Case U215

Members:
HE Hallowes SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 25 November 1987.

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H.E. Hallowes (Senior Member)

The applicant objected to his personal income tax assessments for the years ended 30 June 1984 and 30 June 1985. At a preliminary conference preceding the hearing of this application the respondent conceded the claim made by the applicant for the year ended 30 June 1985. For the year ended 30 June 1984 the applicant claimed a deduction of $247.50 being:

"Cost of meals missed at home due to part-time study at Q.I.T. for attainment of Bachelor of Applied Science - Required for future promotion (15 weeks, 3 night/week @ $5.50 per night)."

2. Subsection 51(1) of the Income Tax Assessment Act 1936 ("the Act") provides:

"All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable 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..."

3. The applicant further claimed a rebate for his spouse of $752 stating that she had a separate net income during the year of $1,395. The respondent adjusted the claim by allowing the sum of $552 and advised the applicant that the adjustment was to the maximum rebate allowable pursuant to sec. 159J of the Act. The applicant stated that his spouse was also a dependent student and under the age of 25 years wholly dependent upon him. He said that he had incurred considerable expenditure in maintaining his spouse at her studies "in addition to what could be considered normal spouse activities".

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4. The respondent referred the taxpayer's objection to assessment to a Board of Review in Brisbane on 18 April 1986. Under the provisions of the Taxation Board of Review (Transfer of Jurisdiction) Act 1986 the functions of the Taxation Boards of Review were transferred to the Administrative Appeals Tribunal with effect from 1 July 1986. On 27 June 1986 the Administrative Appeals Tribunal, Brisbane Registry advised the applicant of a preliminary conference to be held in Brisbane. On 3 July 1986 the applicant advised:

"Unfortunately since I have moved to Victoria I will be unable to appear before the Tribunal as was my original intention. However, I still would wish to attempt to present my case in this letter."

He concluded his advice by saying:

"I appeal for all sections of my claim to be upheld."

The applicant now lives at Hamilton, Victoria. On 16 July 1986 the applicant was advised that in the circumstances his application had been transferred to Victoria. The application was set down for a preliminary conference in Melbourne in February 1987. The applicant acknowledged advice of the date of the preliminary conference but confirmed his advice to the Brisbane Registry that he would be unable to attend the proceedings. He said:

"I wish my case to be based solely on my written submission as given to the Brisbane office early this year."

5. At the hearing of the application the respondent asked the Tribunal to dismiss the application without proceeding to review the decision pursuant to sec. 42A(2) of the Administrative Appeals Tribunal Act 1975 which provides:

"If a party to a proceeding before the Tribunal in respect of an application for the review of a decision (not being the person who made the decision) fails either to appear in person or to appear by a representative at a preliminary conference held in relation to the application under section 34 or at the hearing of the proceeding, the Tribunal may -

• (a) where the only other party to the proceeding is the person who made the decision - dismiss the application without proceeding to review the decision; or
• (b) in any other case - direct that the person who failed to appear shall cease to be a party to the proceeding."

In
Re Andriopoulos and Secretary to the Department of Social Security (1984) 7 ALN N54 Mrs Dwyer, Senior Member, in agreeing to review the decision without any appearance by the applicant, said:

"[A]s a general principle, I believe that this Tribunal should not engage in review of administrative decisions in the absence of an applicant or a representative of the applicant except where the applicant's absence results from good reason such as the applicant living outside Australia, or being unable, for reasons of health or distance, to attend a hearing."

In that matter the applicant was not outside Australia but advised the Tribunal that she had decided not to attend. In the circumstances the Tribunal decided the matter on the basis of the evidence available to it being the documents lodged pursuant to sec. 37 of the Administrative Appeals Tribunal Act 1975 and other medical reports.

6. The applicant in these proceedings now resides in western Victoria, a considerable distance from Melbourne. He had stated in writing on two occasions that he wished the hearing to proceed in his absence. The day before the matter was listed for hearing on the first occasion, the applicant was advised by telegram that due to an industrial dispute within the Australian Taxation Office and an arbitration hearing, the matter had been adjourned until the following day at the request of the respondent. He was further advised by telegram on the following day that the industrial dispute was continuing and his application was further adjourned. Mr W. McLaughlin who represented the respondent at the hearing submitted to the Tribunal that he was not in a position to know the nature of the applicant's claims for the relevant year as the applicant had failed to attend a preliminary conference, that it had been brought to the applicant's attention that an order pursuant to sec. 42A of the Administrative Appeals Tribunal Act would be sought if the applicant failed to appear at the hearing, that it was

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possible for the applicant to make arrangements to attend the hearing and that once the applicant had decided not to attend the hearing he should have withdrawn his application as it was a "misuse of the Tribunal's function" for the Tribunal to hear the application. When the matter finally came on for hearing the Tribunal decided that in the circumstances it was not appropriate to dismiss the application without proceeding to review the decision. A person who is dissatisfied with a decision of the Commissioner may apply to the Tribunal for a review of the objection decision as long as they comply with the relevant provisions of the Administrative Appeals Tribunal Act 1975 and any regulations made thereunder, as modified by the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986. An applicant is entitled to a hearing before this Tribunal bearing in mind that the burden of proving that the assessment is excessive lies upon the taxpayer (Income Tax Assessment Act 1936 sec. 190). Section 33(1)(b) of the Administrative Appeals Tribunal Act 1975 provides:

"(b) the proceedings shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit; and"

In Re Lowe and Secretary to the Department of Social Security No. 2941 decided 17 October 1986 the Tribunal said that it did not sit to suit the mere convenience of parties. Mutual convenience was a factor but not the only one of a range of factors to be considered. There was some responsibility on an applicant to prosecute an application expeditiously. I am satisfied that it is expeditious for the matter in these proceedings to be determined on the papers.

7. The respondent put to the Tribunal, that, for the applicant's claim for cost of meals missed at home to be allowed, he must show a nexus between his study and the derivation of his income for the financial year and further that, even if the nexus was shown, the claim was a private expense and not allowable pursuant to sec. 51 of the Act. In a letter to the respondent dated 3 July 1986 the applicant said:

"The basis of my claim lies with the fact that as my further education would result in increased annual income, and therefore increased income tax deductions, then extra expense that I have necessarily incurred in pursuit of my education which, if the education wasn't undertaken would then never have been incurred, should be tax deductible."

The respondent referred the Tribunal to Case U71,
87 ATC 443 where the taxpayer had claimed a deduction for meals purchased while in attendance at a university. Mr P.M. Roach, Senior Member said at para. 8 (p. 445) of his reasons for decision:

"As to the question of `meal expenses' I am not persuaded that anything is allowable. Even assuming that there was a substantial need to nourish the body in order to promote the development of the mind, I am not persuaded that the cost of partaking of food and drink, including on occasion consuming such items as hamburgers and soft drinks, is to be characterised either directly or indirectly as an expense of education. Such expenses serve an even more basic need than education."

The applicant in these proceedings said that he was paying for meals "which I was missing at home" and that he was involved in extra expense in eating away from home. However, I take it from his advice that he was not eating food at home grown by him at no cost. I would agree with Mr Roach that the outlays expended by the applicant were to serve a basic need and I am not satisfied that the $247.50 claimed by the taxpayer was a loss or outgoing incurred in gaining or producing the assessable income of the applicant. The expenses were outgoings of a private or domestic nature.

Section 159J - spouse rebate

8. Section 159J of the Act provides:

"159J(1) Where, during the year of income, a taxpayer contributes to the maintenance of a person (in this section referred to as a `dependant') specified in column 2 of the table set out in sub-section (2) and that person is a resident, the taxpayer is entitled, in his assessment in respect of income of that year of income, to a rebate of tax ascertained in accordance with this section.

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(1A) A taxpayer is not entitled in his assessment in respect of income of a year of income after the year of income that ends on 30 June 1976 to a rebate under this section in respect of a person by reason that the person is included in class 3 or class 4 in the table set out in sub-section (2).

(1B) Where, but for sub-section (1A), a taxpayer would be entitled in his assessment in respect of income of a year of income to a rebate under this section in respect of a dependant included in class 3 or 4 in the table in sub-section (2), the entitlement of the taxpayer to a rebate under this section in that assessment in respect of any dependant included in class 1 or 2 of that table shall be calculated as if the references in that table to $830 were references to $1,030.

(2) Subject to this section, the amount of the rebate allowable in the assessment of the taxpayer in respect of a dependant under this section is the relevant amount specified in column 3 of the following table:

Column 1       Column 2                               Column 3
 Class        Dependant                           Amounts of Rebate
  1       Spouse of the taxpayer                    $830
  2       Daughter-housekeeper                      $830
  3       Child less than 16 years of age   In respect of 1 such child - $362
             (not being a student)          In respect of each other such
                                            child - $282
  4       Student                                   $376
  5       Invalid relative                          $376
  6       Parent of the taxpayer or of his spouse   $749"
          

9. There is no dispute that the applicant was entitled to a rebate at the maximum rate of $830 for his spouse. The applicant claimed the maximum rebate of $1,030 for his spouse and dependant student (class 4 of the table), the student being in fact his spouse. It was the respondent's contention that to qualify for the higher rebate of $1,030 there must be two separate people, and that dependants cannot be one and the same person. In his letter dated 3 July 1986 the applicant advised that:

"As I had completed my studies at the end of 1983, my wife changed her status from part-time, to full-time in mid 1983 and was wholly dependent upon me for the financial year and I believe that she fulfilled all criteria (as spouse and student) to allow me to claim the higher rebate."

The applicant expressed the view that he was disadvantaged in lodging his income tax return relying on forms and booklets supplied by the Commissioner of Taxation whereas the Commission then produced a series of "sections from the regulations" which to his way of thinking was tantamount to withholding information. A "student" is defined in sec. 159J(6) of the Act to mean a person who is less than 25 years of age and is receiving full-time education at a school, college or university. It is implicit in the meaning of subsec. (1B) of section 159J, that a dependant included in class 3 or 4 in the table entitling a taxpayer to a higher rebate for a dependant in class 1 and 2, that the dependant in class 3 or 4 must be other than the dependant in class 1 and 2. Section 159M of the Act provides:

"Where, but for this section, a taxpayer would be entitled, under the provisions of section 159J and 159L, to more than one rebate of tax in his assessment in respect of income of a year of income in respect of the same person, the rebate or rebates shall be of such amount as is or such amounts as are, in the opinion of the Commissioner, reasonable in the circumstances."

(emphasis added)

The section anticipates a taxpayer who may be entitled to more than one rebate under the provisions of section 159J and 159L of the Act. It does not however anticipate a taxpayer being entitled to more than one rebate within one of the sections.

11. For the above reasons the Tribunal will affirm the objection decision under review. It is no easy matter for the respondent to give

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guidance to taxpayers in forms and booklets on the meaning of the legislation to enable taxpayers to correctly complete their income tax returns. If the relevant legislation has not been correctly applied, a taxpayer may lodge an objection, however, the Tribunal must apply the relevant legislation.