Case U120

Members:
BJ McMahon SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 29 May 1987.

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B.J. McMahon (Senior Member)

The applicant started in her profession as a school teacher in 1962 or 1963. She then went to Germany where she taught English for 10 years, returning to Australia in 1975. On her return she took a short course with the New South Wales Department of Education and acquired a certificate recognising her skill as a teacher of English as a Second Language (ESL). Thus equipped, she obtained employment with the department at a Sydney suburban girls' high school as an ESL teacher. She was appointed to be in charge of three other teachers in that department.

2. Her students were principally Asian girls. No detailed syllabus had been drawn up by the department. Because of their language difficulties, the girls were withdrawn from normal classes. It was the job of ESL teachers to do whatever was necessary to assist the girls to return to normal classes as soon as possible. In addition to teaching English, it was therefore necessary for her to liaise with other teachers and, in some cases, to teach courses parallel with those being taught in normal classes.

3. As she had not taught Asians or Moslems before, she became interested in solving problems that were special to their education. In response to an advertisement in a newspaper published by the Teachers' Federation, she applied to be accepted in a party travelling to Indonesia for organised purposes arranged by the Teachers' Federation in conjunction with the Teachers' Association of the Republic of Indonesia. This course was to be held in Bandung in central Java. At the time, the applicant said, she was interested in broadening her experience and in meeting and discussing problems with Indonesian teachers.

4. The journey took place during her normal Christmas holidays. The applicant left Australia on 1 January 1976 and returned on 26 January 1976. She was not paid any allowance for attending the course, either by the N.S.W. Department of Education or by the authorities in Indonesia. As the course was to be held during the annual vacation, it was not necessary to obtain the consent of her headmistress to take part. She did, however, consult with her and with a migrant education officer. They had known of people who had attended similar excursions in the past and were able to give her their views on the nature of the program.

5. After being welcomed at Jakarta, the party went by bus to Bandung where they stayed for 3 weeks. The applicant said that she stayed in a modest hotel in Bandung, a university city.

6. While there she visited schools in company with other members of the party, attending teaching sessions and had discussions with students. She visited a university language laboratory and learned a good deal of the problems that Asian children have in pronouncing English words. She also discussed administration and curriculum problems with Indonesian teachers. A special trip was made to various village schools where the problems of rural school teaching were studied. In addition to these activities, about 3 days were spent in recreational pursuits such as an excursion to a volcano and rice fields, a visit to a Wayang puppet theatre, and attendance at a Moslem wedding.

7. In her return of income for the year ended 30 June 1976, she claimed as a deduction an amount of $640 for fares and $280 for accommodation, making a total of $920. In her return (prepared by an agent) she included this note:

"The expenses claimed were incurred by the taxpayer for a tour of the schools in Bandung, Indonesia in January, 1976. The purpose of this tour was to teach in schools, to meet teachers, parents and citizens of Indonesia. The outcome of this experience was intended to broaden experience and increase her professional knowledge as a teacher in Australia, and to investigate the organisation and administration of education, and the curriculum and methods of teaching used there. The scheme was sponsored by the Australian Teachers' Federation and the Department of Education. Participants paid their own fares and accommodation expenses and were not reimbursed by the Education Department. The expenses claimed were not of a private, domestic or capital nature."

8. Accompanying her return were two documents intended to give the assessor an idea of the nature of the activities carried out and the reason why they were undertaken.

9. There was firstly a tentative program provided by the Teachers' Association of the

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Republic of Indonesia as a guide to what participants might expect. This was in the following terms:

"TENTATIVE PROGRAM FOR A.T.F. OVERSEAS PROJECT PARTICIPANTS IN INDONESIA

1. December 30 - January 2 1976:

• Some groups of A.T.F. teachers arriving Jakarta.

2. January 3 1976:

• Meeting with National Board of PGRI (Teachers Association of the Republic of Indonesia) at 10.00 in PGRI office, Jalan Tanah Abang Tiga No. 24 Phone 41121, 40598 - Jakarta.

3. January 4 1976:

• Leaving Jakarta for some cities in Indonesia where A.T.F. overseas project will be held.

4. January 5 1976:

• - To participate the project in the city was choosed by A.T.F. participants.
• - The program in detail was arranged by provincial board of PGRI but in general was arranged as follows:
  • a). Meeting with provincial board of PGRI.
  • b). To teach English in a Highschool students for 2 weeks.
  • c). To discuss with Indonesian teachers regarding the method of teaching English in Indonesia.
  • d). Australian teachers are required to convey some sugestions [sic] regarding the method of teaching English in Indonesia.
  • e). The provincial board of PGRI will arrange cultural evening or tour for Australian teachers.

5. January 24 1976:

• Australian teachers leaving Indonesia. -

Jakarta December 22 1975

NATIONAL BOARD OF PGRI."

10. Secondly, a pro forma letter signed by the General Secretary of the Australian Teachers' Federation was submitted to give a general background as to the purposes, at any rate of the organisers, behind this tour. The letter was in the following terms:

"TO WHOM IT MAY CONCERN

This is to Certify that

[name and address of applicant]

was a member of a group of teachers who went to Bandung in January 1976.

The purpose of this tour was to teach in schools, to meet teachers, parents and citizens of Indonesia. The outcome of this experience was intended to broaden experience as a teacher in Australia, to contribute to international understanding and goodwill, to gain knowledge of an important neighbouring country and to investigate the organisation and administration of education and the curriculum and methods of teaching used there.

The scheme was sponsored by the Australian Teachers' Federation in conjunction with the Teachers' Organisation, and the Departments of Education and Foreign Affairs in Indonesia. The teachers attended school every day, to teach or to observe and discuss matters of common interest such as the Universities, Teachers' Colleges, special schools, vocational schools, centres for arts and crafts and the like.

No fee was paid for these services. Participants paid their own fares and accommodation expenses.

[The applicant] paid $640.20 for the fare and $6.40 for a visa.

(sgd George T. Smith)

George T. Smith

General Secretary"

11. The claim was disallowed and the applicant objected to that decision on the grounds that the sum claimed was necessarily incurred by her in gaining or producing her assessable income, and was not a loss or outgoing of a capital, private or domestic nature. That objection was also disallowed.

12. On 8 August 1978 the applicant requested that the objection be referred to a Board of Review. For some extraordinary reason, for which no explanation was offered,

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it took over 7 years for the Australian Taxation Office to respond to that request. The objection was not referred to a Board of Review until 13 December 1985. By virtue of the provisions of the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986, the matter now comes before this Tribunal for review.

13. Certain other deductions that had been claimed in the return for the same year of income had also been disallowed. However, I was informed that because of the delay, the respondent was prepared to concede these claims. The only matter in issue, therefore, relates to the expenses of overseas travel and accommodation.

14. The applicant said that she benefited from the trip in many ways. She said that she learned how Indonesian teachers taught English and how they solved problems peculiar to Indonesian-speaking students in pronunciation of English words. The films that she exposed and the artefacts that she acquired during the course of this visit were also used by her and by the Geography Department in her school as teaching aids.

15. A year after her return she applied for and passed her "second promotion list" which entitled her to be a mistress in charge of girls. This was a senior position involving dealing with administration problems such as truancy, complaints from parents and the like, and liaising with the school counsellor. No suitable vacancy has arisen since she passed that test. Her priority number is something like 800 and she does not expect that promotion for some time to come. However, in 1977, a year after the Bandung visit, she was in fact promoted to the lesser grade of Form Supervisor. This involved an increase in salary. She agreed that such promotion was internal and was made by the head mistress after her personal assessment of each teacher. She agreed that she had acquired many skills as a teacher in Germany, although for official purposes the years that she spent there were not counted. She believes that, nevertheless, the 3 weeks she spent in Bandung over a year previously would have had some bearing on her minor promotion. She had become known through the knowledge she had of teaching migrant girls, and this knowledge had been contributed to by the period in Bandung. Furthermore, one of the factors in her selection for promotion, she said, was her demonstrated ability to participate in activities outside school. She agreed that the position to which she was appointed, Form Supervisor, had nothing in particular to do with teaching migrants.

16. She could not remember whether she had any Indonesian students at the time of her trip, but was quite sure that there were other Asians and Moslems in her class and that a study of their problems in their own environment would be of assistance in helping her to teach them on her return. She had considered a similar trip to Malaysia but discarded that in favour of the Indonesian trip because it was closer and cheaper. Furthermore, in Indonesia there were two religions, Moslem and Hindu and the solution of religious problems in teaching interested her. She did not, however, go to Bali, the Hindu centre of Indonesia.

17. She confirmed that her purpose in going was to make herself a better teacher and there can be no doubt of the sincerity and earnestness with which she pursues her profession. She is now doing a Master of Arts course in migrant studies. When she obtains that degree she says that she can apply for consultative jobs. She believes that her Bandung experience will be useful in completing this course. Although the trip was personally and professionally satisfying, her principal aim was not so much to take a holiday as to improve her capacity as a teacher.

18. Although her original objection was framed in terms of section 51(1) of the Income Tax Assessment Act, it is possible that the applicant herself has not read the section. For convenience of reference, its terms are now set out:

"51(1) [Deductions for losses and outgoings] All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or of a capital, private or domestic nature, or are incurred in relation to the gaining or production of exempt income."

It will be seen that in order to claim the benefit of exemption under this section she must bring herself within one of the two limbs. In her

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concluding address, the applicant referred to what she believed was unfair discrimination in allowing deductions to, for example, dentists who attend conventions while denying her claim. The principal difference between the two situations is that the dentist is carrying on a business and therefore comes within the second limb. the applicant is not and comes within the first. As a salaried employee, she must establish that the outgoings were incurred in gaining her assessable income, namely her salary, and secondly that the outgoings were not of a private nature. These are the only issues to be addressed. The worthiness of motives, the desirability of self improvement, the value to the community are at best of peripheral concern. This Tribunal, being in the same position as the Commissioner, is confined to an examination only of the relevance of the outgoings to the gaining of salary.

19. I recently had cause to review the large number of decisions concerned with claims for overseas travelling expenses by schoolteachers. In Case U109,
87 ATC 657, I observed that there were so many such cases that they constitute a separate genus. I adverted to the various principles that had been distilled from the decisions there discussed. As indicia of the way in which claims of this nature have been treated in the past, they may be summarised as follows:

• (a) promotion to a higher grade as a result of the travel may prove decisive. However, the promotion must be clearly and proximately linked with the travel.
  F.C. of T. v. Finn (1961) 106 C.L.R. 60 at p. 67;
  F.C. of T. v. Lacelles-Smith 78 ATC 4162;
  F.C. of T. v. Wilkinson 83 ATC 4295.
• (b) If advancement in grade or salary forms a real and substantial element in the combination of motives for undertaking the travel, this too could be decisive. Finn.
• (c) It is material to consider whether the travel is of "distinct advantage to his work" so far as the employer is concerned. Finn.
• (d) It is important to consider whether the travel is in accordance with the conditions of service. Finn.
• (e) A general consideration that the travel will result in a better teacher is not sufficient to form the "perceived connection" between the outgoing and assessable income.
  F.C. of T. v. Hatchett 71 ATC 4184 at p. 4187.
• (f) Expenditure for the travel will be deductible if it can be shown to be part and parcel of the employment, "which means that the expenditure is incurred in the process of carrying out the employees' duties".
  F.C. of T. v. White 75 ATC 4018. This is another way of stating proposition (d) above.
• (g) If there is no real possibility of promotion (for example, if the applicant finds himself at his maximum grade), this is regarded as an important factor. Cases Q57
  83 ATC 307; P19,
  82 ATC 81; and P79,
  82 ATC 386.
• (h) The fact that travel arrangements are carried out in conjunction with special study tours, rather than general packaged tours, is not of itself sufficient to demonstrate the necessary connection with the earning of assessable income. Cases Q86,
  83 ATC 432; R109,
  84 ATC 727; and U54,
  87 ATC 354.
• (i) The specialist nature of teaching duties, such as that of a master art teacher or an Indian history teacher, may make it incumbent upon the teacher to carry out the travel involved. In such a case the travel would be incidental to the proper execution of his office. Cases R73,
  84 ATC 509; and T65,
  86 ATC 464.
• (j) Active encouragement by way of provision of paid leave or by way of specific request of a headmaster to travel will be of significance in demonstrating that the travel was carried out in the course of employment. Cases S1
  85 ATC 102; T23
  86 ATC 228; and T47,
  86 ATC 381.

20. The present applicant's case may now be looked at in the light of these principles.

21. It cannot be said that she was required to travel, either by her headmistress or by the exigencies of her employment. There was no requirement in her classification as an ESL teacher that the travel be carried out. She had permanent employment and that employment would not have been in any way affected had she not undertaken the travel.

22. The connection between her travel in January 1976 and her promotion to Form

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Supervisor in 1977 must be regarded as tenuous. The particular experience that she obtained in Bandung was not relevant to the promotion, except in the broad sense to which she referred, namely that it displayed an interest in extra curricular activities. It gave her none of the qualities that she was required to bring to the position of Form Supervisor. She is a woman of some breadth of experience and undoubtedly would have been promoted in any event.

23. The travel was not connected with any income-producing activities. No fee was paid for any work that she may have carried out with students in Indonesia, nor was any allowance paid by the department either then or in reimbursement for her expenses.

24. Her principal purpose was to improve her ability and confidence as an ESL teacher. This is the type of general consideration referred to by Menzies J. in Hatchett. It is not enough to connect the travel with her income-earning activities.

25. In the application of these guidelines it must be understood that there is no reflection on the applicant personally. She was somewhat indignant at the suggestion that she had no need to improve her capacities and that this proposal was just another aspect of what she called "teacher bashing". The question to be resolved here is not whether the applicant is an adornment to her profession (and I have no doubt that she is). The question is whether the expenses she incurred were in the course of gaining assessable income. The question is whether there is a "perceived connection" between this expenditure and the salary she received on her return. The question is whether the moneys that she spent were "incidental or relevant" to the earning of that salary. In the light of all the above authorities the question must clearly be answered in the negative.

26. The objection decision under review is therefore affirmed.