Case S25

Judges:
KP Brady Ch
JE Stewart M
DJ Trowse M

Court:
No. 2 Board of Review

Judgment date: 29 March 1985.

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K.P. Brady (Chairman), J.E. Stewart and D.J. Trowse (Members)

In his return of income for the year ended 30 June 1981, the taxpayer claimed a concessional expenditure rebate of $250 under sec. 159U of the Income Tax Assessment Act 1936 and a net amount of $90 under sec. 51(1) of that Act in respect of what were claimed to be self-education expenses, totalling $355. Those expenses included outgoings of $36 for books, $15 for fees and an estimated amount of $304 said to have been incurred for self-education purposes in travelling between the taxpayer's place of work and an institute of technology and between the institute and his home. A reimbursement amount of $15 was taken into account by the taxpayer in calculating the above amount of $90.

2. Another matter in issue before us related to a claim for rebate for basic hospital and medical expenses made in respect of the year of income ended 30 June 1983.

3. In making his assessment for the 1981 year, the Commissioner disallowed the rebate claimed to the extent of $70 and the sec. 51 claim to the extent of $90, on the basis that that part of the expenses related to private travel between the institute and the taxpayer's home. It appears that expenses incurred in travelling between the taxpayer's place of work and the institute and for one round trip between home and the institute were taken into account by the Commissioner in calculating the self-education expenses allowed for rebate purposes. However, the rebate matters were not put in issue by the taxpayer's grounds of objection, nor were they the subject of submissions before us. Accordingly, we make no further reference to them.

4. It is convenient to deal here with the taxpayer's submissions concerned with his sec. 51(1) claim. In our understanding, the taxpayer based his claim upon the general proposition that the travelling expenses in issue were properly to be regarded as part and parcel of ``expenses of self-education'' as defined in sec. 159U(5) of the Act, with the consequence that they should also be regarded for the purposes of both limbs of sec. 51(1), in the taxpayer's submission, as losses or outgoings which were incurred in gaining or producing his assessable income or were expenses which were necessarily incurred in carrying on a business for the purpose of gaining or producing such income; for similar reasons, the taxpayer's submission continued, they could not be regarded as losses or outgoings of a capital, private or domestic nature.

5. We consider that the taxpayer's claim lacks substance. The taxpayer was an employee in the 1981 income year and did not carry on a business, and therefore the second limb of sec. 51(1) could not apply in the circumstances of his case. Whilst self-education expenses

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incurred in excess of the statutory rebatable limit of $250 imposed by sec. 159U might be deductible under the first limb of sec. 51(1) in certain circumstances, the excess, to be deductible under that limb, must nevertheless, in our opinion, satisfy the tests of deductibility which emerge from the many decisions of the courts concerning the application of that subsection. We are not aware of any principle of law or of a court decision which would support the contention that self-education expenses, even if satisfying the requirements of sec. 159U, must, in relation to any excess, automatically and without regard to the sec. 51(1) tests adverted to, qualify as a deduction under that subsection.

6. Whilst the travelling expenses of $90 in issue were associated with the taxpayer's attendance at the institute of technology, they arose out of his actions in travelling between his place of work and home, albeit via the institute. Therefore, in the light of the decisions of the courts, in particular the decisions in
Hayley and Lunney v. F.C. of T. (1958) 100 C.L.R. 478, those expenses must, in our opinion, be regarded as essentially private in character and therefore not deductible under the provisions of sec. 51(1).

7. In the year of income ended 30 June 1983, the taxpayer made payments, totalling $898, in respect of basic hospital and medical expenses as follows:

                                               $
      18 November 1982, for period 19
         November 1982 to 17 May
         1983                                 308
      17 May 1983, for period 17 May
         1983 to 17 May 1984                  590
                                             ----
         Total:                              $898
                                             ----
          

In his return of income for that year, the taxpayer claimed 30.67% of that amount, viz. $275, as a rebate under the provisions of sec. 159XA of the Act, which deals with premiums paid for basic health insurance. In raising his assessment for that year, the Commissioner disallowed $60 of that amount as a rebate which, despite the issue of several amended assessments which need not concern us here, was the amount in issue before us.

8. Whilst the Commissioner conceded that the total amount of $898 was paid in the manner and for the purposes mentioned, he took the view that the amending provisions of sec. 159XA(2), effective from 19 June 1983, operated to disallow a rebate in respect of that part of the amount claimed, which was paid by the taxpayer for the purpose of ``securing an entitlement to basic hospital benefits or basic medical benefits in respect of any period... after 30 June 1983...'' (sec. 159XA(2)(b)(i)).

9. The taxpayer did not appear to dispute the Commissioner's contention that the payment made in May 1983 was made in part in respect of a period ``after 30 June 1983''. The taxpayer's opposing contention appears to have been based upon the proposition that the payment, having been made before 19 June 1983, when the amending provisions received the Royal Assent, was not caught as to any part by the provisions of sec. 159XA(2). However, it appeared to be common ground (presumably in recognition of the use of the words ``to the extent'' in sec. 159XA(2)(b)) that apportionment was open to the Commissioner as a matter of principle to ensure that the appropriate health insurance rebate was only allowed in the income year corresponding to the period in respect of which the basic benefits arose.

10. However, the taxpayer's basic contention appears to have been that the Commissioner's action in apportioning the payment in issue on the basis mentioned was wrong in law because it effectively gave retrospective application to the amending provisions of sec. 159XA(2)(b)(i) which could only have, in the taxpayer's submission, prospective application to payments made after 19 June 1983. In other words, therefore, the taxpayer's contention appears to have been that the payment under consideration, having been made before 19 June 1983, was not therefore subject to the apportionment provisions of the amendment referred to.

11. We cannot find any support for the taxpayer's contention in the wording of the statute or in any case law which may have some bearing upon the problem. On the contrary, we find ourselves in substantial agreement with the Commissioner's submissions that sec. 159XA is clear and unambiguous and should be given its ordinary and grammatical meaning, with the consequence that the amending provisions of sec. 159XA(2)(b)(i), literally construed, clearly restrict the rebate otherwise allowable in the instant case to an amount calculated in respect

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ATC 266

of contributions paid before 1 July 1983 (although paid in fact before the date of the Royal Assent), in so far as they related to the period ended at 30 June 1983. In support of our conclusions in this matter, we would draw attention to the following remarks of Gibbs C.J. at p. 4296 in the High Court case of
Cooper Brookes (Wollongong) Pty. Ltd. v. F.C. of T., 81 ATC 4292:

``... if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust. To say this is not to insist on too literal an interpretation, or to deny that the court should seek the real intention of the legislature. The danger that lies in departing from the ordinary meaning of unambiguous provisions is that `it may degrade into mere judicial criticism of the propriety of the acts of the Legislature', as Lord Moulton said in
Vacher & Sons, Limited v. London Society of Compositors (1913) A.C. 107, at p. 130; it may lead judges to put their own ideas of justice or social policy in place of the words of the statute.''

12. It appears to us that the amending legislation as enacted faithfully reflects the intention of the legislature to disallow rebate claims of the kind here in issue, as may be gained from the following extracts taken from speeches delivered in the House of Representatives by the Treasurer and the then Minister for Finance, which are recorded in Hansard, dated 19 May 1983:

Mr Keating (Treasurer) at p. 806:

``The Government's election health policy statement made it clear that the rebate for basic health insurance premiums would be abolished to help finance the Medicare arrangements. It will be abolished in respect of contributions for basic health insurance coverage after 30 June 1983.''

Mr Dawkins (Minister for Finance) at pp. 819-820:

``To clear the way for implementation of the Government's Medicare policy, the rebate for basic health insurance contributions is by this Bill to be discontinued in respect of premiums paid to secure cover after 30 June 1983.''

13. Finally, we would add that, in our opinion, the health insurance rebate of $215 allowed by the Commissioner in the 1983 income year was probably in excess of the amount which, strictly speaking, was properly allowable to the taxpayer in respect of that year. However, the Commissioner's representative indicated that he did not wish to resile from the factual position before us, and consequently our decision is based upon those facts.

14. For the foregoing reasons, we would uphold the Commissioner's decisions on the objections and would confirm the assessments in issue.

Claims disallowed