Commissioner of Taxation v Jayasinghe - [2016] HCATrans 275

[2016] HCATrans 275

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S177 of 2016

B e t w e e n -
COMMISSIONER OF TAXATION
Applicant
and
KAMAL JAYASINGHE
Respondent
Application for special leave to appeal

BELL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 16 NOVEMBER 2016, AT 9.33 AM

MR J.O. HMELNITSKY, SC: May it please the Court, I appear with my learned friend, MS T.L. PHILLIPS, for the applicant. (instructed by Australian Government Solicitor)

MR A.H. SLATER, QC: If the Court please, I appear with my friend, MR L. McBRIDE, for the respondent. (instructed by Balazs Lazanas & Welch LLP)

BELL J: Yes, Mr Hmelnitsky.

MR HMELNITSKY: Your Honours, the question of construction that is raised by the first proposed ground of appeal concerns the meaning of section 6 of what we, in our submissions, have called the “IOPIA” – the International Organisations (Privileges and Immunities) Act. The Court below was divided on that question at a high level of principle. Section 6 of the Act is reproduced over pages 71 and 72 of the application book. May I draw the Court’s attention to the language of section 6(1)(d) which appears around halfway down page 72. Your Honours there see the language that is in dispute. Skipping over the chapeau, the language is:

a person who holds an office in an international organisation –

I also draw the Court’s attention to regulation 10 of the 1986 regulations which give effect to that provision which appears on page 75 of the application book. Your Honours see there in clause 10 that the language is relevantly the same. It is a reference to:

a person who holds an office in the United Nations –

The particular question that arises, your Honours, is as to the meaning of those words and, specifically, whether or not the concept that is referred to in both section 6 and in regulation 10, is one that is informed by the meaning of the international agreement to which this Act gives effect.

The majority and the minority in the Court below took what we would suggest are starkly different approaches to resolving that issue. The first of those is the approach for which the Commissioner contended and that was adopted by the Chief Justice below. That is, that the reference in section 6 and in regulation 10 to a person who holds an office is to that same concept that appears in the UN Convention to which these provisions give effect. That is to say, an official, as that expression is used in the international agreement and by the UN itself. If that is the approach that is ultimately adopted, then the Commissioner succeeds essentially for the reasons that are given by the Chief Justice.

The second approach, as your Honours will have seen from the materials, is different and, we suggest, different at a high level…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Commissioner of Taxation v Jayasinghe

Details

AGLC: Commissioner of Taxation v Jayasinghe [2016] HCATrans 275
Case: [2016] HCATrans 275
Decision Date

CaseChat Overview and Summary

The Commissioner of Taxation appealed to the Full Federal Court against a decision of the Administrative Appeals Tribunal (AAT) which had allowed an objection by Mr. Jayasinghe against an assessment of income tax. The dispute concerned whether certain payments made by Mr. Jayasinghe to his former spouse, pursuant to a binding financial agreement, were deductible as expenses incurred in gaining or producing assessable income under section 8-1 of the *Income Tax Assessment Act 1997* (Cth).

The Full Federal Court was required to determine whether the AAT had erred in law by finding that the payments made by Mr. Jayasinghe were deductible. Specifically, the court considered whether the payments were made for the purpose of gaining or producing assessable income, or whether they were of a capital, private or domestic nature. The central question was whether the payments were sufficiently connected to Mr. Jayasinghe's income-producing activities, or if they were primarily related to the dissolution of his marriage and the consequent private obligations arising from that event.

Bell and Gageler JJ held that the AAT had erred in law. Their Honours reasoned that the payments were made in discharge of Mr. Jayasinghe's private obligations arising from his marital relationship and its dissolution, rather than for the purpose of gaining or producing his assessable income. The binding financial agreement, while legally binding, did not alter the fundamental character of the payments as being of a private and domestic nature. The court applied the principles established in cases such as *Lodge v Federal Commissioner of Taxation* and *Federal Commissioner of Taxation v Smith*, which distinguish between expenses incurred in the course of earning income and those incurred in fulfilling private or domestic responsibilities. The connection between the payments and Mr. Jayasinghe's income-producing activities was found to be too remote.

The appeal was allowed, and the decision of the Administrative Appeals Tribunal was set aside. The matter was remitted to the AAT for redetermination in accordance with the judgment of the Full Federal Court.

Orders