Sharma v. Federal Commissioner of Taxation.
Judges:Rogers J
Court:
Supreme Court of New South Wales
Rogers J.
I heard, at the same time, the taxpayer's appeals against the assessments and an amended assessment issued to him in respect of four years of income. By consent I ordered that the evidence in one appeal be evidence in the other. In respect of two of the years of income the appeals were to this Court directly from disallowance of objections by the Commissioner of Taxation. In respect of the other two years of income the taxpayer had initially appealed to the Board of Review which by majority confirmed the assessments in substance. The parties agreed, and correctly in my opinion, that the appeal from the Board tenders a question of law for consideration and accordingly the appeal does lie to this Court.
In order to place the taxpayer's claims in the correct perspective it is necessary to say something about the taxpayer's background. In my view, this is a wholly exceptional and unusual case and whatever might be said in relation to the average person pursuing the profession of the taxpayer has no application to him.
The taxpayer is a legal academic of international renown. He was born in India and obtained his undergraduate degrees at the University of Rajasthan located at Jaipur. He also obtained the degrees of Master of Arts and Master of Laws from that university. Thereafter he obtained a Master of Laws from Harvard University in 1968 and later from the same university a Doctor of Laws in 1970. His areas of interest embrace criminal law, constitutional law, jurisprudence and comparative law.
At the time he was completing his thesis for his doctorate, Professor Wootten, then Dean of the Faculty of Law at the University of New South Wales, invited him to apply for a position with the faculty which was to take the first of its students in the 1971 academic year. He accepted a temporary lectureship to commence in early 1971. He has been a resident of Australia ever since and has progressed through the academic ranks to senior lecturer and, more lately, to associate professor.
Although, as can be seen, the taxpayer's cultural ties are firmly embedded in western civilisation, his family, as well as a considerable number of academic and professional contacts, remain in Asia and particularly in India. He is one of a large family, having two brothers and six sisters. With the exception of a sister who lives in the United States his brothers and sisters are still resident in India as is his widowed mother. On the death of his father as the eldest son and conformably to what I gather is the Indian legal and cultural tradition, he became the head of the family and responsible for the welfare in all respects of his juniors. His youngest sister was at all relevant time still a student. Although his father left an estate it was apparently necessary for the taxpayer to contribute financially to the family funds and it was uncontested that he was solely responsible for the financial upkeep of his youngest sister.
The importance of the taxpayer's continuing ties with Asian countries and particularly India was lent emphasis when, on joining the faculty at the University of New South Wales and at Professor Wootten's request, he took over the editorship of the Lawasia Journal. Although he relinquished the formal title in 1975 he continued his association with the journal in an informal way throughout the years of income in question fostered by his continuing interest in Asian comparative law. This interest was manifested in two ways. Firstly, the taxpayer
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spent a large amount of time during the relevant years of income in India and other Asian countries meeting in discussion judicial officers, including the Chief Justices of India and the Philippines, fellow academics and practitioners. As well, when such personages came to Australia he not only met with them for further discussion and exchange of ideas but also was successful on a number of occasions in persuading eminent visitors, such as the two Chief Justices, to address students at the university.It is uncontested that when the taxpayer said that ``the university is my life'' he was accurately, if graphically, describing his lifestyle in this country. His acquaintances appear to be restricted to persons he has met in a professional sense, either students, fellow academics or members of the profession and his association with them has been of the same kind. He is not married and has no family obligations of any kind in this country and, accordingly, is not only willing but able to devote the whole of his time to fostering his professional interests. I cannot over-emphasise this aspect of the taxpayer's life. Whilst, as a matter of initial impression, one greets with complete disbelief a claim that the taxpayer found it necessary and incidental to his duties to have discussions with students or members of the profession at one of the bars of the Hilton Hotel, the claim assumes more credence as one looks at the taxpayer's particular social life and range of interests which make demands upon his time. I accept the taxpayer's evidence that he does spend all his time, including time which other people might devote to family life or social interests, in pursuing activities which relate in the way I will describe to his academic position and interests. I accept his claim that sheer pressure of time obliges him to transact university business or university related business at such unlikely locations as the Juliana bar at the Hilton. I will, of course, develop this further later in the judgment but it seems appropriate to emphasise the unusual position in which the taxpayer is placed as I recount the circumstances of the appeals. I should add that he occupies a home unit and, of course, has no household assistance from anyone which would enable him to entertain at home. Furthermore, I think that in Asian countries there is more of a tendency to conduct one's semi-social activities, such as entertaining professional colleagues, in public places.
In the years since his initial appointment to the faculty the taxpayer has taught an extremely wide variety of subjects including Legal System, Common Law (an integrated course dealing with Contracts, Torts and Criminal Law), Public Law, Law Lawyers and Society, Criminal Law, Contracts, Administrative Law, Legal Research and Writing, Bankruptcy and general constitutional and administrative law. The University of New South Wales had adopted a teaching method in its Law School where small groups of students are taught by exchange of ideas between students and lecturer. Further, each lecturer or professor is assigned ten or fifteen students ``for whom he is expected to act like an intellectual godfather''. In addition, the taxpayer acted as an adviser to postgraduate students during the 1979/1980 academic years. In the result the taxpayer had a much closer relationship with students and a more extensive demand on his time outside ordinary periods of lectures than is the case in other universities where different teaching methods are practised. The taxpayer has, since 1977, played an important role in the university's continuing legal education programme and for 1979 he was chairman. In 1978 and 1979 he was faculty adviser to the university's law journal. He has assisted with the organisation of moots held at the university. He has written and been co-author to a number of publications during the relevant years. It will be readily understood from all the foregoing that not only was the taxpayer involved in a great deal of research and preparation for his publications and lectures and conferences which he attended but that he had to maintain contact with members of the profession and members of the judiciary in order to enable him to discharge his functions in activities such as the moots and continuing education. With this background I can now turn to the particular years of income under consideration and the matters presented for resolution.
For the year ended 30 June 1977 the taxpayer received a gross salary of $24,349 which after necessary deductions for superannuation and tax left him with a net salary of $13,917. The taxpayer claimed deductions of $11,190. Included in that claim is $350 claimed pursuant to the provisions of sec. 159K of the Act.
For the year ended 30 June 1978 his gross salary was $26,260 which after deductions gave
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him a net salary of $15,488 of which he claimed $14,000 as deductions. In this year of income he claimed $388 pursuant to the section of the Act I have mentioned in respect of moneys expended on maintenance of his sister and, in addition, made the following claims which are now in dispute: Entertainment Expenses
Claimed Allowed Disputed
1,921 628 1,293
Postage, Telephone and Telegram Expenses
Claimed Allowed Disputed
596 80 516
Accident Insurance Premiums
Claimed Disputed
83 83
For the year ended 30 June 1979 his gross salary was $27,536 which after deductions threw up a net salary of $18,413. The taxpayer claimed the following:
Conferences, Conventions and Seminars
Claimed Allowed Disallowed
11,758 2,123 9,635
Entertainment
Claimed Allowed Disallowed
2,386 Nil 2,386
For the year ended 30 June 1980 his gross salary was $29,492 and his net salary was $19,588.
Conferences, Conventions and Seminars
Claimed Allowed Disallowed
9,289 864 8,425
Entertainment
Claimed Allowed Disallowed
2,864 Nil 2,864
It is convenient if I deal firstly with the claims for deduction based on sec. 159K. At the relevant time subsec. (1) provided:
``Where, during the whole of the year of income, a taxpayer has the sole care of a dependant or dependants included in class 3 or class 4 in the table in sub-section 159J(2), being a dependant or dependants in respect of whom he would be entitled to a rebate of tax under section 159J in his assessment in respect of income of the year of income but for sub-section 159J(1A), he is entitled, subject to sub-section (3), to a rebate of tax, in his assessment in respect of income of that year of income...''
Class 4 in the table in sec. 159J(2) refers to a dependent student being a person who is less than twenty-five years of age and is receiving full time education at a school, college or university. Class 3 of that subsection refers to a child less than sixteen years of age who is not a student.
It is common ground between the parties that the appellant satisfied the call of the section except that of having the ``sole care'' of the sister in respect of whom the deduction was claimed. For the taxpayer it was contended that in this Act ``sole care'' means sole financial responsibility. Counsel for the Commissioner put no argument as such but drew attention to two decisions of Boards of Review as well as the decision in the appeal under consideration. In Case M43,
80 ATC 304 the taxpayer was an unmarried mother who had a son born in Europe. She migrated to Australia leaving her son in Europe with her parents. She remitted moneys to her parents for his maintenance and visited him in Europe on the occasions mentioned in the report. In analysing the meaning of ``sole care'' the No. 1 Board had regard to the notions of custody and care and control laid down in divorce cases and decisions involving custody generally. The conclusion of the Board was that the taxpayer's parents had the sole care of the child. Mr. Harrowell in his decision accepted that ``sole care'' did not necessarily involve continuing care. Thus, he recognised that a parent did not part with sole care of a child by sending it to a finishing school in Switzerland or to a boarding school in another State or Country. But, he said, in all such instances care had been delegated on a temporary not permanent basis. Sole care was retained by the parent because, he said, when the period of delegation ended the child returned to the care of the parent. Similarly, in Case M78,
80 ATC 549 No. 2 Board gave the same meaning to the expression ``sole care''. At p. 552 the Board said:
``It seems to us that care of a child can be delegated... to others, certainly on a temporary basis, and if we examine one typical day of a child attending school we would consider that the driver of the school bus owed a duty of care to that child whilst on his bus, that the traffic officer at the pedestrian crossing owed a duty of care to
ATC 4264
the child whilst under his supervision at the crossing, and that the school authority also had a duty of care whilst the child was on the school premises... The distinguishing aspect of `sole care' as distinct from the degree of care due from those to whom care is given on a temporary basis must therefore, we consider, relate to ultimate and exclusive responsibility for providing care to the child. In other words, we consider that `sole care' vests in that person who has the full and unshared responsibility for making decisions on a day-to-day basis as to the child's upbringing and welfare, whether it be the food that he eats, the clothes that he wears or the school that he attends.''
With all due respect to these views I do not think that they should be accepted. In order to arrive at the conclusion I have mentioned the two Boards of Review borrowed from fields of learning completely alien to the statute under consideration. So to approach the problem is, in my respectful view, to disregard the ultimate objective of giving effect to the intention of the Act, accurately described as purposive interpretation. What is under consideration is a taxing Act. The self evident intention of the provision is to grant relief to those within the prescribed category who are involved in a financial outgoing. The focus of attention at all times remains on financial obligations whether to the revenue or to the dependant. It is certainly right to recognise that it is not every outgoing expended on a dependant which permits of a deduction being had. There is the further qualification that the dependant has to stand in a particular relationship to the taxpayer. However, once again, that relationship is a relationship predicated on financial responsibility and expenditure. In my view, what the legislature intended to achieve by inserting the qualification ``sole care'' was to ensure that the deduction was obtained by one taxpayer only and not by a multiplicity of taxpayers each of whom may expend money on the welfare and maintenance of the dependant. In order to ensure that only the one taxpayer benefited he or she was specified as being the person who had the sole care in the sense of having the sole financial responsibility for the dependant. Quite apart from lacking any self evident purpose in despatching the revenue and the taxpayer into the wilderness of determining who, according to law and fact, may have actual day-to-day control of the dependant in question, the test formulated by and accepted by the Boards in the two decisions I have mentioned is difficult to apply in the case of at least one of the class of persons contemplated by the Act. The taxpayer may have the privilege of financially caring for an individual student of twenty-four years of age but to say that he or she has the day-to-day care and control of such a person is, in this day and age, a contradiction in terms. Something of this kind was recognised by the Chairman in the appeal under consideration, Case P99,
82 ATC 477, but in the ultimate he said that there could be no differentiation on a class and therefore age basis. He said in para. 10 of his reasons:
``In my opinion the term `care' cannot be simply equated to the provision of finance so that the mere supply of money to enable a child to be fed and clothed (ignoring the need for the preparation of food and washing and ironing of clothes) can be said to constitute `sole care'.''
If I may say so, it is not apparent to me why a taxing Act should be concerned with who prepares the food, does the washing and ironing and otherwise caters for the physical needs of the dependant. What about the girl student of twenty-five who lives in a flat on her own and does all her own cooking, washing and ironing but is completely dependent financially upon her parents? Is the availability of deduction to turn simply on the question whether she lives at home and has a mother who is willing to do these tasks for her? In the result, I accept as correct the dissenting view of Mr. Pape in the Board of Review decision under appeal and I allow the taxpayer's appeals so far as the claims for deduction on this count are concerned.
It is convenient that I next consider the claims for deduction for entertainment. With all due respect to the Board they appear to have been influenced to an impermissible extent in disallowing the claims of the taxpayer by one consideration. The Chairman appears to have rejected the claims simply (para. 4) on the ground that the obligation to expend moneys on entertainment was not an express or implied condition of the taxpayer's contract of employment. The same consideration appears to have convinced Mr. Pape (para. 7) although he went on to consider what advantage or gain the taxpayer sought to obtain from these expenditures. In
F.C. of T. v. Wilkinson 83 ATC 4295 G.N. Williams J. of the Supreme
ATC 4265
Court of Queensland made a careful examination of the authorities and rejected the test applied by the Chairman as being either decisive or conclusive. In my view the Board had proceeded on the same basis as it did in the decision referred to by G.N. Williams J. and its approach should be rejected for the same reason. As his Honour said at p. 4303:``The reasoning of each member could be summarised as follows: it was not an implied term of the contract of employment that the taxpayer have or obtain a flying licence, therefore the outgoing in question was not deductible. Insofar as the members of the Board applied that test and that test alone, it appears there is an error in their reasoning. The question whether or not the outgoing is incurred in consequence of an implied term in the contract of employment is always relevant, it may in some factual situations be decisive, but it is never conclusive (at least in factual situations similar to that under consideration here). For the reasons I have given above, I do not consider that Finn's case, Hatchett's case and White's case support the reasoning of the members of the Board in that case. I can find nothing in that judgment which causes me to alter the conclusion I have expressed above.''
The principle which determines the fate of the taxpayer's claims for deduction both for entertainment and travelling and other expenses associated with attendance at conferences, conventions and seminars emerges from the judgments of members of the High Court in
F.C. of T. v. Finn (1961) 12 A.T.D. 348; (1961) 106 C.L.R. 60. An architect employed by the Public Works Department in Western Australia devoted his long service leave to studying current trends in architecture in South America and Europe. During his tour he devoted all his available time to the advancement of his knowledge of architecture and the development of his architectural equipment, outlook and skill. All three members of the Court considered that he was entitled to claim his travelling expenses pursuant to the provisions of sec. 51(1) of the Act. The statement of reasons which is most apposite to the present case is that which fell from Kitto J. at A.T.D. p. 352; C.L.R. p. 69 where his Honour said:
``But it was nevertheless in my opinion incidentally to the proper execution of his office and not otherwise that he engaged in those activities. For the office was of a kind which by its nature made incumbent upon the occupant much more than the performance of set duties at set times. Its professional status implied an obligation of progressive acquaintance with a living and developing art. It was therefore, I think, plainly incidental to the office that the respondent should avail himself of such opportunities as might arise to add, in the interests of the State even if also in his own interests, to his knowledge and understanding of architectural achievements and trends overseas, both in design and in construction, and of endeavours made and being made to solve architectural problems such as might from time to time confront his Government.''
The question which I pose for myself is whether it was relevant and incidental to the employment of this particular taxpayer during the years of income to entertain students, fellow academics and members of the profession in the way that he did. I start with the proposition that it was an important part of the taxpayer's activities that he maintain contact with all the foregoing category of persons in the course of performance of his duties. With the students he had to maintain contact both as a teacher and as the faculty contact point, as well as the person in charge of postgraduate activities, organiser of moots and general ``intellectual godfather''. With fellow academics he had to maintain contact for an interchange of ideas which is of the very essence of university life. With members of the profession he had to maintain contact in order to enable him to organise moots and otherwise provide intellectual stimulation for his students for example, by organising the visit of the Chief Justice of India. Indeed, I do not think that it was suggested by counsel for the Commissioner that the contact that he established and maintained with all these categories of persons was not in necessary performance of his duties. Where issue was taken was in the manner of performance, that is that contact was established and maintained by having a drink with, or having a meal with, one or other of this category of persons. The Chairman, if I may say so, exhibited robust common sense when he expressed surprise at a taxpayer in effect working for a mere pittance because he expended almost the whole of his net salary on entertainment and in attending seminars and research facilities. In the common
ATC 4266
experience of mankind such conduct is so unlikely that it calls for close examination when asserted to be the fact. That is why I have sought at the outset of my judgment to emphasise how unusual and exceptional I regard this case to be. I accept the taxpayer as a witness of truth. I accept him when he says that his work occupied all his waking hours. The task of establishing and maintaining contact with the category of persons I have mentioned had to be fitted into the time available which was time other people regarded as their leisure time. In those circumstances it seems to me it was appropriate to performance of his office that the taxpayer should provide some refreshment, whether a drink or a meal, for the persons whose assistance and advice he was soliciting. I do not regard it as being of assistance to consider how other academics, perhaps not as pressed for time as the taxpayer, discharge the duty of establishing and maintaining contact with the persons in question. In the particular circumstances in which the taxpayer found himself I think it was necessary that he established contact with those persons outside the campus and therefore involved himself in the expense incurred. I have given consideration to the question whether his conduct is more readily explicable by a wish to maintain purely social contact with people rather than by the call of his official duties. At the end of the day I am satisfied that is not the true situation. Having observed the taxpayer over a period of some considerable time the appeals have occupied, he has struck me as a most sincere and devoted teacher whose whole life is wrapped in academic pursuits and what may be surprising in another person is in his case perfectly true and that is that he devotes all his time to pursuing in various ways the proper discharge of his duties.In address a number of the small items of the claim for entertainment were not pressed. I think it is also right to say that to a very minor extent there may have been some elements of private expenditure involved in the amounts claimed. Doing the best I can and recognising that this whole question of apportionment can be approached only on the very broadest of bases, I consider that 90 per cent of the amount claimed by the taxpayer on this account should be allowed to him.
I now turn to the claim for expenses incurred in attending conventions and seminars. I think it is necessary that I set out in full the description of functions of a university teacher of law given by Professor Sackville, a former Dean of the Faculty of Law at the University of New South Wales. He said that university teachers in law are expected to perform a range of functions which may include the following:
``(a) teaching such courses as may be assigned by a Dean of Faculty subject to the Supervision of the Faculty and the Council of the University;
(b) to undertake legal research and to publish material arising from that research;
(c) to keep himself up to date in his areas of expertise and interest;
(d) to be actively involved in Law School activities such as student moots and faculty and school committees; the publication of journals by the University; and academic contact with students outside the classroom;
(e) to maintain contact with academics in Australia and abroad and to promote the relationships between the University and the legal profession within New South Wales and elsewhere in Australia;
(f) to promote relations between the University and the general community;
(g) to assist students to undertake post-graduates studies and to supervise candidates for higher degrees;
(h) to assist students and graduates in obtaining employment opportunities in the community...''
Professor Sackville said in addition that a teacher would be expected to make use of any special skill or expertise he may have. In the case of the taxpayer those were identified as an understanding and experience of other legal systems, especially those of India, other Asian countries and the United States. He said:
``One particular contribution which Professor Sharma has made to the University is to utilise his knowledge of the United States legal system particularly in relation to criminal law. In addition, his contacts with universities and professional bodies in the United States, India and elsewhere and his experience of the working of overseas legal systems have been specially useful to the faculty, both through his teaching and through other activities. Professor Sharma's contacts with lawyers in Asian countries
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were valuable because of the faculty's interest, specially in the earlier years, in the legal systems of Asia.''
Professor Sackville expanded on his affidavit evidence when he said in answer to a question from me which read in part:
``It was put to you by Mr. Branson that in effect quite a deal of the material that you covered (sic) in the course of your travels could have been obtained in the university library here. From your experience are there advantages in a professor or lecturer of law attending to research of his own and conducting overseas investigations which cannot be obtained by research in the library here? - A. There are very considerable advantages and the extent of those advantages will depend upon the circumstances. The advantages will lie, probably not so much in the printed material that is generally available through published sources, but in the [contact] with experts working in similar fields themselves, in lines of enquiry and ideas that might be pursued that broaden the research.''
There is no doubt that the taxpayer spent a very great deal of time indeed in attending conferences and seminars both in Australia and overseas. Thus, in the years in question he was overseas for ninety-seven days in the 1977 tax year, for one hundred and four days in the 1978 tax year, for one hundred and three days in the 1979 tax year and ninety-five days in the 1980 tax year. It would be tedious to examine in detail each of these overseas trips. It is sufficient if I deal with the 1980 tax year which may be taken as fairly representative. From 19th June to 20th July, 1979 the taxpayer conducted what he called an appraisal programme of ``Human Rights in Asia'' in six Asian countries, the Philippines, Hong Kong, Thailand, Nepal, India and Singapore. For so much of that trip as fell within the year in question he claimed the sum of $990, in respect of fifteen days spent in India and Nepal and three days in Singapore.
The Commissioner allowed him nothing for his stay in India and Nepal and $120 for his stay in Singapore. Why he was allowed $120 is an impenetrable mystery shrouded in the workings of the Taxation Department. The taxpayer was overseas from 17th December, 1979 to 19th February, 1980, a period of sixty-five days. During that period he conducted a study programme researching the area of double jeopardy and associated human rights in Asian, Continental and North American legal institutions including participation in a conference of the International Law Association in New Delhi and the mid-year convention of the American Bar Association in Chicago. He conceded that six days of his stay in India was of a private nature for which he did not claim. Excluding those six days he claimed $5,539 all of which was disallowed. The taxpayer had a further thirty days overseas between 21st June and 20th July, 1980 visiting the law schools of the Universities of Singapore, Bombay and Rajasthan for library research in comparative law matters and attending the twelfth All-India Seminar on Taxation and Economic Development. He claimed $1,622, all of which was disallowed. It is appropriate that I mention what the taxpayer has said concerning his research interests and the benefits that he thought he derived from them for the purposes of teaching. He said:
``My research interests have been wide-ranging in the areas of criminal law, law and population, human rights, judicial administration and consumer protection, all with a comparative law orientation. Continuing research (and updating) on many aspects of these areas was essential for classroom teaching. For example, research on `provocation', `strict liability', `self-defence', `prison transfers and disciplinary proceedings', `human rights', and `double jeopardy' has been indispensable in teaching many areas of criminal law. Similarly, research in the subjects of `social welfare law', `environmental protection and standing', `doctrine of state action', `martial law' has been unavoidable in teaching Public Law 1 (dealing with aspects of constitutional and administrative law). And a comparative law insight (Asian or otherwise) into these areas undoubtedly maximises the benefits of teaching by the discussion method and helps widen the horizons of students and colleagues.
Research unconnected with immediate use for teaching a given subject in a particular year (for example, taxation, comparative law, legal system-torts, human rights) cannot simply be abandoned for a teacher can be called upon in any subsequent year to teach that subject, depending upon the
ATC 4268
teaching needs of the law school and the availability of its staff.''
The Commissioner's attitude in defending the assessments was, if I may say so without being offensive, more than somewhat ambivalent. At one stage the cross-examination seemed to be suggesting that at least the visits to India were of a private nature and the dominant purpose was to visit the taxpayer's family in that country. However, that attitude was not maintained with any consistency in the submissions. In my view this was quite proper because I think counsel for the Commissioner recognised that the taxpayer was entirely truthful in asserting as he did that he went to Asian countries, including India, for the purposes of professional research, although he frankly conceded that if the opportunity offered it was his pleasure and duty to see members of his family.
It was submitted that the taxpayer could carry out the research functions that he assigned to himself in Australia at the University of New South Wales and other places of learning. At the very least what can be said is that the submission disregards the great benefits to be derived in discussion with one's peers when exploring what, in the taxpayer's case, are undoubtedly the frontiers of learning in the various subjects in which he was interested. Alternatively, it was put that insofar as overseas visits were necessary or appropriate the research should be done during sabbatical or other special leave allocated to the taxpayer. It is not for the Commissioner of Taxation to dictate when a taxpayer should carry out functions associated with his office, so long as the taxpayer is involved in activities which are relevant and incidental to the activity from which he derives his assessable income. It is a matter for him as to when and in what manner he chooses to conduct that activity. In my view although the taxpayer's research activities occupied a great deal of the calendar year they took place with the permission of the university authorities, they were into subjects which were part of his general equipment as a law teacher, they were relevant to his teaching activities, present and future, and in my view they fall within the criteria prescribed by Kitto J. in Finn's case in the passage which I have ventured to quote. No differentiation can be drawn between the 1980 year and previous years of income. Further, there was no suggestion that if I was of this view some apportionment was necessary. The Commissioner appeared prepared to accept the concessions for private purposes made by the taxpayer in his returns. In my judgment the whole of the taxpayer's claims on this account should be allowed to him.
The other matters in dispute related to more minor amounts which were expended by the taxpayer on postage, telephone and telegrams and such like. As I understand it the taxpayer made some telephone calls overseas from his home partly because the time zones made it impracticable to call, for example, the United States from the university during ordinary working hours. In part the telephone calls were made from his home because of the bureaucratic prescriptions which the university deemed it necessary to impose to ensure that no inappropriate telephone calls were made on the university's account. I am not to be thought of as being critical of the university in any form when I say this. Quite obviously care has to be taken to ensure that members of staff do not impose on the university's scant resources by making inappropriate telephone calls. However, that is in no way to suggest and, indeed, I did not understand counsel for the Commissioner to suggest that these telephone calls were not properly related to the taxpayer's activities as a law teacher.
Again, although the university did provide some mailing facilities the taxpayer paid out of his pocket for items which were bulky and therefore expensive. He did exchange copies of articles and other material also of a legal nature with academic personages including the Chief Justices, not only of India and the Philippines but also of the High Court. Surely it cannot be gainsaid that exchange of information is a two-way street and that the least the taxpayer could do in return for the courtesies extended to the students of the university by the two Chief Justices of India and the Philippines giving of their time when in Australia was for the taxpayer to oblige them by sending them the material which he did. Although other recipients of material may have been in different offices the principle is the same. In my view there is no reason to think that the amounts were expended otherwise than in relation to activities which were, once again, relevant and incidental to the taxpayer's office.
In the result then, the appeals will be allowed and the assessments are remitted to the Commissioner for amendment in accordance
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with my judgment. I order the respondent to pay the appellant's costs. Exhibits will be retained for twenty-eight days and, unless in the one case an application for leave to appeal is filed and in the other a notice of appeal is filed within the time limited by the Rules, the Exhibits will be dealt with in accordance with the Rules of the Court.This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.