80 ATC 76
AM Donovan Ch
LC Voumard M
G Thompson M
No. 2 Board of Review
Judgment date: 21 March 1980.
A.M. Donovan (Chairman); L.C. Voumard and G. Thompson (Members): In this reference the taxpayer's objection is directed against the assessment for the year ended 30 June 1976, and challenges in particular an increase in his share of the net income of a partnership of which he is a member. The issues raised thereby are the entitlement of the partnership to a deduction for an investment allowance and to a deduction for depreciation calculated at twice the ordinary rate in respect of a Ford F100 Styleside Truck purchased during that year at a cost of $6,389. An ancillary matter raised by the objection is the quantum of the deduction in respect of housing loan interest paid by the taxpayer. The amount already allowed is correct as the assessment stands, and this ground was taken as a protective measure should the objection otherwise succeed. The Board was informed that should this eventuate the deduction in relation to housing loan interest will be adjusted in the appropriate fashion and, in consequence, this is a matter to which the Board will direct no further attention.
2. It was contended for the Commissioner that an investment allowance in respect of the vehicle which would otherwise be allowable under sec. 82AB of the Act was denied by the provisions of sec. 82AF(2)(a), which provides:
``(2) This Subdivision does not apply in relation to -
- (a) motor vehicles (including vehicles known as four wheel drive vehicles) that are -
- (i) motor cars, station wagons, panel vans, utility trucks or similar vehicles;
- (ii) motor cycles or similar vehicles; or
- (iii) other road vehicles designed to carry loads of less than 1 tonne or fewer than 9 passengers.''
3. It was tacitly conceded that the vehicle was designed to carry a load in excess of one tonne and that, in consequences, subpara. (iii) had no application. It was strongly argued, however, that the vehicle was within the description ``utility trucks or similar vehicles'' and that the deduction was not therefore allowable.
4. It is not necessary to say much of the evidence. The description ``utility truck'' is not one known in the vehicle trade. What in ordinary speech is referred to as a ``utility'' is perhaps more correctly to be called a ``utility coupe'' and is a derivative of a passenger car. The Ford Motor Company produces a utility which is a derivative of a passenger vehicle, in that it is of mono construction which limits its load carrying capacity to about three-quarters of a tonne. This vehicle is quite distinct from the F100 series, which is produced along the same lines as a truck in that it has a chassis on which a variety of goods carrying sections may be fitted. The Styleside model has a well-type box similar in appearance to a utility, but which of course, instead of being integral with the cab, is bolted to the rails of the chassis. Many of the components of the F100 are of a more robust construction than those in a motor car and in a utility coupe, but conversely are less sturdy than those in vehicles in the company's range which are designed to carry heavier loads.
5. There is no doubt that the F100 Styleside vehicle is not a utility or a utility
80 ATC 78
coupe. It was described by an expert witness, however, as a ``truck type utility''. The witness explained that it was ``truck-type'' because of features which included the cab and chassis, and it was ``utility'' because of its low loading platform, to achieve which the wheel housings were let into the well box area.
6. The argument for the taxpayer was simply that the words ``utility truck'' are unknown in the motor trade; therefore the partnership's vehicle could not possibly fall within that description and, in consequence, was outside the prohibition enacted in the subsection. Council for the Commissioner readily conceded that ``utility truck'' was not a technical term, and submitted that, that being so, the words had to be given a meaning and the rules of statutory interpretation required them to be given their ordinary meaning. When this was done, it was argued, the words comprehended a vehicle exhibiting features of both a utility and a truck. The F100 Styleside exhibited those features and was therefore a ``utility truck'' for the purposes of sec. 82AF(2)(a)(i).
7. The difficulty of construing the words as counsel suggested is that there is no guide to the degree to which a vehicle must exhibit any particular feature to fall within the description, and in our view because of this uncertainly the construction is one which has to be avoided if at all possible. It can, we think, be avoided quite simply by paying regard to the other words in subpara. (i) of para. (a). The leading words there have unmistakable meanings, being ``motor cars'', ``station wagons'' and ``panel vans'', the latter two being derivatives of motor cars. In this context, when the meaning of ``utility trucks'' is unclear, the expression, in accordance with the generally accepted rules of interpretation, ought to be taken as comprehending a vehicle which is a derivative of a motor car. That is the construction we prefer, and in so deciding we are conscious of the fact that the words as we have interpreted them may be regarded as tautologous because of those in the following phrase ``or similar vehicles''. This difficulty notwithstanding, the construction is in our view the one to be preferred in all the circumstances.
8. It follows therefore that the partnership is entitled to an investment allowance under sec. 82AB in respect of the vehicle.
9. The claim for depreciation at the accelerated rate was disallowed by the Commissioner on the basis that sec. 57AD(1)(a) prohibited it. For present purposes, this provision is expressed in the same terms as sec. 82AF(2)(a)(i) and needs no separate consideration. For the reasons already given, the accelerated rate of depreciation is allowable. In this regard, it was pointed out to the Board that because of the amount already allowed success on this point entitled the partnership to an additional deduction of $30 only.
10. We are therefore of the opinion that the partnership is entitled to an investment allowance in respect of the vehicle in question amounting to $2,556 and a further amount of depreciation in respect of the vehicle amounting to $30. The taxpayer's share of the net income of the partnership should be adjusted accordingly. His entitlement to a deduction in respect of housing loan interest should be increased to the appropriate amount.