Case V74

Members:
RK Todd DP

Tribunal:
Administrative Appeals Tribunal

Decision date: 6 May 1988.

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R.K. Todd (Deputy President)

The objection decision under review is challenged by the taxpayer on the basis that the Commissioner should have allowed the applicant a deduction of $2,494 as an expense incurred in gaining or producing assessable income during the year ended 30 June 1986. The expenditure in question related to such part of the cost of a Canadian canoe expedition as had been incurred in that year.

2. The applicant in this matter is a teacher of Years 11 and 12 students only. She teaches media studies and a variety of units which may be described as ``outdoor education''. The applicant has taught outdoor education at the school since 1983. Before that time she was involved in this area through the Outward Bound organisation, both in Australia and in the United Kingdom. While she has not undertaken any formal qualification in outdoor education she has had a personal interest in it for some time.

3. The outdoor education activities in which the applicant is involved at the school are many and varied. Her oral evidence was not entirely clear as to what outdoor education units she had been teaching, but she provided a written description of two courses in which she is named as one of the proponents. The first of these is the ``Rope and Rucksack'' course which comprises several units. The aims and contents of these units, as stated in the written description, are set out as follows:

``Aims

(1) To provide students with the opportunity to enjoy outdoor activities, such as caving, rock climbing, bushwalking, canoeing, cross-country skiing, orienteering and scuba diving.

(2) To increase the students' knowledge of the techniques used in some of these activities and to give them opportunities to practise them and to improve their skills.

(3) To help the students to become aware of the safety precautions needed in such activities and to guide them to use these at all times.

(4) To help the students to become aware of the trust and co-operation that can develop when they work in groups in these activities.

(5) To foster a concern for conservation of the delicate wilderness environment.

Content

Preliminary sessions will be run for the learning and practice of the skills needed and for planning the excursions.

Excursions will be organised to suitable areas such as the Budawangs, Bungonia, the Blue Mountains, Kosciusko National Park, Red Rocks and Booroomba. These will be either for a single day or for extended periods.''

4. The second course is the ``Wilderness Expedition'' course which also consists of several units. These units may only be undertaken by Year 12 students who have enrolled in Rope Rucksack units and who have had experience in short excursions. The aims and contents of these units, described in the written material provided to the Tribunal, are set out below:

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``Aims

(1) To give the students the opportunity to visit wilderness areas some distance from the local region.

(2) To increase the students' skills in expedition planning including such areas as transport, equipment and food.

(3) To help the students to become aware of the social skills needed to live and work in a closely-knit group for an extended period of time.

Content

Excursions will be organised to suitable wilderness areas and will be of either two weeks or one week duration.

Students will be expected to organise their own camping equipment and to help in the planning and preparation of food for the group.

Activities will depend on the area visited and could include bushwalking, rock-climbing, caving or cross-country skiing.

Students will be expected to participate in the organisation and care of any necessary equipment.

The expedition will normally be held during a college vacation.''

5. At the commencement of the hearing I was shown slides of some expeditions and trips undertaken by the applicant with her students. The activities observed included abseiling, rock climbing, cross-country skiing, snow camping, liloing, bushwalking and kayaking. It is clear that these activities had required a great deal of preparation, responsibility and skill on the part of the applicant. Such excursions could be quite unsafe unless a proper degree of skilled supervision were exercised. This necessarily requires the applicant to possess a great deal of confidence in her own ability to undertake the excursions with her students, and for the students likewise to repose confidence in, and respect for, her skills. The applicant must provide competent instruction and supervision of particular activities, and on longer excursions she must help the students to plan and organise their trips, to maintain social interaction and harmony between students, and to deal with difficult situations in the wilderness where outside help is not available. These skills could not be obtained from merely reading a book or attending a seminar. They necessarily have to be acquired by actually going out into the field and participating in and experiencing different situations. It is a matter of experiential learning.

6. The applicant stated that it was necessary for her to have experiences that would stretch her abilities and thus make her better able to cope with the challenges involved with her school excursions. She sought to push her students to their limits and it was therefore necessary for her to have stretching and broadening experiences in order to help her students do the same thing on a lesser scale. A witness called by the applicant, who was also an outdoor education teacher, stated in evidence that:

``It is an ongoing concern of every outdoor education teacher, certainly every outdoor education teacher who I know, to keep up with their skills so that they have a sense of control over every activity that they run. It is not enough... to have started your training... 10 years ago and to be relying on trips that have been done in the past.''

7. When the applicant learned of the trip to Canada, she decided that it was necessary to participate in it because it would provide the experience that she required to expand her skills in outdoor education. She described it as a trip of ``huge significance in gaining an understanding of all kinds of elements in outdoor and wilderness pursuits'' and a ``very significant remote wilderness expedition''. It involved canoeing down the Back River in the Canadian Arctic following an historic journey of Captain George Back, and it occupied exactly six weeks. The planning for the trip began a year beforehand and involved planning every meal for the six weeks. The applicant, her fellow expeditionists, their canoes, supplies and 60 per cent of their food were flown to the source of the river where the trip was to begin. The other 40 per cent of their food was to come from fishing. The applicant stated that she had never before done a trip of this length and difficulty in such a remote spot. I was persuaded by the evidence put before me that she had to call on all her past experiences because the trip was very tough. The expeditionists encountered many rapids on the trip which even with the applicant's previous

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experience were initially a problem. It was often necessary to plan which of the river's channels to take in order to avoid disaster. There was sometimes snow and ice to contend with and thus defensive paddling was required so that the canoes were not capsized. Where the rapids were not navigable a decision had to be taken to carry the boats around the rapids. The boats were extremely heavy when laden with supplies and equipment since the supplies were intended to last eight people seven weeks. When the wind blew up on the lakes that were traversed the routine was changed so that the expeditionists travelled by night and slept by day. Undoubtedly this was extremely stressful. However it was considered important to keep the speed of the trip consistent so that participants felt that the expedition was in control.

8. There were other challenging aspects of the trip. Firewood was extremely scarce and often took many hours to collect. Therefore the expeditionists had to use it carefully and they constantly had to increase their burdens by carrying it on their canoes. There was also the continuing presence of unpleasant insect life: mosquitoes and black flies abounded. The Tribunal was shown a slide which confirmed the nature of the problem. The applicant stated that it was always necessary to wear protective clothing against the insects, and went so far as to say ``We ate them, we breathed them, they bit us''. The expeditionists were also concerned about bears. Fortunately however they had only one encounter with a bear which was described as friendly. Furthermore, the weather was very cold, despite the fact that it was summer. Lastly, the applicant stated that it was a very demanding social situation, living with seven people for six weeks.

9. While the trip was extremely gruelling, it provided a significant opportunity to improve and develop the applicant's river skills. It increased her general level of confidence, in particular giving her confidence to embark on such a testing excursion, and confidence to be able to supervise her students properly on trips. As seen by the above difficulties and hardships that were encountered this is not the sort of trip that would be undertaken lightly. The venture is not to be compared with a package tour supervised by a leader and not requiring participants to be involved in the organisation of the trip. While there were probably elements of private inspiration in her wish to participate in the trip, it is my belief that the applicant went primarily and principally because she earnestly desired to develop herself further as a teacher of outdoor education.

10. Unlike as in so many other cases the applicant did not contend that the expenditure in question was made to help her short term promotion prospects. Rather she stated simply that she undertook the trip because she believed it was essential to the proper execution of her job. It was a necessary part of her job. The evidence was confusing as to whether it is possible to be promoted at the school in the field of outdoor education. At best it seems that the applicant's chances of promotion in this area in the near future are remote. It is however unnecessary to decide this point conclusively because the applicant does not in any event seek to argue that this is the case.

11. The representative of the Commissioner argued that since, as he claimed, the applicant taught only two of her 18 hours of teaching in the area of outdoor education in the year in question, it was unnecessary to undertake such a trip. However the applicant stated that in actual fact 50 per cent of her time was spent in outdoor education when weekend trips with students were taken into account. She stated that these trips were a necessary part of her participation in the course. Without this commitment she believed that it would be questionable whether she would still be tolerated as an outdoor education teacher at the school.

12. It should be noted that the applicant apportioned her expenditure in 1986 for her overseas trip between what she was prepared to concede were private expenses on the one hand, and those expenses claimed to have been incurred in the process of producing assessable income on the other. While overseas she not only participated in the canoe expedition but she also went climbing in California and Oregon and walking in Washington State. She also visited Toronto, London and New York. The applicant recognised that the latter activities were of a private nature and therefore has only sought to claim a deduction for the cost of the Canadian canoe expedition. That claim however includes the cost of the airfare, payment of which was requisite in order that she undertake the trip in question.

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13. The question to be determined by the Tribunal in this matter is whether the relevant expenditure incurred is deductible under sec. 51(1) of the Income Tax Assessment Act 1936 (``the ITAA''). In any inquiry such as this the first authority which must be considered is
F.C. of T. v. Finn (1961) 106 C.L.R. 60. Dixon C.J., as he then was, said in that case at p. 64 that:

``it is indeed important that officers and employees engaged at a salary in the exercise of a skilled profession should not be in a worse position in respect of the costs of better equipping or qualifying themselves in point of knowledge and skill than are those exercising the same profession as a calling remunerated in fees paid by clients or by the members of the public who, under whatever style, enlist their services.''

He went on to say at p. 68 that ``the acquisition of better knowledge of a skilled profession'' does not fall within the exceptive provisions of sec. 51(1). Kitto J. was in agreement, but went further and stated that even where prospects of promotion are put to one side, expenditure will be deductible where it is incidental ``to the proper execution of his office'' (at p. 69). Windeyer J., in the same case at p. 70, stated:

``a taxpayer who gains income by the exercise of his skill in some profession or calling and who incurs expenses in maintaining or increasing his learning, knowledge, experience and ability in that profession or calling necessarily incurs those expenses in carrying on his profession or calling.''

and then further down the same page:

``Outgoings incurred for the genuine purpose of acquiring or maintaining knowledge and skill in a vocation do not become an outgoing `of a private nature' simply because the taxpayer got pleasure and satisfaction in increasing his knowledge and attainments.''

Windeyer J. also observed that the outcome of any such case will necessarily depend on its own facts.

14. There have been many cases relating to teachers seeking deductions for overseas travel which have come before the Tribunal and the Boards of Review: See Case U120,
87 ATC 721; Case R73,
84 ATC 509; Case Q104,
83 ATC 522; Case R20,
84 ATC 201; Case U109,
87 ATC 657; Case T65,
86 ATC 464; Case L21,
79 ATC 103; Case L43,
79 ATC 268; Case T47,
86 ATC 381; Case T23,
86 ATC 228 and Case S1,
85 ATC 102. The cases have developed indicia which provide a guide as to when the expenses relating to an overseas trip will be deductible under sec. 51(1) of the ITAA. It has been stated often that promotion to a higher grade as result of travel may be decisive. Travel in accordance with conditions of service or as requested is also seen as a significant factor. Further, status as what has been described as a ``master teacher'', whatever that means, has also attracted consideration. Active encouragement by way of paid leave or specific request have also been accepted as helpful indicia.

15. In
F.C. of T. v. White, 75 ATC 4018, Helsham J. interpreted Finn's case as meaning, inter alia, that expenditure on travel which was ``part and parcel'' of a person's job and was appropriate to the position held was deductible. A similar approach was taken in
Griffin v. F.C. of T., 86 ATC 4838. In that case a professional engineer employed by a State railway went on an overseas trip while on long service leave in order to study developments in overseas railway electrical systems. He had not been asked to take this trip and there was no reliance on the question of promotion. He succeeded in his claim for a deduction for the expenditure incurred in travelling overseas because it was held that the purpose of the trip was ``so he better equipped himself to carry on as a professional engineer'' and was ``designed to ensure, as best he could, that he brought the highest degree of professional skill to the carrying out of his task.'' (at p. 4845). Teachers are professionals and are expected to exercise a high degree of skill in the exercise of that profession. In the case of a gifted teacher, he or she will seek to exercise such skill as a matter of self-motivation. Without such, their ability to teach inspirationally will wither.

16. Three cases involving school teachers claiming deductions for expenses incurred on overseas trips have followed a similar line. In Case T47 (supra), a French teacher had travelled to France and undertaken a six week professional development course. Her headmaster had encouraged her to attend and had granted her nine days paid leave to enable her to complete the course. Although there was

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no foreseeable chance of promotion, these costs were held to be losses and outgoings in the course of gaining her assessable income as a teacher. The second case is Case T23 (supra). In this case the taxpayer approached his headmaster and asked to teach a higher level of Italian than that already taught by him. He suggested that while he was in Italy that year for his summer vacation he would complete a course of advanced Italian which would qualify him to teach a higher level. He later taught this level but was not promoted or paid a higher salary as a result. The No. 1 Board of Review decided that the course was a combination of ``keeping up-to-date and broadening his knowledge''; ``it was part and parcel of his professional income-producing activities'' (at p. 231). Therefore the Board allowed the costs of attendance at the course. Finally in Case S1 (supra), a French teacher who intended travelling to Europe with his wife on his summer vacation changed his plans to include France at the suggestion of his headmaster. He was not provided with any extra leave and did not foresee a promotion as the result of his visit. Although he did receive a promotion the Board did not perceive a connection existed between the two events. It was held that one third of his costs were deductible.

17. As a member of the teaching profession the applicant is required to demonstrate a very high standard in her work, especially as she teaches the demanding course of outdoor education. Activities such as abseiling, rockclimbing and kayaking could become very dangerous unless properly taught and supervised. She must do what she can to exercise the highest degree of professional skill while teaching her course. Therefore she can legitimately claim expenses for ``maintaining or increasing'' her skills from time to time. It is thus necessary to determine whether the canoe trip down the Back River in Canada involved her maintaining or increasing her skills in outdoor education. I believe that it did. The venture here in question was a special case, not to be in any way compared with a tourist trip, even a tourist trip of a broadly educational kind. It was calculated to lift the applicant's performance in a critical area of her work, and to confer upon her substantially increased confidence in her conduct of outdoor education, a confidence reposed in her own self on a subjective basis, and one that would become evident to those undertaking courses supervised by her, and to those who entrusted their children's safety to her. The trip was an extremely gruelling experience not lightly undertaken. The applicant needed to have an experiential trip. The trip was so rigorous that it would not have been embarked upon except to provide the challenging experience which it undoubtedly represented. On these particular facts, therefore, I believe that the expenditure was sufficiently connected and directed to the gaining of assessable income to support the claim of deductibility.

18. Once a connection is established it is then necessary to determine whether the whole or part of the cost of the airfares to and from Canada is deductible. It has long been established that sec. 51 of the ITAA permits apportionment: see
Ronpibon Tin N.L. v. F.C. of T. (1949) 78 C.L.R. 47 at p. 59. It is thus necessary to determine whether apportionment is called for here. While overseas the applicant also embarked on some private excursions (see earlier detail - para. 12). She does not claim the expenses related to these excursions except to the extent of the airfare which enabled her to undertake them as much as it did the crucial Arctic trip. The time basis of apportionment adopted by the Commissioner has been rejected (see Case R13,
84 ATC 168 and Case S26,
85 ATC 266) in favour of ascertaining the purpose(s) of the trip. In Case T47 Senior Member Mr P.M. Roach stated at p. 388:

``Further, I am of the view that once it is accepted that the taxpayer is entitled to a deduction in relation to the costs of attending the course, it follows that costs of travel... necessarily incurred in order to enable her to attend are also deductible unless they were wholly or in part expenses of capital, or of a capital, private or domestic nature, or were incurred in relation to the gaining or production of exempt income.''

It would seem from Case T47 and I would agree that it does not matter that the activity, in that case attendance at a French course, was overseas. In Case T23, the Italian teacher case, the No. 1 Board of Review apportioned the airfares because part of the trip was for the purpose of holidaying in Italy. This case can be distinguished from the present case because in Case T23 the applicant was going on holidays

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in Italy and then decided to embark on the Italian course. In the present case, the applicant seems to have decided to go to Canada for the purpose of participating in the canoe trip and then to add on some extra excursions of a private nature to her itinerary.

19. For the above reasons I consider that the objection should be allowed. The decision of the Tribunal will be to set aside the objection decision under review and in substitution therefor to decide that the applicant be allowed a deduction of $2,494 as claimed.