Farmhouse expenses as trading deductions: full income tax relief allowed where the home formed part of the farming trade.

Farming was treated as a trade, and the farmhouse formed part of the trading assets of the farm. Expenditure on rates, repairs, maintenance and insurance of the farmhouse was therefore incurred for the purposes of the farming trade and was not converted into private or domestic expenditure merely because the farmer and family lived there. The statutory bar on deductions for private or domestic outgoings did not require apportionment on these facts. The full amount of the farmhouse expenses was deductible as revenue trading expenditure, and the disallowance of nine-tenths was incorrect.

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Issues: Whether, for income tax purposes, the whole of the rates, repairs, maintenance and insurance expenses incurred in respect of the farmhouse used by the farmer and his family were deductible as trading expenses, or whether the deduction had to be apportioned because the house was also used as a private residence.

Analysis: Farming was treated as a trade under the relevant income tax provisions, and the statutory definition of farmland included the farmhouse as part of the trading assets of the farming business. Once the house was accepted as the farmhouse, the expenditure on rates, repairs and insurance was expenditure on a trading asset and was not to be treated as expenditure for domestic or private purposes merely because the farmer and his family lived there. The statutory prohibition on deductions for private or domestic expenditure did not justify an apportionment on the facts of this case, and the claimed outgoings were prima facie revenue expenses incurred for the purposes of the farming trade.

Conclusion: The full amount of the farmhouse expenses was deductible, and the apportionment disallowing nine-tenths was incorrect.

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