Case T29

Judges:
KP Brady Ch
JE Stewart M
DJ Trowse M

Court:
No. 2 Board of Review

Judgment date: 30 May 1986.

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

In this reference, which is concerned with the year of income ended 30 June 1983, the question for decision is whether the separate net income derived by the taxpayer's brother, an ``invalid relative'' for purposes of sec. 159J(6) of the Income Tax Assessment Act 1936, precludes the taxpayer from claiming the concessional rebate otherwise available to him under the terms of sec. 159J(1) and (2).

2. It was common ground that the taxpayer and his brother were both residents of Australia, also that the taxpayer was retired from employment and that the brother lived with him and was looked after by him. More particularly, it was agreed that the brother could properly be described as an ``invalid relative'' as defined in Subdiv. A of Div. 17 dealing with concessional rebates. The main point in issue was the proper meaning to be given to the term ``separate net income''.

3. In compiling his tax return for the year in issue, and more specifically in completing details as to the separate net income of his invalid brother, the taxpayer stated that his brother was in receipt of an invalid pension but did not advise the amount of that pension. He then went on to claim the maximum amount of rebate, viz. $376.

4. Whether or not a taxpayer may obtain the full amount of rebate is affected by considerations as to the dependant's separate net income. On that matter, sec. 159J(4) states as follows:

``The amount of the rebate otherwise allowable under this section in respect of a dependant shall be reduced by $1 for every $4 by which the separate net income derived by the dependant in the year of income exceeds $282.''

Accordingly, if the separate net income of the dependant amounted to $282 or less there would be no adjustment required to be made to the full rebate of $376. For amounts between $283 and $1,785 inclusive, there is need for adjustment, and the rebate is wholly eliminated when the separate net income reaches a figure of $1,786.

5. In the instant case, the Commissioner ascertained that the taxpayer's brother received separate net income of $4,166 in the year of income in issue in the form of an invalid pension. That figure was not contested by the taxpayer. Accordingly, in raising the assessment the Commissioner disallowed in total the taxpayer's claim to a rebate in the amount of $376.

6. The taxpayer, who conducted his own case, made the following two main points in putting forward his various submissions:

• first, Parliament could not have intended that ``separate net income'' should include an invalid pension as its inclusion negates

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  the purpose of the rebate, viz. to give a measure of financial help to taxpayers who have the task of looking after and caring for invalid relatives; and
• • secondly, and in any event, the provisions as to ``separate net income'' contained in sec. 159J did not operate in his situation as his brother was not a dependant of his, nor, for that matter, of anyone else.

7. The words ``separate net income'' are not defined in the Act. However, sec. 159J(6) tends to narrow the phrase by excluding certain receipts. As regards the year of income under review, the exclusions were:

``... family allowance, or a handicapped child's allowance, paid under the Social Security Act 1947, amounts paid under a scheme for the provision by the Commonwealth of assistance in connexion with the education of isolated children or domiciliary nursing care benefit paid under Division 5B of Part V of the National Health Act 1953-1975.''

8. It is clear, we believe, that invalid pensions are not amongst the items expressly excluded, and in keeping with the rule of statutory interpretation that one must intend the legislature to have meant what it has actually expressed (see Maxwell on Interpretation of Statutes, ninth edition, p. 4), it is evident, we consider, that invalid pensions must be taken into account in arriving at a dependant's separate net income. Accordingly, in our view, the Commissioner acted properly in treating the amount of pension income of $4,166 as the separate net income of the invalid brother. Through the operation of sec. 159J(4), that level of income had the effect of eliminating the taxpayer's claim for rebate, and thus we rule that no part of the amount of $376 was properly claimable by him.

9. As regards the taxpayer's further submission that his invalid brother was not a dependant, it may have been true in the general sense, although not altogether clear from the evidence, that his brother did not depend on him in any major way for support (see the definition of ``dependant'' in the Shorter Oxford English Dictionary). However, for purposes of the operation of sec. 159J, a person is said to be a dependant where, first, that person, being a resident of Australia, is of the category of persons specified in column 2 of the table set out in subsec. (2) of the section and, secondly, where the taxpayer contributes to his or her maintenance. The taxpayer's brother was of that category, and it was the taxpayer's own evidence (refer to pp. 7a and 18 of the transcript) that he made many outlays for necessities on his brother's behalf. Accordingly, for the purposes of the section, we find that the brother was a dependant of the taxpayer. The point that the taxpayer made in his evidence, that the Supreme Court of Victoria, when ordering the Public Trustee to decertify his brother, did not make an order making him his dependant, is not relevant to the issue before us.

10. It may be considered a matter of some regret that the Act provides no relief in the situation where an invalid relative receives income higher than the cut-off point determined by the sec. 159J(4) formula, particularly when the section is in the nature of a relieving provision. However, the words of sec. 159J(6) are plain, and we have no alternative but to follow them.

11. Before making the necessary order, it is appropriate that we make mention of two other matters that were included in the taxpayer's notice of objection. The first matter related to additional tax of $68 levied for late payment of amended assessments for certain past years, whilst the second matter related to provisional tax which apparently had been incorrectly levied by the Commissioner in his assessment for the year in issue. However, as regards the late payment penalty, the Board is precluded by the operation of sec. 193(2) from examining the matter and, in any event, we consider that the matter was not properly before us as it did not relate to the year of income in issue.

12. In regard to the provisional tax issue, we were informed by the Commissioner's representative that a credit had been passed so as to eliminate the charge in the issue of the taxpayer's 1983/1984 assessment. What should have been of some reassurance to the taxpayer was his further comment ``that there is nothing outstanding in the taxpayer's account, currently''. It follows, we consider, that we need not comment further on the above matters.

13. For the reasons detailed above, we uphold the Commissioner's action in

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disallowing the taxpayer's objection and we confirm the assessment.

Claim disallowed