Kellow and Commissioner of Taxation
[2002] AATA 834
•25 September 2002
DECISION AND REASONS FOR DECISION [2002] AATA 834
ADMINISTRATIVE APPEALS TRIBUNAL Nº VS2002/3
Sitting as Small Taxation Claims Tribunal
Re: ROBERT J. KELLOW
Applicant
And: COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal: Mr B.H. Pascoe, Senior Member
Date: 25 September 2002
Place: Melbourne
Decision:The Tribunal sets aside the decision under review and in its stead, finds that the applicant is entitled to a credit for sales tax under credit ground CR2A of Table 3 to Schedule 1 of the Sales Tax Assessment Act 1992 on the grounds that the motor vehicle purchased in February 2000 is exempt under Item 97 of Schedule 1 of the Sales Tax (Exemptions and Classification) Act 1992.
(sgd) B.H. Pascoe
Senior Member
SALES TAX – whether motor vehicle exempt – whether for use for personal transportation to and from gainful employment – meaning of gainful employment – voluntary work – actively seeking paid employment
Sales Tax Assessment Act 1992
Sales Tax (Exemptions and Classification) Act 1992
Re Isles and Secretary, Department of Social Security (AAT 4432, 22 June 1988)
Re Hastings and Secretary, Department of Social Security (AAT 3863, 28 October 1987)
Re J.B. Griffiths, Quinn and Co (1968) 5 KIR 128
Vandyk v Minister of Pensions and National Insurance [1954] 1 QB 29
Benjamin v Minister of Pensions and National Insurance [1960] 2 QB 519
REASONS FOR DECISION
25 September 2002 Mr B.H. Pascoe, Senior Member
This is an application to review a decision of the respondent to disallow an objection against a notice of refusal of a sales tax refund request in respect of sales tax paid on a motor vehicle purchased by the applicant in February 2000. The request for the credit was made under credit ground CR2A in Table 3 of Schedule 1 to the Sales Tax Assessment Act 1992 ("the Assessment Act") and the claim for exemption under item 97 in Schedule 1 to the Sales Tax (Exemptions and Classification) Act 1992 ("the E & C Act").
At the hearing the applicant, Mr R.J. Kellow, was represented by Mr A. Broadfoot, a solicitor, and the respondent by an officer of the respondent. Evidence was given by Mr Kellow and by Ms H. Bryant, general manager of Community Care with Paraplegics and Quadriplegics Association of Victoria ("ParaQuad"). The Tribunal had the documents provided by the respondent pursuant to s.37 of the Administrative Appeals Tribunal Act1975 (T1-T11). Both parties requested written reasons for decision by the Tribunal.
Mr Kellow was born on 30 August 1943. He contracted poliomyelitis at a young age and became severely and permanently paralysed. He requires the use of a wheelchair. Although missing many early years of schooling, he gained his matriculation certificate in 1961. He was first employed by Gippsland LaTrobe Valley Channel 10 television station in 1963 and remained in the television industry until 1988. He had held a number of senior executive positions in the industry, including general manager of a television post-production company and station manager of Channel 9 in Melbourne. From 1989 to 1997, he was employed by the Gas and Fuel Corporation of Victoria in human resources. He was made redundant in 1997.
In 1987, Mr Kellow was elected to the Polio Advisory Committee ("PAC") of ParaQuad. He said that, throughout the period of his involvement with PAC, he spent, on average, not less than eight hours per week in addition to committee meetings. However, he last attended a meeting of PAC in November 1999 and, early in 2000, had indicated to others his intention to resign from PAC. In April 2000, he formally stated his intention to resign and not to attend further meetings. He resigned by letter of 12 May 2000, indicating that he was no longer in a position to devote the necessary time to PAC. From this, it would appear that he was devoting little or no time to this organisation at the time of purchase of the motor vehicle, in February 2000.
From 1998 until late 2000, Mr Kellow was a member of the Polio Consultative Committee ("PCC") formed by St Vincent's Public Hospital which had successfully tendered to perform the work formerly provided by the Polio Services Unit of the Department of Human Services. Mr Kellow said that the involvement with PCC consumed no less than four hours per week in addition to committee meetings. In addition to PAC and PCC, Mr Kellow was appointed special events co-ordinator by the Disabled Motorists (Victoria) in 1999. He ceased this involvement in 2000. He said that he received car parking, meals, afternoon teas and some reimbursement of telephone and travel expenses as part of his work with PAC, PCC and Disabled Motorists (Victoria).
In his affidavit filed prior to the hearing, Mr Kellow said that, since August 2000, he has conducted a business with two partners which provides consulting services to a wide range of public and private bodies in relation to provision of appropriate disabled access to buildings and other facilities. In his oral evidence, he said that he had met his current partners in early 2000. They were actively involved in the business and he provided consulting services to them on a voluntary basis. He said that, by the time he resigned from the PAC, he was fully involved for some 40 hours per week which, although unpaid, was on a basis of the partners getting to know him and for him to get to know them, with the view of him acquiring an equity in the business. He acquired that interest in August 2000. Mr Kellow said that, when he was retrenched at the age of 54, he initially felt that he had been left on the scrap heap. However, soon after, he decided to actively pursue further full-time employment but was conscious of the difficulties of his age and disability. He said that he thought that the best way of obtaining such work was to utilise the network, which he had established and would continue to establish through active involvement in voluntary work. He acknowledged that, while he had in mind to resign from PAC in February 2000, it was not clear that he would undertake a full-time involvement with the consulting business until May 2000.
Ms Bryant gave evidence that Mr Kellow's last attendance at a PAC meeting had been in November 1999 and indications of his pending resignation were given in January and February 2000. She provided details of the role of the PAC and the reliance of ParaQuad on a large number of volunteers.
Item 97 of Schedule 1 to the E & C Act provides exemption from sales tax of
…
Motor vehicles for use by an eligible disabled person for his or her personal transportation to and from gainful employment.
There was no dispute that Mr Kellow is an eligible disabled person or that the motor vehicle purchased in February 2000 was for his personal transportation. The dispute centred on whether the motor vehicle was for use in transportation to and from gainful employment.
For the applicant, it was submitted that the words gainful employment in ordinary usage can encompass any useful activity in which a person is engaged and that his voluntary work satisfied this definition. It was argued that, if it was necessary to receive something of value to be gainful, the applicant had received car parking, meals, afternoon teas and reimbursement of expenses.
The respondent submitted that the words gainful employment required the activities to be profitable or lucrative in a pecuniary sense and the activities to be in an employment relationship with an employer. It was argued that reimbursement of expenses, free car parking and occasional lunches did not constitute a gain and that Mr Kellow's voluntary work as a member of a committee was not employment.
It is readily apparent that the two suggested meanings of gainful employment are at two extreme ends of a spectrum and demonstrates the problem of selecting a meaning suitable to an argument from dictionary definitions of each of the words and then combining the result. For the applicant, the New Shorter Oxford English Dictionary meanings were chosen. In that dictionary the meanings of the two words are shown as:
…
gainful — productive of (esp financial) gain or profit;(of employment) paid, useful.
employment — occupation, business; paid work; an activity in which a person is engaged.
This led to the submission that the two words together meant useful activity in which a person is engaged. On the other hand, the respondent used the Macquarie Dictionary 2nd Ed., which shows:
..
gainful — profitable, advantageous, lucrative.
employment — that on which one is employed; work; occupation business.
This led to the submission that the words in question meant profitable or lucrative employment under a contract of employment. There is difficulty with both these views. If the applicant's view was accepted, it would seem that an enjoyable hobby would come within the suggested meaning and such a pursuit would appear most unlikely to have been the intention of the legislation. On the other hand, the respondent's view would appear to exclude persons carrying on a business as a sole trader or a company director who is not under a contract of employment. Black's Law Dictionary 5th Ed. describes gainful employment as … In general, any calling, occupation, profession or work which one may profitably pursue. Butterworth's Australian Legal Dictionary refers to the definition of gainful employment in s.19 of the Social Security Act 1991 being … paid employment, including sheltered employment, and self employment that is intended to result in financial gain. The words defined in that Act are relevant to s.1035, which sets out qualification for a mobility allowance. Mobility allowance is available to a person who is
(a)a handicapped person;
(b)is unable to use public transport without substantial assistance because of the person's physical or mental disability;
(c)is engaged in gainful employment for at least 8 hours per week;
(d)is undertaking vocational training to assist the person to find gainful employment;
(e)is undertaking job search activities;
(f)is engaged in approved voluntary work for at least 8 hours per week.
It is noted that s.1037 of the Social Security Act 1991 provides that a person is not entitled to mobility allowance for a period of two years from the date on which such person receives the benefit of an exemption under item 97 in Schedule 1 to the E & C Act.
It was submitted by the respondent that the definition contained in the Social Security Act 1991 is relevant to the issue before the Tribunal. It was said that mobility allowance and the exemption from sale tax by item 97 are linked by providing assistance to handicapped persons to access gainful employment. Two decisions of this Tribunal were referred to. In Re Isles and Secretary, Department of Social Security (AAT 4432, 22 June 1988), the applicant worked as a volunteer for some 20 hours per week in a kitchen for Meals on Wheels. Often, but not always, he was provided with a free lunch. The applicant had claimed for mobility allowance which was then provided for in s.146(1) (formerly s.133R3(1)) of the Social Security Act 1947. This section required a person to be engaged in either or both gainful employment or undertaking vocational training to assist in finding gainful employment or to carry on a profession, trade or business. There was no definition of gainful employment in that Act. Deputy President Todd found that Mr Isles was not engaged in gainful employment, and said (at para 23):
… While I might have been able to concede to him the question whether sufficient hours had been worked to satisfy the provision o the Act, the real sticking point in the matter is the meaning of "gainful employment". I can accept from the English cases relied upon by the applicant that "gainful" does not necessarily in this context always mean profitable or lucrative. Therefore provision to a person of a small amount of money or perhaps even payment in a non-monetary form (such as food as was the case here) could suffice. In order however to succeed in obtaining a mobility allowance it is in my opinion necessary to establish that there was in existence a relationship of employment between the applicant and the person or organisation providing the payment. In this case I believe there was no such relationship and that therefore the applicant cannot succeed. Unlike the English cases discussed in paragraph 8 there was here no contract of service. There was no legal obligation on the applicant to go everyday to the kitchen nor as to the number of hours that were required to be worked. On the other side, Meals on Wheels were not obliged to provide anything to him in return.
In Re Hastings and Secretary, Department of Social Security (AAT 3863, 28 October 1987), the applicant was engaged in full-time study at the university, but had no intention of entering into paid employment because it would interfere with his superannuation payment and intended to undertake voluntary work. The Tribunal found that gainful, particularly when linked with employment, meant paid employment relying on dictionary definitions of gainful as profitable; lucrative, productive of gain or profit. The Tribunal said (at para 33):
…
We specifically reject the submission of counsel for the applicant, Mr Stretton, that "gainful employment" within the meaning of s.146 of the Act means employment other than paid employment which is of use to society. We reject that definition of the words "gainful employment" because that would be an unusual use of the word "gainful" and also because of the whole context in which the mobility allowance occurs within Part VIIB of the Act. It is quite clear that a mobility allowance is an allowance specifically given for the purpose of assisting a handicapped person who is unable to use public transport without substantial assistance by providing them with an allowance so that they would not be prevented by reason of their inability to use public transport from attending either paid employment or undertaking training for the purpose of paid employment.
In Re Isles, the Tribunal referred to three English decisions involving the question of whether a person was gainfully occupied in employment for the purposes of the National Insurance Act 1965 or its 1946 predecessor. The first was in Re J.B. Griffiths, Quinn & Co (1968) 5 K1R 128 where an articled clerk was provided with the cost of travel and lunch by his employer solicitor. Cooke J in holding that the clerk was gainfully employed said, at p.138, that:
… a person is gainfully occupied if he receives something from his master as the fruit of his labour, even though he does not make profit out of his employment.
In Re Vandyk v Minister of Pensions and National Insurance [1954] 1 QB 29, a handicapped research assistant was paid £375 per annum but spent £572 on travel to work, Slade J found, similarly, that it was sufficient to receive … something from his master as the fruit of his labour. In Benjamin v Minister of Pensions and National Insurance [1960] 2 QB 519, it was held that another articled clerk was gainfully occupied and was paid £100 in one year, although the terms of his articles meant that he had no expectation of obtaining any gain. It was noted by the Tribunal that, in each of these three cases, there were contracts of employment and the question for the courts was whether the person was gainfully occupied in such employment.
With the greatest respect to my colleagues in Re Isles, I cannot agree that the words gainful employment requires an employment relationship between the person and the provider of some gainful reward. In my view, the phrase should be given its normal meaning of an occupation, profession or work, which is productive of some advantage or pecuniary gain. In this case, I am unable to see that Mr Kellow was employed in his involvement with PAC, PCC or Disabled Motorists (Victoria). In the first two, he was either an elected or appointed member of a committee, providing advice in relation to the needs of polio sufferers and in the last, the involvement could be seen as an extension of a hobby. I have difficulty in accepting any of these roles as employment and the occasional lunch or afternoon tea and some reimbursement of expenses, I do not accept as being a gain, advantage or benefit from those roles. Given the complementary nature of mobility allowance under the Social Security Act 1991 and the exemption here in question, it is reasonable to consider that Parliament intended the words gainful employment to have the same meaning.
However, there is a distinct difference between this case and cases such as Isles, where a person is solely concerned and involved in providing voluntary services to a charitable organisation. Here, Mr Kellow had held senior executive positions until retrenched in 1997. I accept his evidence that, following the retrenchment, his intention was to pursue and obtain paid employment. He saw involvement on a voluntary basis with organisations as a means of remaining in the public eye and developing a network of contacts, which could lead him into the obtaining of paid employment. By February 2000, he was actively involved in working with the consulting business in which he subsequently acquired an equity and, by August 2000, was clearly involved in gainful employment. It can be said in this case that the motor vehicle was purchased by Mr Kellow with the intention and expectation of a purpose of transportation to and from gainful employment. In my view, the exemption is not dependent on the person being in gainful employment at the date of purchase of the motor vehicle. There will be many instances where an eligible disabled person is unable to obtain paid employment without a motor vehicle for transport and acquires a motor vehicle for that purpose. The legislation, providing the exemption, is beneficial legislation to assist persons with a handicap to be employed and, in my view, should be interpreted liberally so as to give effect to that purpose. While being reluctant to accept that gainful employment in its normal, accepted meaning extends to voluntary work with an occasional lunch or possible reimbursement of expenses, the facts of this case, involving the active pursuit of paid employment, entitle Mr Kellow to the exemption.
As a consequence, the decision under review should be set aside and in its stead, there is a finding that Mr Kellow is entitled to a credit under credit ground CR2A in Table 3 of Schedule 1 to the Assessment Act on the grounds that the motor vehicle purchased in February 2000 was for use by the applicant, being an eligible disabled person, for his personal transportation to and from gainful employment.
I certify that the sixteen [16] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr B.H. Pascoe, Senior Member(sgd) Catherine Thomas
ClerkDate of Hearing: 27 August 2002
Date of Decision: 25 September 2002
Solicitor for the Applicant: Mr A. Broadfoot, Messrs Allen Arthur RobinsonSolicitor for the Respondent: Mr A. Crowther, with Australian Taxation Office
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