home and who is accessible by phone.
• (viii) There was arguably a deficiency in the evidence in this case in relation to the attitude of employer as to whether provision might have been made for office accommodation - we were simply told that ``no provision is made''.

2. The question is one of fact and degree and the answer turns upon whether there are sufficient factors to override the prima facie domestic character of the dwelling. I think this case has some special features, but the matter is difficult, given the well-known authorities in

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this area. Perhaps one day the High Court will reconsider those authorities. In my view Faichney's case is distinguishable (see above) and so also are previous decisions of this Board (e.g. school inspector who could have worked at a school, and part-time lecturer who could have worked at a library). My colleagues are agreed as to the result. In the special circumstances I am not disposed to disagree.