Case L21

Judges:
HP Stevens Ch
CF Fairleigh QC
JR Harrowell M

Court:
No. 1 Board of Review

Judgment date: 10 April 1979.

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H.P Stevens (Chairman); C.F. Fairleigh Q.C. and J.R. Harrowell (Members): In his return of income for the year ended 30 June 1977 the taxpayer, a school teacher, claimed a deduction of $2,898 in respect of overseas travel which cost $3,111. The basis was the claim of some expenses, e.g., air fares and passport in full, with an apportionment of some other expenses, i.e., hire car, petrol, bus fares, accommodation (other than for seminars and training courses, claimed in full) and general expenses on a time basis of 88 days out of 130 days, i.e., 68%. (In the course of the evidence a different apportionment was introduced, but that is of little consequence.)

2. The Commissioner adjusted the income as returned by reducing the deduction for air fares and passport to 68% and so increasing the taxable income by $337. A notice of assessment issued accordingly. The taxpayer objected thereto and the Commissioner decided to disallow the objection. That decision was referred to a Board for review.

3. At the hearing the Commissioner's representative maintained that in the circumstances as presently known the taxpayer was not entitled to any deduction at all for the expenditure. Nonetheless the Commissioner did not present a case for an increase of the taxable income as assessed.

4. At all relevant times the taxpayer has been a secondary school teacher and has held a Bachelor of Science degree and a Diploma of Education. In years preceding and following the one in issue he taught such subjects as biology, physics, chemistry, mathematics and geology; and in 1976 he taught a further normal curriculum subject entitled ``Rock climbing and camping''. That subject is one of a number of outdoor education subjects which are allied to outdoor activities.

5. Despite his wishes to do so and because of circumstances beyond his control, the taxpayer was unable at the relevant time to obtain an Overseas Award which would have secured payment of his air fares and of some of the cost of accommodation overseas.

6. The taxpayer departed from Australia on 5 September 1976 and returned on 28 January 1977. He was on leave without pay, a concession rarely granted by the school authorities, from 13 September 1976 until 31 January 1977.

7. Before leaving Australia the taxpayer wrote to the director of the Sports Council of a National Mountaineering Centre in Wales and obtained permission for an outlay of £430 (sterling) to attend a ten week outdoor education course. He applied for and obtained permission to undertake other outdoor courses elsewhere in the United Kingdom.

8. The major activities of the taxpayer whilst in the United Kingdom were:

 11.9.76 to 20.11.76       Ten week outdoor education course at the
                           mountaineering centre in Wales.
20.11.76 to 21.11.76       Teachers' seminar and outdoor activities at a
                           college in Wales.
30.11.76 to 1.12.76        At two colleges of outdoor education in Scotland.
 2.12.76                   At a Field Studies and Environmental course
                           conducted by an education committee in


         Manchester.

 3.12.76 to 8.12.76        At two colleges of education (Cumbria and
                           Macclesfield).
10.12.76                   At a High School, with outdoor pursuits, in Derby.
13.12.76 to 15.12.76       At a Teachers' College in Exeter which is concerned
                           with outdoor education.
 8.1.77 to 10.1.77         At two education centres (Ogwyn and Birmingham)
                           which are concerned with outdoor education.
      

9. The taxpayer travelled to the United Kingdom and incurred the expenditure as referred to in para. 1 hereof because he has a particular interest in teaching such curriculum subjects as rock climbing and camping. He had hopes and expectations that his attendance at courses in the United Kingdom and the gaining there of additional experience would lead to promotion as a school teacher in Australia whether at his present or some other school. As mentioned in para. 10 hereof these hopes and expectations were to some extent fulfilled.

10. After his resumption of duties in Australia in early February 1977, the taxpayer conducted an in-service course for other teachers on elementary light weight camping; this course was sponsored by the schools authority and he was paid $300; he has regularly visited other schools for the purpose of conducting an in-service course on trails and camping; and, at material times, he has been a member of a Government working committee on ``Outdoor Education''. In the present year (1979) the taxpayer has received a teaching allowance for his part in organizing outdoor activities/outdoor education and for taking care of the equipment for those pursuits.

11. Whilst there is an observation by Dixon C.J. in
F.C. of T. v. Finn (1961) 106 C.L.R. 60 at p. 68; 12 A.T.D. 348 at p. 351 with respect to outlaying money ``in the acquisition of better knowledge'' the gravamen of the judgment is the stated conclusions of Dixon C.J. the fourth of which is that ``it was all done while he was... acting in accordance with the conditions of his service''. So also Kitto J. C.L.R. at p. 70; A.T.D. at p. 352 said that ``in making the investigations and studies which he pursued during his period of leave(he) was acting within the scope of his office, and therefore in the gaining of his salary''. In agreeing, Windeyer J. said that each case of this sort must depend on its own facts (p. 70; p. 352).

12. The other leading authority on this subject is
F.C. of T. v. Hatchett 71 ATC 4184; (1971) 125 C.L.R. 494 where Menzies J. drew the distinction between the teacher's Higher Certificate which resulted ipso facto in an automatic increase in salary (possession of the certificate carrying with it a higher salary range immediately) and the university degree which did not have that result.

13. The taxpayer does not assert that there was a term implied in the conditions of his employment (nor was there any express condition) that he should undertake the journey overseas and incur the expenditure which is here in issue. There was not any ``automatic'' increase in salary as a result of the journey and investigations overseas; and it does not assist the taxpayer merely to achieve a higher income after his return to Australia, even in the circumstances set out in para. 10 hereof.

14. In any consideration of the right of an employed person to a deduction for expenditure under sec. 51(1) it is necessary to confine attention to the first positive limb of sec. 51(1) where the deduction is not lost by reason of the exclusions set out in sec. 51(1).

15. It is not sufficient for an employee as a matter of choice, even with the encouragement of an employer (and not as a condition, i.e., a term implied or express, of the employment) to undertake expenditure which the employee believes will increase his prospects of promotion or otherwise enhance his ability to earn income. The relevant case law has been analysed in recent decisions of this Board, e.g., the quorum decision in Case K29
78 ATC 281.

16. The evidence shows that the outlays here in issue (more particularly the air fares and passport expenses) were not incurred in the course of gaining assessable income present or future.

17. The decision on the objection is upheld and the assessment is confirmed.

Claim disallowed