Case S27

Judges:
KP Brady Ch
JE Stewart M
DJ Trowse M

Court:
No. 2 Board of Review

Judgment date: 3 April 1985.

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

The question for decision in this reference is whether the taxpayer is entitled to a deduction under the provisions of sec. 51A of the Income Tax Assessment Act 1936 of an amount of $4,420 in his assessment for the year ended 30 June 1982.

2. The taxpayer is a young man who migrated with his parents to this country from the United Kingdom in 1969. After living here for several years with his parents, he returned alone to the U.K. where he resided for some three years. Whilst in the U.K. he derived income as an employee and was wholly self-supporting. On his return to Australia, he resumed living with his parents in a country town some distance from a capital city. After some three years, he went to live in the capital city where he was employed on clerical duties and, again, he was wholly self-supporting. In the capital city he lived in a fully furnished flat under a 50/50 sharing arrangement with a friend. All his possessions, comprising stereo equipment, records, clothes and such like, were stored at the flat. Responsibility for payment of the rent of some $50 per week and for food expenses, etc. was shared between the taxpayer and his friend. It seems that those arrangements continued until late in 1979, when the friend vacated the flat. We were given to understand that the taxpayer continued to live alone in the flat for some time at the same rental per week and that those arrangements were not formally terminated with the landlord until mid-March 1981. When the taxpayer vacated the flat he returned to live at the parental home which, in the meantime, had been moved from the country and established in the capital city where the taxpayer continued to be employed by the same employer.

3. The taxpayer's evidence concerning the period of time that elapsed between his friend's departure from the flat and his leaving it to return to the parental home was, at best, equivocal. At one stage, we gained the impression from his evidence that a period of several months only was involved. However, under continued cross-examination by the Commissioner's representative, it emerged (correctly, in our opinion) that the taxpayer continued to live in the flat for about 12 months before returning to the parental home. This appears to be an important aspect of the case because, if our first impressions were correct, it means that the taxpayer lived at home for some 15 months before leaving it to take up the duties of a new position on a construction site which was located near a small country centre some 200 kilometres from the capital city abovementioned. On the other hand, if the correct facts were what we consider them to have been, the taxpayer's return to the parental home was for a period of only a few weeks before he left it in April 1981 to commence the duties of the new position.

4. When the taxpayer vacated the flat, he took all his possessions with him to the parental home where he shared a bedroom with his brother. An amount of about $30 per week was paid by the taxpayer in respect of his accommodation there and for food, etc. It seems that those arrangements continued until he left the parental home in April 1981 to undertake his duties at the construction site abovementioned. However, it appears that, on leaving the parental home on that occasion, the taxpayer left some of his personal belongings in the room that continued to be occupied by his brother. It also appears that, work permitting, the taxpayer returned to the parent's home by car at weekends for one or two days for what were described as ``mostly social'' reasons. On those visits, the taxpayer paid his mother between $20 to $30 for his food and accommodation.

5. During the time that the taxpayer worked at the construction site, until he ceased his employment there in 1983, he shared a flat with his father in the nearby country town. The taxpayer contributed to the flat rental of $40 per week and to the food expenses, etc. of $60 per week. It appears that those arrangements continued throughout the year ended 30 June 1982. It also appears that, during that time, the taxpayer availed himself, to some extent, of the limited social facilities to be found in the town.

6. In the year of income ended 30 June 1982 the taxpayer was paid a salary, a travelling allowance and the amount in issue of $4,420 (calculated at the rate of $85 per week) for what was described in the group certificate as a living-away-from-home allowance. The taxpayer described his employer as a ``fairly small company on the construction site'' which, unlike the larger companies carrying out operations at the same site, did not provide its employees with accommodation, meals, etc.

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free of charge. It appears that the taxpayer, like other employees of his company, was required to find his own accommodation and to provide his own meals, etc. at his own expense. As already indicated, that is what he did. However, it appears that the above amount of $85 per week was paid to the taxpayer as a ``living out allowance'' in conformity with sec. 14 of the Western Australian Metal Trades (General) Award, which provision deals with works carried out for the State Energy Commission of that State at Kwinana or Muja. It seems that the taxpayer's employer company became a party to the Award by the operation of sec. 37 of the Industrial Arbitration Act of Western Australia. Further, it appears that entitlement to the amount of $85 per week was not related in any way to the quantum of additional expenses, if any, incurred by the taxpayer or by any other employees of the same firm who became eligible for payment of that allowance. It was payable whether or not an employee was married, had dependants, was living alone or was living with his family.

7. In his return of income for the year ended 30 June 1982 the taxpayer returned the abovementioned amount of $4,420 as income and claimed a like amount as a deduction. The Commissioner disallowed the claim and, following an objection and a request for reference, the matter came before this Board for review.

8. The matter at issue calls for an examination of the definition of a living-away-from-home allowance in subsec. (3) of sec. 51A, which states:

```living-away-from-home allowance' means so much of any allowance or benefit paid or granted in money or otherwise as the Commissioner is satisfied is in the nature of compensation to the employee for the additional expenses (not being expenses which are allowable as a deduction under section 51) incurred by him, or which would be incurred by him if the allowance or benefit were not received, through having to live away from his usual place of abode in order to perform his duties as an employee.''

9. Essentially, the matter at issue raises for our consideration two questions, as follows:

• (a) Whether the taxpayer's ``usual place of abode'' was the flat shared with the father, the parental home or some other place.
• (b) Whether, if his ``usual place of abode'' was not the flat shared with his father and was the parental home or some other place, the allowance paid to him was ``in the nature of compensation (paid to him) for the additional expenses... incurred by him (or which would have been incurred by him if the allowance had not been paid) through having to live away from his usual place of abode in order to perform his duties as an employee''.

10. In the light of the particular facts in the case, we consider that there can be little doubt that the taxpayer effectively severed his connections with his parental home many years ago, first, on his departure to the U.K. and, subsequently, on shifting from home to the flat which he shared with a friend. His connections with that flat were terminated before he commenced the duties of the new position which gave rise to the matter in issue. Whilst the taxpayer's return to the parental home (in the period that elapsed between vacating that flat and commencing to live in the flat shared with his father) might have provided him with a temporary ``place of abode'' in that interim period, it did not thereby become, in our opinion, his ``usual place of abode'' (emphasis added) for the purposes of the definition of ``living-away-from-home allowance'' which must be satisfied for the taxpayer to succeed in his claim.

11. Having regard to the evidence which indicates the transitory nature of the taxpayer's lifestyle, it is apparent, in our opinion, that his ``usual place of abode'' was the flat, house or residence where he generally ate and slept as a matter of convenience in proximity to his usual work place. We find as a fact, therefore, that the taxpayer's ``usual place of abode'' in the year in issue was the flat which he shared with his father in the country town adjacent to his work.

12. Whilst the taxpayer's change of jobs made it necessary for him to move from his flat in the city and to terminate his sojourn at his parental home, those facts, of themselves, do not, we consider, establish a situation which would support the contention that one or other of those places (because they preceded by only a short period his move to the country) was his ``usual place of abode'', with the consequence that the payments in issue must therefore be seen to satisfy the criteria provided in

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the definition of ``living-away-from-home allowance''. We do not consider, either, that the taxpayer's weekend visits to the city, which appear, as normal social outlets for a young person, or the payments made to his mother for accommodation and for food on those occasions, assist the taxpayer's case or put in doubt the conclusions which we have reached. Furthermore, we do not consider that the statutory requirements imposed on the taxpayer's employer to make the payments would, of themselves, impress the payments, without regard to the taxpayer's factual position, with the characteristics that are necessary for the purposes of satisfying the definition.

13. Having regard to the circumstances of the present case, we do not find it necessary in these reasons to embark upon an analysis concerning the technical meaning of the phrase ``usual place of abode''. As a matter of convenience, we are content for present purposes to adopt the reasoning in that respect of the Boards of Review in Case H2,
76 ATC 7 and in Case N31,
81 ATC 167, and the reasons for decisions, in so far as they are relevant to an understanding of that phrase, in the other cases referred to in the cases cited.

14. In the circumstances of the instant case, we consider that the amount that the taxpayer received was not a living-away-from-home allowance as defined in sec. 51A(3). Therefore, the taxpayer is precluded from obtaining a deduction under sec. 51A(1) and (2).

15. We refer briefly to the second question set out in para. 9 above. It will be obvious, in the light of our conclusions above, that we could not be satisfied, standing in place of the Commissioner, that the amount paid to the taxpayer in the year in issue was an allowance for the purposes of the definition of ``living-away-from-home allowance'' (sec. 51A(3)). It was not, in our opinion, an allowance in the nature of compensation which was paid to the taxpayer for additional expenses incurred by him, or which would have been incurred by him if the allowance had not been received, through having to live away from his usual place of abode in order to perform his duties as an employee. In any event, the taxpayer failed in his evidence, in our opinion, to discharge the onus of proving, as required by sec. 190(b), the amount of the expenses, if any, which could properly be regarded in the year in issue as being additional to those which were incurred in fact or which might have been incurred by him in living in a place of abode other than in the flat which he shared with his father.

16. For the above reasons, we would uphold the Commissioner's decision on the objection and confirm the assessment in issue.

Claim disallowed