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The Honourable Murray Gleeson AC

Statutory Interpretation

word “necessarily” adds something to the word “incurred”. But it does not mean that a deduction can be disallowed because somebody thinks expenditure was wasteful or ill-advised.

An example of historical context throwing light on the interpretation of the Act in its application to a specific, and basic, question concerns a particular aspect of allowable deductions, that is, the cost of travelling between home and a taxpayer’s principal place of work. This topic was considered by the High Court in 2001 in Commissioner of Taxation v Payne.17 The Court declined to depart from the approach earlier taken in Lunney v Commissioner of Taxation,18 a case which, in turn, stressed the historical context in which the question fell to be decided.

The historical context was explained by Denning LJ in the English Court of Appeal in Newson v Robertson (Inspector of Taxes).19 Speaking in 1956, his Lordship said:

“In the days when income tax was introduced, nearly 150 years ago, most people lived and worked in the same place. The tradesman lived over the shop, the doctor over the surgery, and the barrister over his chambers, or, at any rate, close enough to walk to them or ride on his horse to them. There were no travelling expenses of getting to the place of work. Later, as means of transport quickened, those who could afford it began to live at a distance from their work and to travel each day by railway into and out of London. So long as people had a choice in the matter – whether to live over their work or not – those who chose to live out of London did so for the purposes of their home life, because they preferred living in the country to living in London. The cost of travelling to and fro was then obviously not incurred for the purpose of their trade or profession.”

17

(2001) 202 CLR 93; [2001] HCA 3.

18

(1958) 100 CLR 478; [1958] HCA 5.

19

[1953] 1 Ch 7 at 15.

© The Honourable Murray Gleeson AC, Chief Justice of New South Wales 1988-1998, Chief Justice of Australia 1998-2008

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