Commissioner of Police v Tanos

The Commissioner of Police (appellant) appealed to the High Court of Australia against a decision of a Board of Review that had upheld an objection by Richard Oxley French (respondent) to his income tax assessment. The dispute concerned whether a sum of £110 paid to Mr. French for services rendered in New Zealand was income derived from a source outside Australia, and therefore exempt from Australian income tax under section 23(q) of the *Income Tax and Social Services Contribution Assessment Act 1936-1951*.

The legal issues before the High Court were: firstly, whether the £110 paid to the respondent for services performed in New Zealand constituted income derived from a source out of Australia within the meaning of section 23(q) of the Act; and secondly, if it did, whether it was exempt from income tax in New Zealand, a condition for exemption in Australia under that section. It was agreed by the parties that the sum was not exempt from income tax in New Zealand.

A majority of the High Court, comprising Dixon C.J., Williams and Taylor JJ., held that the £110 was income derived from a source outside Australia. Their reasoning, drawing on English authorities such as *Bennett v. Marshall* and *Bray v. Colenbrander; Harvey v. Breyfogle*, emphasised that for contracts of employment, the source of income is generally determined by the place where the contract for payment is deemed to have a locality or where the payments are made, rather than the place where the services are performed. This approach contrasts with the determination of the source of income from trade or business activities, where the place of activity is often considered paramount. McTiernan J. dissented, finding that the income was not derived from a source outside Australia, while Kitto J. found there were insufficient facts to decide the question.

The High Court, by majority, answered the question in the case stated in the affirmative. Consequently, the appeal by the Commissioner of Police was allowed, and the decision of the Board of Review was overturned.