Case T83

Members:
P Gerber SM
KL Beddoe SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 6 November 1986.

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Dr P. Gerber and K.L. Beddoe (Senior Members)

In this application, the applicant was, during the 1982 tax year, an officer cadet at Portsea in the employ of the Department of Defence.

2. The claim now before the Tribunal involves a deduction of $289 for a lounge suit and $122.70 for various books chronicling wars of various kinds, both historically and logistically.

3. Dealing with the suit, it was deposed that over and above Army issue, officer cadets were expected to have one good quality lounge suit

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ATC 1115

to be worn at various Army functions. As the applicant put it: ``Whilst there was no specific order, it was understood that officer cadets have a lounge suit for the appropriate occasion''. Is this sufficient to convert what is conventional attire into ``uniform''? Regrettably, the answer is ``No''.

4. The claim is brought under sec. 51 of the Income Tax Assessment Act 1936 and accordingly it is necessary for the applicant to show that the expenditure was incurred in gaining or producing his assessable income. I can do no better than to quote from the decision of Mr F.E. Dubout, the then Chairman of the Taxation Board of Review No. 3 (as it then was) in Case H2,
76 ATC 7. That case involved an employee of a large chain store who was required to wear a black skirt and white blouse for work and claimed a deduction for the expenditure on several of these garments. Mr Dubout said (at p. 7):

``The case is one of a kind that has fairly frequently come up for consideration by Boards of Review, and with a view to achieving a degree of consistency in their decisions, the Boards have attempted to develop certain tests for determining the deductibility of moneys expended on occupational clothing. However, in spite of these efforts to apply consistent principles in this particular field of inquiry, I doubt whether all the decisions can be reconciled with one another.

In considering the present reference, there is perhaps no necessity to attempt to reason from generalised concepts to particular instances, because there are decisions by other Boards of Review based upon facts which are in all material respects indistinguishable from the facts of this reference. The first of these is the majority decision of Board of Review No. 2 in
14 C.T.B.R. (N.S.) Case 2. In that case, the taxpayer concerned was employed as a saleswoman in a large retail establishment. Under her employer's house rules, she was required to wear a black dress, which she had to purchase and maintain. This dress was worn by the taxpayer only during her hours of employment. Disallowing the taxpayer's claim, the majority held that the expenditure was of a private nature, and did not satisfy the `necessary and peculiar' test adopted by Board of Review No. 1 in
8 T.B.R.D. Case H61.

The decision of Board of Review No. 1, issued on 12th December 1975, and reported as Case G81,
75 ATC 572, is the second case which I would regard as identical in all essential aspects with the present one. There the taxpayer, a fashion supervisor at a department store, was required to wear a black dress, with certain restrictions as to style, length and trimmings. Confirming the assessment, the Board held the expenditure in question was of a private nature, and was therefore excluded from deductibility under sec. 51. In the Board's opinion, the clothing did not satisfy either the `necessary and peculiar' test or the `abnormal expenditure on conventional clothing' test.

This Board is not bound to follow the decisions of the other Boards, but it will normally do so unless it is convinced that its counterparts elsewhere have fallen into error. In the present instance, so far from holding any view that the above quoted cases were wrongly decided, I am firmly of the opinion, with respect, that those cases were correctly decided, and that I, in the present reference, must likewise come to a conclusion that is adverse to the taxpayer.''

5. I have no doubt that Mr Dubout's decision was a correct exposition of the law. The claim in that case failed on the basis that the expenditure in question was of a private nature, and thus excluded from deductibility under sec. 51(1). Applying the same reasoning to this case, I conclude that, notwithstanding the expectation of the employer that officer cadets must have a lounge suit, the expenditure is none the less of a private or domestic kind. Again quoting from Mr Dubout in Case H32,
76 ATC 280, a case dealing with the replacement cost of stockings regularly laddered at work, Mr Dubout said at p. 282:

``But merely because the need for an expenditure arises during the seven or eight hours of the working day, it by no means follows that that expenditure will qualify for deduction under sec. 51. Nor does it necessarily profit a taxpayer to show that a particular expenditure had to be made as a matter of compulsion e.g. the point taken for the taxpayer in the present case that the employer directed that stockings be worn.''

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ATC 1116

6. For the above reasons, this aspect of the claim cannot succeed.

7. Dealing with the claim for the books relating to wars, etc., I am satisfied that these books were acquired and used by the applicant in the course of his work. In this circumstance, the argument advanced on behalf of the respondent that the expenditure had to be characterised as having been incurred for purposes of self-education expenses and thus merely rebateable under sec. 159U, must be rejected. Textbooks are items of capital and therefore not deductible under sec. 51. However, they may be depreciated pursuant to sec. 54.

8. Applying an appropriate rate of 15%, the applicant is thus entitled to a claim for $18.

9. The Tribunal therefore varies the decision under review by decreasing the taxable income of the applicant by $18.

Claim allowed in part