Commissioner of Taxation v Anstis [2010] HCATrans 110 (23 April 2010)

Last Updated: 27 April 2010

[2010] HCATrans 110

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M105 of 2009

B e t w e e n -

COMMISSIONER OF TAXATION

Applicant

and

SYMONE ANSTIS

Respondent

Application for special leave to appeal

GUMMOW J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 23 APRIL 2010, AT 11.56 AM

Copyright in the High Court of Australia

MR S.J. GAGELER, SC, Solicitor-General of the Commonwealth of Australia: If the Court pleases, I appear with MS L.A. HESPE for the applicant. (instructed by Gadens Lawyers)

MR M.L. ANSTIS: If the Court pleases, I appear for the respondent. (instructed by the respondent)

GUMMOW J: Thank you.

MR GAGELER: Your Honours, the case has immediate application up to about a quarter of a million recipients of youth allowance, it has potential application to the recipients of other taxable social security payments and it turns on the construction and operation of a central provision of the Income Tax Assessment Act. Section 8-1 has been considered by your Honours on a number of fairly recent occasions, but not in a relevant respect.

GUMMOW J: On this question of what you say is general importance there is an undertaking by your client at page 139 as to costs, is that right?

MR GAGELER: That is right.

GUMMOW J: Yes, Mr Solicitor.

MR GAGELER: If your Honours look at page 35 of the application book your Honours will see the familiar terms of section 8-1. There is a question we seek to raise about the construction and operation of section 8-1(1)(a) and there is a question we seek to raise about the construction and operation of section 8-1(2)(b). Neither of those questions has been determined by authority. The question about paragraph (1)(a) is whether expenditure incurred in meeting what might be described as a qualification or condition or criterion for the grant of a taxable periodic living allowance is expenditure that can be described as being incurred in gaining or producing the assessable income that is constituted by that living allowance.

The difficulty about that question and the problem with the approach taken in the Full Court is really highlighted – if your Honours would turn over to page 43 and look at paragraph 40 and particularly the second sentence where it is said that:

the respondent in this case, contrary to the Commissioner’s submission, was paid to undertake the course in which she was enrolled.

Now, she was not in any meaningful sense paid to study. She was not providing a service. She was not engaged in effort for which she was being rewarded.

CRENNAN J: She had to study to receive the allowance, did she not?

MR GAGELER: That is the point. She was paid because she studied and because she studied she received a living allowance and that living allowance, because it was periodic and for the purpose of living, became income under ordinary concepts. We wish to put the case slightly higher and more conceptually than it was put, although we do not abandon the way in which the Commissioner put it below, we want to put it a little higher. We wish to say that income of this nature is not income that is gained or produced at all in the relevant sense, that is, it is quite possible to have what we have described in our written submissions as unearned income.

We have used that terminology simply to make the point that gaining or producing assessable income really connotes, in our submission, something like winning, earning or making, it does not simply connote getting, and that entire concept within paragraph (a), which, of course, has a very long lineage, in our respectful submission, is simply inapplicable to income which is in the nature of a gift which is payable where a condition or a criterion is met. That is the case at the high point of principle that we seek to make. The other point we seek to raise is about paragraph (2)(b).

CRENNAN J: Well, I think the complaint there is it has not been raised before.

MR GAGELER: That is right. The answer to that complaint is, accepting that it has not been raised before and it could have been raised before, is nevertheless a question of law and it is a question of law which was left open by this Court in John’s Case. It is ripe for consideration and the argument we wish to put is obvious. If your Honours please, those are our submissions.

GUMMOW J: Yes, thank you, Mr Solicitor. Yes, Mr Anstis.

MR ANSTIS: Your Honours, I will only address the second issue regarding the private and domestic expense which was not raised earlier on. It was suggested, I think, in the writings of the applicant that there would be no disadvantage to us to contest this matter. All I would suggest to that is that there is some disadvantage in that any kind of court proceeding has strains or emotional stress to it and also it is unclear, if this matter had been raised in the first place, how we would have argued our case because it could be that some evidence would be required as to whether an expense is private or domestic.

I would note as an example of this that one of the expenses claimed was an expense doing teacher rounds and it seems to me wholly implausible

that if you have an expense doing teacher rounds, that it would be a private expense. If you wanted to imagine a situation where, say, the respondent produced a times table that said two times three is fourteen and handed this out to the children and one of the parents of the children came to the principal and said, “Look what this teacher is handing out”, and then the principal said, “Well, I am sorry, that is a private matter”, it just seems a totally implausible argument. The fact that it was not raised earlier I think is because it is a very implausible argument. That is all I wanted to say on the matter. Thank you, your Honours.

GUMMOW J: Mr Solicitor, what do you say about the factual point as to private or domestic?

MR GAGELER: If Mr Anstis is saying that he would have led evidence on the point if it had been raised below, then obviously I cannot now raise it. It is not clear to me from what he said orally that he was going that far. He certainly did not even mention it in his written submissions.

CRENNAN J: I think he is suggesting he might have led it.

MR GAGELER: I will simply say, if he is going so far as to say that he would have done so, I accept that I cannot raise the point. If he is simply saying that there is an abstract possibility it may have been done, then I can raise the point.

GUMMOW J: Well, perhaps we should know what the nature of the evidence would have been.

MR GAGELER: Yes.

MR ANSTIS: Your Honours, it would depend on what the meaning given by the applicant to “private and domestic” would be, because currently I think he just says it is an essential character without describing exactly what “private or domestic” means and what the criteria for determining what it is. Now, if the determination has anything to do with perceptions of people, then this seems to me that evidence could be given about such a matter. That is all I wish to say.

MR GAGELER: I was probably too cryptic, your Honours, when I said that the argument we would wish to present in respect of paragraph (b) is obvious. The argument that we would wish to present is that the nature or character of the self-education expenditure here was that of self -betterment or an investment in human capital by undertaking a course of study which would lead to employment in the chosen field some time in the future. We simply put it at that level, if the Court pleases.

GUMMOW J: Looking at your grounds at page 130, we have just been talking about ground 6 on page 131?

MR GAGELER: Ground 6 would be 6(b)(ii).

GUMMOW J: Ground 6(b)(ii).

MR GAGELER: Yes.

GUMMOW J: It seems to us that, as explained, 6(b)(2) is a legal ground and if there were to be a grant of special leave, it should extend to that. There will be a grant of special leave in this matter on the undertaking by the applicant Commissioner to the Court that the Commissioner will pay the respondent’s costs of the appeal, in any event, which is given, and it will be a one day case.

AT 12.07 PM THE MATTER WAS CONCLUDED