Case N37

Judges:
KP Brady Ch
LC Voumard M
JE Stewart M

Court:
No. 2 Board of Review

Judgment date: 4 June 1981.

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K.P. Brady (Chairman); L.C. Voumard and J.E. Stewart (Members)

The question for decision in this reference is whether the taxpayer, a secondary school teacher, is entitled to deduct certain expenses of an overseas trip to the United Kingdom and the Continent. He had been an art and craft teacher in the service of his State's Education Department for some 20 years, and when be became entitled to long service leave in 1977 he and his wife decided that, with their two young children (aged four years and 20 months respectively), they would visit the U.K. and Europe to enable the taxpayer to see original art works that in general he had previously known only through slides and photographs. The family were overseas from 8 May 1977, to 18 October 1977; consequently the trip straddled two income years. In his return of income for the year ended 30 June 1977, the taxpayer claimed, and was allowed, a proportionate part of his expenses as a deduction under sec. 51(1) of the Income Tax Assessment Act 1936. The balance of overseas travel expenses was claimed in the return of income for the 1978 income year, but that claim was disallowed. The same fate befell certain other items, but on objection they were allowed and are not relevant to this reference. The objection concerning the overseas travel expenses claimed in the 1978 return was however disallowed by the Commissioner, and that disallowance is now the subject of this reference.

2. Very little relevant evidence was adduced by the taxpayer's representative. The Commissioner's representative indicated at the outset that the Commissioner would challenge, or at any rate would not concede, the expenses of travelling by campervan in the countries visited. The amounts of these expenses were apparently partly the result of estimates (including an estimate made, on a basis not known to the taxpayer, by the taxpayer's former tax adviser as to the cost per mile) and partly the result of an apportionment which allocated one-half of the cost to the taxpayer's wife and children. This again was a figure inserted in the return by the former adviser. The result was that the basis on which certain costs were calculated and apportionments made did not appear, and we are left in considerable doubt about the position; certainly the taxpayer's case did not satisfactorily establish the quantum of these travelling expenses. To this extent the claim would fail in limine, but we shall deal with the principle.

3. What did emerge was this:

(a) For some eight years covering the period before and after the trip the taxpayer's classification within the teaching service was that of a senior teacher. He was still so classified at the time of the hearing. The inference is that he did not achieve an increase in salary, nor any promotion, that could be regarded as a consequence of the trip. Certainly no evidence was led to suggest that he did.

(b) The taxpayer did not make the trip with the encouragement of his employer. Indeed, he could not recall whether the Education Department knew of his plans to undertake it beforehand.

(c) There was nothing in the terms upon which the taxpayer was employed to suggest that he was bound or expected by his employer to make such a trip.

(d) The taxpayer believed that he became a better teacher through being able to see the actual art works housed in the British and Continental galleries that he visited. We accept this without reservation, but this is not the test of deductibility.

4. Ignoring the unresolved problems of quantum, the taxpayer's claim could succeed if, and only if, he could bring it within sec.

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ATC 193

51(1), by demonstrating that the outgoing was incurred in or in the course of gaining or producing his salary income as a teacher, and that it was not an outgoing of a private or domestic nature. But the only attempt that was made on his behalf to do this consisted of a submission that ``there was a direct relevance between the trip and (the taxpayer's) teaching''. No doubt there was, but that is not enough to satisfy sec. 51(1). There must be a real connection between the outgoing and the taxpayer's income - for instance, it must be shown that the former had a direct effect upon the latter, or that the taxpayer undertook the trip because the terms upon which he was employed obliged him to. In two recent decisions this Board has endeavoured to explain what is required, and we think that rather than repeat what we have said previously it is enough to refer to the discussion in Case N4 and Case N29
81 ATC 32 and 159 respectively.

5. One other point needs to be mentioned. For the taxpayer, considerable emphasis was placed on the fact that a like claim was allowed in the taxpayer's notice of assessment that issued in respect of the year ended 30 June 1977; why then, it was asked, was the 1978 claim treated differently by the Commissioner, notwithstanding that it arose in identical circumstances? As was explained at the hearing, the Commissioner is not bound, because he has viewed a matter in a particular way in one year, to take the same view of it in a subsequent year. That is, no conduct of the Commissioner can operate as an estoppel against the operation of the Act (see
F.C. of T. v. Wade (1951) 84 C.L.R. 105 at p. 117). Likewise, the function of a Board of Review is to give a decision on the particular reference before it, and such decision is to be given in accordance with what, in the view of the Board, is the correct operation of the Income Tax Assessment Act. As to why the Commissioner's two decisions on the taxpayer's travelling expenses claims were different, we consider on the information before us that the 1977 one was in error, and that the 1978 one was correct. However, as the 1977 assessment is not before us, we do not wish nor are we empowered to disturb it.

6. For the reasons we have given, we would uphold the Commissioner's decision on the objection and confirm the amended assessment for the year ended 30 June 1978.

Claim disallowed