Case Q17

Judges:
KP Brady Ch
JE Stewart M

Court:
No. 2 Board of Review

Judgment date: 18 March 1983.

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K.P. Brady (Chairman) and J.E. Stewart (Member)

In these references, the taxpayers, who are husband and wife, are primary producers partners in a business of running sheep and growing cereal crops on a property of approximately 292 hectares (or 720 acres). In the year of income ended 30th June, 1980 there was claimed in the return of the partnership, as a deduction under sec. 51(1) of the Assessment Act, the cost of a hearing aid amounting to $465. The Commissioner disallowed that claim on the basis that the expense was of a private nature (together with a further expense which he subsequently allowed), and adjusted the partners' assessable incomes accordingly.

2. At the hearing the husband, whom we shall call A, conducted his own appearance and represented his wife. By consent, both references were heard together. The Commissioner was represented by one of his officers.

3. In presenting his arguments, A referred us to correspondence which he had entered into with the Taxation Office in an endeavour to have the Office re-examine the claim. He had brought to the notice of the Commissioner that the hearing aid in question was a Phillips ear level aid purchased from O.P.S.M. Ltd. He contended that it was ``an essential tool to enable us to carry on our business'', in that it was purchased ``to enable our business associates to communicate with us in the day-to-day running of our business''. He further contended that the hearing aid was akin to a business radio for ``both are capable of receiving a signal, amplifying it and reproducing the original sound, but operating on different frequencies''. He then sought acceptance of the proposition that if the radio were deductible, why was not the hearing aid?

4. It came out in the evidence that the hearing aid was purchased for A's own use. He informed us that his hearing was so bad that the shearers refused to work unless he wore the hearing aid so that they could communicate with him. He also had a need to communicate with stock agents. He reported that their first question on arriving at his property was, ``have you got your hearing aid''? From our own observations we would agree that communications would

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ATC 63

have been extremely difficult, if not impossible, had he not been using the hearing aid. We therefore see the hearing aid as a means of ameliorating his disability in the earning of his assessable income.

5. Despite that connection between the outlay of the partnership and A's income, we see the primary cause of the expenditure as being the correction of a disadvantage personal to A. It is in that vital aspect that the hearing aid differs from those items alleged by A to be similar, such as radios, inter-com systems, two-way radios, headphones and telephones. These latter items, being items of capital, may or may not be deductible by way of depreciation allowances depending upon the use to which they may be put. We see the outlay on the hearing aid as not being ``necessarily incurred in carrying on a business for the purpose of gaining or producing [assessable] income'', but as one incurred to help overcome an unfortunate disability suffered by A. We therefore regard the outlay as being of a private nature, and as such specifically excluded from deduction under the terms of sec. 51(1). See
Lodge v. F.C. of T. 72 ATC 4174, also Case P31 (Gilbert v. F.C. of T.),
82 ATC 141.

6. For the reasons outlined above, we uphold the Commissioner's decisions on both taxpayers' objections and confirm the amended assessments.

Claims disallowed