Case R49
Judges:MB Hogan Ch
P Gerber M
GW Beck M
Court:
No. 3 Board of Review
M.B. Hogan (Chairman), Dr. P. Gerber and Dr. G.W. Beck (Members)
This taxpayer was throughout the 1981 tax year a lecturer in Social Work at a university. Students in the discipline were required to participate in practical work at social work agencies for certain specified periods and this field work had to be planned and administered. This taxpayer was the field work co-ordinator for the department and she claimed motor vehicle expenses which she said were incurred in the course of carrying out her university duties. According to her return, the university reimbursed $300 of the expenses (actually the reimbursement was shown as an allowance in the return) and the Commissioner allowed the motor vehicle expenses to that extent. The balance of the claim, $395, is the subject of this reference.
2. The taxpayer had some of the duties that one expects of all academics, as well as duties arising out of the students' field work requirements. She described her total activities quite clearly as follows:
``I have major responsibility as field work co-ordinator for placing our students in their field work placements. The students do three field work placements in the last two years of their course. In the third year of the course, the third year students do one 60 day placement. In the fourth year of the course, the students do two placements, one of 40 days and one of 60 days. Now, on average, there are about 90 students in each of those years, so overall I have to find round about 300 placements. There are often some extraneous students who are needing requirements to be members of the AASW - people who have done courses overseas, etc., so there are the odd few in relation to those, and some who come from other States to do field placements. That involves contacting welfare agencies, contacting them, visiting them, particularly if they have not had students previously and visiting potential teachers and once the student is placed, it involves co-ordinating visits to the student. I myself do approximately a third or
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a little bit more of those visits. In 1981 there were two other staff working primarily on the field work programme, and myself, and we shared the visits and some other staff did one or two visits per placement. I also have responsibility for organising seminars on supervision which I conduct both in the university and in another location, because a lot of our students are actually placed in that location. I suppose that would be the range of things related to my field work activities. I also have responsibility in teaching some of the undergraduate courses in the Department, mainly those in relation to social work practice and in relation to social work in a multi-cultural context and I also have research that I am currently doing and was doing at that stage.''
Because the taxpayer's objection sets out her travel as a field work co-ordinator as the sole ground upon which she disputed the disallowance of the motor vehicle expenses, her representative indicated that he would not pursue an argument that such expenses also resulted from research and other work-related activities.
3. The current head of the taxpayer's academic department gave evidence and indicated that although he was not Head of Department in the relevant year, he was then a member of the department and quite familiar with the field work undertaken by students and the taxpayer's obligations in relation thereto. In summary his evidence was:
- - every person charged with co-ordinating student field work would have to travel away from the university;
- - time constraints and distances and locations involved made it essential to travel by car;
- - on average, the taxpayer would have been away from the university one day a week attending to her duties connected with field work;
- - he had never directed a staff member to use his or her car, but an academic would not be charged with field work co-ordination unless he or she had a vehicle that could be used;
- - reimbursement of costs at the university standard rate per kilometre was made to staff members using their cars in this way;
- - reimbursement was triggered by a claim form submitted by the staff member and setting out details of every trip and showing distances, but no steps were taken to check more than the arithmetic correctness of claim forms;
- - the university had recently approved the purchase of a motor vehicle for use by his Department for field work co-ordination, supervision and so on.
4. In the light of the evidence of the taxpayer and her Head of Department, it has to be accepted that the travel is part and parcel of her assigned work, and the associated expenditure is deductible from the taxpayer's assessable income (
Amalgamated Zinc (De Bavay's) Ltd. v. F.C. of T. (1935) 3 A.T.D. 288; (1935) 54 C.L.R. 295 and
Ronpibon Tin N.L. & Tongkah Compound N.L. v. F.C. of T. (1949) 8 A.T.D. 431; (1949) 78 C.L.R. 47). Having drawn that conclusion it is necessary to determine the quantum of the ``associated expenditure'' and on the evidence that is not an easy task. The return included a statement as follows:
-
$ Registration 217 Insurance 124 Interest/leasing - Driving licence 10 Road service membership 17 Petrol and oil (avge. $12 x 52 weeks) 624 Repairs 290 Tyres, batteries, etc. 200 Washing and polishing 10 ------ Sub total $1,492 Less private use 70% 1,044 ------ Sub total 448 Parking fees and tolls 10 Depreciation - see below 237 ------ Total 695 Less allowance 300 ------ $395 ------
MOTOR VEHICLE EXPENSES
The depreciation figure was calculated:
$
Depreciated value (opening) 3,500
-----
Depreciation 22 1/2% 787
Private use 550
-----
Claimed $237
-----
ATC 389
At the hearing it emerged that this claim was incorrect in at least two respects. The registration paid in that year was $189.50 and as the taxpayer had annual holidays of four weeks the car was used for work purposes for only 48 weeks and not 52 as claimed. She said that visits continued during university vacations. The taxpayer also said that the expenses shown had been arrived at by reference to cheque butts of the joint bank account she operated with her husband, by reference to her own Bankcard entries and to some extent by estimates. For example, the $12 per week petrol expenditure was an estimate made ``when I went to the tax agent''. There is some reason to have reservations about the amounts, but having adjusted for the incorrect registration and the number of weeks in the petrol costs, we accept the other amounts except for the driving licence fee $10 and depreciation $237. The licence fee is the cost of the entitlement to drive on public roads and is not an expense of running the vehicle; it is, therefore, of a private nature and is excluded from deduction by the qualification in sec. 51(1). The depreciation is overclaimed. The motor vehicle was purchased new on 8 August 1978 for $4,850. If this cost is depreciated at normal tax rates of 22½% p.a., the opening depreciated value in the 1981 tax year would be $3,004. The opening depreciated value as per the return was $3,500 and presumably this was an estimate of the market price at that time, the vehicle not previously having been depreciated for tax purposes. In view of the definition of ``depreciated value'' in sec. 62, the depreciation calculation must be based on an opening depreciated value of $3,004 (vide
F.C. of T. v. Anderson (1956) 11 A.T.D. 115). The car was purchased in the name of the taxpayer's husband and was insured in his name. To claim depreciation under sec. 54(1), depreciable items must be owned and used by the taxpayer.
5. The fact that the car is registered and insured in the husband's name is neutral in determining the nature of the taxpayer's interest in the vehicle. We were informed that the vehicle was paid for out of the joint account, into which both husband and wife paid their earnings. They clearly treated the car as their joint property. We consider it critical in this case to determine whether the parties have created a joint tenancy or a tenancy in common. If the latter, the claim for depreciation must fail, since on our reading of sec. 54, there is no apportionment available as between tenants in common - the property must be owned and used by the taxpayer; i.e. must be wholly owned in the sense that something more is required than owning a mere share of the property in question. Concurrent ownership of chattels may be either joint or in common - not unlike concurrent interests in real property. Although this was criticised by Windeyer J. in
Dennis v. Dennis (1971) 124 C.L.R. 317 at p. 325, who noted that a ``tenancy in common is not, except by analogy, a technically correct expression for the co-ownership of a chattel'', his Honour added, however, that his criticism was perhaps pedantic, ``for did not Blackstone say that `things personal may belong to their owners, not only in severalty, but also in joint tenancy, and in common, as well as real estates'?''.
A joint ownership (or joint tenancy) is distinguished by the ``four unities'':
- (i) unity of possession, which decrees that every co-owner is entitled, concurrently with the other co-owner(s) to complete possession of the whole;
- (ii) unity of interest, which decrees that the interest of each joint owner must be the same in nature, extent and duration;
- (iii) unity of title, which decrees that all joint owners must derive their interest from the same title; and
- (iv) unity of time, which decrees that the interest of each joint owner must have vested at the same time and by virtue of the same common event: vide 2 Blackstone's Commentaries 399.
In one sense, a joint owner holds the whole, whilst in another he holds nothing (totum tenet et nihil tenet: Co. Litt. 186a). The right of survivorship attaches to joint ownership of personal property, a right which does not enure for the benefit of owners in common who have unity of possession, but a distinct and several title to their shares with no right of survivorship. Although the question was not put, we feel confident that the taxpayer would have given the same reply as did the taxpayer in
Spence v. F.C. of T. (1967) 15 A.T.D. 80; (1967) 121 C.L.R. 273 who, when asked why certain property was held in joint tenancy replied: ``it was something that was just part of our way of life; we owned everything together; we were married and that was it''. In the circumstances here, we derive little assistance from examining the diverse rules applied by law and equity to joint
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ownership. The evidence satisfies us that it was the intention of the parties that the family car be jointly owned, with the result that the wife/taxpayer is entitled to claim depreciation to the extent the vehicle was used by her for the purpose of producing assessable income. On the facts of this case, the result is that the taxpayer is entitled to a deduction under sec. 54 for depreciation calculated on the full depreciated value and reduced by an appropriate percentage for non-income earning use in accordance with sec. 61. The correct depreciation before taking into consideration the proportion of private use is, therefore, $676 and not $787.6. Putting these amended figures into the statement of claimed expenses produces the following:
$
Registration 190
Insurance 124
Road service membership 17
Petrol and oil 576
Tyres, batteries, etc. 200
Washing and polishing 10
Parking and tolls 10
Depreciation 676
---
Deductible expenses before
adjustment for private use
of vehicle $1,803
------
Repairs totally allowable for
reasons set out in decisions
of this Board in Cases Q8,
Q11 and Q98 $290
----
Turning to the calculation required by sec. 61 of the proportion of vehicle use applicable to the taxpayer's income producing activities, it has to be observed that the only acceptable evidence consists of copies of two claim forms submitted to the university during the relevant tax year. These claims were accompanied by lists of car trips away from the university and show the kilometres travelled on each trip. The information can be summarised:
Claim dated Period covered Kilometres
(exactly as shown on claim) claimed
September 1980 23 January to 21 May 1980 1,965
26 May to 8 August 1980 1,076
April 1981 September 1980 to April 1981 1,097
Assuming that the extent of the travel during the period 26 May to 8 August 1980 was about the same week by week it seems reasonable to calculate that 39/74 (days from 1 July to 8 August over total days 26 May to 8 August) of 1,076 represents kilometres travelled in 1981 tax year. This gives 567 kilometres. The last listed travel date on the April 1981 claim was 10 April so there are 81 days of the 1981 tax year not covered by claims for reimbursement, i.e. 10 April to 30 June. In the previous year, during what would seem to be a comparable part of the academic year, the taxpayer claimed for 1,076 kilometres over 74 days. In 81 days at the same travel rate this would amount to 1,178 kilometres. We conclude from these calculations that the taxpayer travelled (567 + 1,097 + 1,178) 2,842 kilometres during the year in the course of her work. She might have travelled more than this; indeed, she claimed that there was other travel not covered by the claim forms. In the absence of reasonable evidence (as opposed to mere assertions) we can do no better than the calculations above. The taxpayer said the motor vehicle travelled about 14,000 kilometres for the whole year and when asked if she had evidence of that she replied: ``We did keep a log book. We went away last year and lent our car to someone and when it was returned the log book was not there. It would have indicated it''.
7. Doing the best we can, and accepting the estimate of 14,000 kilometres as the total distance travelled, it is a simple matter to calculate the allowable deduction. The taxpayer is entitled to 2,842/14,000 of 1,803, i.e. $366, plus the full cost of repairs, $290. The total deduction is $656 and of this amount she has been allowed $300. The assessment should be amended to allow an additional $356.
Claim allowed in part
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