Campisi and Commissioner of Taxation

[2009] AATA 428

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 428

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/1108

SMALL TAXATION CLAIMS TRIBUNAL		)
Re		JULIAN CAMPISI

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Ms G Ettinger, Senior Member

Date 15 June 2009

PlaceSydney

Decision The Tribunal affirms the decision under review.

...................[sgd]........................

Ms G Ettinger     
  Senior Member

CATCHWORDS

Taxation – Applicant is foreign resident – not resident of Australia – Commissioner’s calculation of assessable income included all ordinary income derived directly or indirectly from all Australian sources during the relevant income year, 2008 – Applicant disputes having to pay tax in Australia – decision under review affirmed

Income Tax Assessment Act 1997 s 6-5(3), 8-1
International Tax Agreements Act 1953, Schedule 3

REASONS FOR DECISION

15 June 2009	Ms G Ettinger, Senior Member
BACKGROUND

1.      Mr Julian Campisi is a Canadian citizen and student, who visited Australia on a five month working holiday in 2008.  He earned income here, was taxed on it, and lodged a tax return. The Commissioner assessed Mr Campisi for an additional $306.15 which Mr Campisi disputes. He has exercised his right to appeal to this Tribunal.  The parties have agreed that the matter be decided on the papers.

THE ISSUE IN DISPUTE

2.      I have to decide whether the correct or preferable decision is that Mr Campisi pay the tax as assessed for the year ending 30 June 2008 by the Commissioner of Taxation on 23 July 2008, and as affirmed by his Decision on Objection on 12 November 2008.

THE LEGISLATIVE CONTEXT

3.      The relevant legislation in this matter is section 6-5(3) and section 8-1 of the Income Tax Assessment Act 1997 (ITAA), and the International Tax Agreements Act 1953, Schedule 3.

DISCUSSION

4.      In Mr Campisi’s notice of appeal against the assessment of the Commissioner for the year ending 30 June 2008, he stated as follows:

·     He is a resident and citizen of Canada.

·     He is a student, and was in Australia on a five month working holiday from 23 January 2008 to 1 May 2008.

·     He earned money on which he was taxed, and now objects to the additional tax of $306.15 on which the Commissioner has assessed him because he has to pay tax in Canada on foreign income he has earned.

·     He also asked for a refund on what he had paid for “social insurance and national health plans” from which he said he could not benefit.

5.      The Commissioner considered the question on the basis that any wages or salaries from employment in Australia had to be included in Mr Campisi’s assessable income in Australia. That is a very basic tenet in Australian law, which I must take into account, and is embodied in section 6-5(3) of the Income Tax Assessment Act 1997.

6.      Section 6-5 follows as relevant, and accordingly the Commissioner, in his notice of assessment dated 23 July 2008, took into account Mr Campisi’s taxable income, being $9,173, calculated his tax on the taxable income according to the tax bracket into which it fell, and took into account the tax which had been deducted by his employers. The difference was $306.17 which was rounded down to $306.15, and is the amount of tax Mr Campisi still has to pay. I do not have any information about the “social insurance and national health plans” to which Mr Campisi has referred, and have no jurisdiction which permits me to order a refund of whatever it is he claims he has paid in that regard. 

7.      Deductions to assessable income may be made pursuant to section 8-1 of the ITAA which follows as relevant:

8‑1  General deductions

(1)       You can deduct from your assessable income any loss or outgoing to the extent that:

(a)       it is incurred in gaining or producing your assessable income; or

(b)       it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income.

8.      Section 6-5 follows as relevant:

s 6-5   Income according to ordinary concepts (ordinary income)

(1) Your assessable income includes income according to ordinary

concepts, which is called ordinary income.

…

(3) If you are a foreign resident, your assessable income includes:

(a) the *ordinary income you *derived directly or indirectly from

all *Australian sources during the income year; and

(b) other *ordinary income that a provision includes in your

assessable income for the income year on some basis other

than having an *Australian source.

(4) In working out whether you have derived an amount of *ordinary

income, and (if so) when you derived it, you are taken to have

received the amount as soon as it is applied or dealt with in any

way on your behalf or as you direct.

9.      I am mindful also that Mr Campisi was a foreign resident of Australia at the relevant time, and a resident and citizen of Canada, and that there is no tax-free threshold available to a non-resident.

10.     I was also able to consider Schedule 3 of the International Tax Agreements Act 1953, which deals with the double tax agreement between Australia and Canada. That operates to avoid double taxation of income received by Australian and Canadian residents. Article 23 of Schedule 3 of the International Tax Agreements Act 1953, which is headed “Elimination of Double Taxation” sets out the basis on which each country will provide double taxation relief for those forms of income which the agreement allows both countries to tax.  The Canadian convention utilises the conventional method adopted in Australia’s other tax agreements – the country of residence provides tax relief by granting the recipient of the relevant income a credit against its tax for the tax paid in the source country.  This means that depending on Mr Campisi’s circumstances, when he lodges his income tax return in Canada, he may be eligible for consideration in relation to tax he has paid in Australia.

11.     I have accepted the facts Mr Campisi put forward in his application, and considered the Commissioner’s decision, and his reasons for making it. I am satisfied as I have noted above, that section 6-5(3) of the ITAA 1997 applies, and that any wages or salaries from employment in Australia had to be included in Mr Campisi’s assessable income in Australia. That meant he would be taxed on it. I am also satisfied that Schedule 3 of the International Tax Agreements Act 1953, applies and takes care of double taxation issues which may arise for citizens and residents of Canada and Australia.  I am satisfied from my consideration of the evidence and legislation that the correct or preferable decision is to affirm the objection decision.

DECISION

12.     The Tribunal affirms the decision under review.

I certify that the 12 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member

Signed:         ................[sgd]................................................................
  Associate

Date of Hearing  Decided on the papers
Date of Decision  15 June 2009