Commissioner of Taxation v Whitehouse

This is a case stated by the Chief Justice in an appeal by the Commissioner of Taxation under s. 196 of the Income Tax and Social Services Contribution Assessment Act 1936-1956 (Cth) against a decision of a Board of Review. The question is as to the amount which the taxpayer is entitled to deduct from his assessable income under s. 82B of the Act.

Section 82B is contained in Sub-div. B of Div. 3 of Pt. III of the Act, which is headed " Concessional Deductions ". So far as material, it reads:

(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 the second column of the table set out in the next succeeding sub-section, and that person is a resident, the taxpayer shall be entitled to a deduction in accordance with this section.

(2) Subject to this section, the amount of the deduction allowable under this section in respect of a dependant is the relevant amount specified in the third column of the following table: -

First Column Second Column Third Column Class Dependant Amount of Deduction 1 Spouse of the taxpayer £130 2 Daughter-housekeeper £130 3 Child less than sixteen years of age In respect of one such child - £78. In respect of each other such child - £52 4 Student child £78 5 Invalid relative £78

(3) The amount of a deduction otherwise allowable under the foregoing provisions of this section in respect of a dependant shall be reduced (a) where the dependant is a student child - by the value of any assistance (consisting of money, accommodation or sustenance) provided by the Commonwealth or a State, during the year of income, in connexion with the education of the child.

The term "student child" is defined as meaning a child who is not less than sixteen years of age but is less than twenty-one years of age and is receiving full time education at a school, college or university.

The taxpayer has a daughter who, throughout the year of income, was receiving full time education at the University of Melbourne and was a student child within the meaning of s. 82B. The taxpayer contributed to her maintenance throughout the year of income, and it is not disputed that, if no other facts had appeared, he would have been entitled to a deduction of the full amount of £78, which he claimed in his return. In fact, however, the daughter had been awarded a Commonwealth ordinary scholarship under the provisions of the Education Act 1945 (Cth) and the Commonwealth Scholarship Regulations made thereunder, and the Commonwealth had, during the year of income, paid fees amounting to a total sum of £77 2s. 0d. in connexion with her course of study at the University. It does not seem necessary to refer to the terms of the Act or of the Regulations, but it must be mentioned that no part of these fees was paid to the daughter or to the taxpayer. The whole amount was provided out of moneys appropriated by the Parliament of the Commonwealth, and was paid by the Universities Commission (a body established under the Act) to the Education Department of the State of Victoria, and by the State of Victoria to the University.

Having ascertained these facts, the Commissioner, in assessing the taxpayer, disallowed his claim for a deduction under s. 82B except to the extent of £1 - the difference between £78 and £77. This he did, of course, in reliance on sub-s. (3) (a) of s. 82B. The taxpayer objected, and, on the disallowance of his objection, required it to be referred to a Board of Review for review.

The matter of the interpretation of sub-s. (3) (a) of s. 82B had been considered by a Board of Review on a previous occasion. In 1954 in Case No. E53 [1] it had been decided by a majority (Mr. A. C. Leslie dissenting) that the Commissioner's view was correct. In the present case the Board intimated that it did not regard itself as bound by the decision of 1954, and after argument it was unanimously decided that the taxpayer's objection was well founded. All the members of the Board accepted the reasoning of the dissenting opinion of Mr. Leslie in the earlier case. The Commissioner appeals against this decision.

It is easy to criticize the drafting of s. 82B (3) (a). It adopts a course which is not seldom productive of difficulty in that it treats as co-ordinates things which are not really co-ordinate. "Accommodation" and "sustenance" are things of the same class: they may be regarded as things provided for the student child and enjoyed by him, so to speak, in specie. "Money" is a different class of thing. It is not a thing capable of being itself enjoyed, but a means of obtaining things capable of being themselves enjoyed - such things, for example, as accommodation and sustenance. The awkwardness of the collocation of the three things in the parenthesis - money, accommodation and sustenance - is emphasized by the use of the word "value" in relation to all three. To speak of the "value" of accommodation or sustenance is natural enough. But it is not natural, except in an economist's universe of discourse, to speak of the "value" of money. In the present universe of discourse £x is £x, and the "value" of £x is £x. The awkwardness of the collocation is still further emphasized by the fact that the three things mentioned in a sense overlap. For the Commonwealth could hardly provide accommodation or sustenance without the expenditure of money.

The validity of these criticisms, which may or may not be regarded as unduly academic, may be conceded. But such criticisms afford no justification for departing from the plain meaning of a statute and the meaning of sub-s. (3) (a) seems plain enough. It means that the deduction otherwise allowable under sub-ss. (1) and (2) is to be reduced, where the dependant is a student child, by the amount of money paid, or the value of accommodation or sustenance provided, by the Commonwealth or a State by way of assistance in connexion with the education of the child. That is what the words seem to mean, and they do not seem to be capable of any other meaning.

The argument for the taxpayer concedes that, if the words in parenthesis had been omitted, it could not have been said that assistance had not been provided by the Commonwealth in connexion with the education of the taxpayer's daughter. The argument depends entirely on the words in the parenthesis. It is said that those words operate to restrict or narrow the meaning which would otherwise have to be attributed to the word "assistance". They mean either "consisting of money provided for the purpose of accommodation or sustenance" (which gives a sort of "hendiadys" effect to the parenthesis) or "consisting of money provided for the purpose of accommodation or sustenance, or consisting of accommodation or sustenance". The restrictive character of the parenthesis is put by Mr. Leslie (whose opinion, as has been said, the Board adopted) as his major premise. He deduces that it must be restrictive from the fact that s. 82B is designed to relieve taxpayers in respect of the maintenance, as distinct from the education, of their children. He then observes that the extent of the restriction is "not easy to determine", and he supports the conclusion he finally reaches by reference to the maxim noscitur a sociis.

Of this argument it may be observed in the first place that there does not seem to be any justification for saying a priori that the parenthesis is intended to narrow or restrict the meaning which must otherwise have been given to the word "assistance". Looking at it in its context one would be inclined rather to say that it was intended to be enlarging. It may be merely expository. But it cannot be right to begin by saying that it is restrictive, and then to build on that conclusion as a premise. We must first construe the words, and it will depend on the construction which we give to them whether we are able to describe them as enlarging, or restrictive, or merely expository, of the word "assistance". It will not really matter what description we give them, when once we have given them a meaning. It is true, of course, that s. 82B is concerned with giving to taxpayers some relief in respect of the maintenance of various classes of dependants, and (unlike s. 82J, which was introduced later into the Act) not directly concerned with relief in respect of expenses of education as such. But this fact has little bearing on the question in hand. "Maintenance" and "education" are, for parents, closely associated matters, and there is nothing improbable or unnatural in the Commonwealth's saying, as a matter of policy, that, in the particular case of a "student child", the allowance to the parent should be reduced if the Commonwealth or a State is giving assistance in the matter of his education.

When the major premise is rejected, the whole argument falls to the ground, and we come back to the fact that the meaning of the word "assistance" and the meaning of the words in the parenthesis are plain and unambiguous. It is only in a case of ambiguity or doubt that help can be derived from the maxim noscitur a sociis. The word "money" does not require or receive explanation by reference to the word "accommodation" or the word "sustenance"

It need only be added that the Commissioner's view receives considerable support from the negative definition of separate net income in s. 82B (5). Paragraphs (b), (c) and (d) of sub-s. (3) of s. 82B provide for a reduction in the amount of the concessional deduction in respect of maintenance of dependants in cases where the dependant is in receipt of "separate net income". Sub-section (5) of s. 82B provides that " "separate net income" does not include (a) the value of any assistance or the amount of any invalid pension taken into account for the purposes of paragraph (a) or (b) of sub-section (3) of this section; (b) in the case of a dependant being a student child - the value of any scholarship, bursary, exhibition or prize, not being assistance referred to in the last preceding paragraph". This clearly indicates that payment of the amount of a scholarship is regarded as "assistance" within the meaning of s. 82B (3) (a).

Question 3 in the case stated should be answered - No, and question 4 - Yes. It is unnecessary, in the view which we take, to answer the other questions.