Federal Commissioner of Taxation v Applegate

Income Tax - Appeal - Permanent p lace of abode ou ts ide

Aus t ra l i a

Income Tax Assessment Act

1936,

s . 6 ( l ) ( a ) ( i )

THE COMiVIISSIOITER OF TAXATION OF THE COI"IMON\TALTH OF ATJSTRALIA

v. GEOFFREY DAVID APPLEGATE

G. No. 31 of 1978

Coram: Franki, Northrop and Fisher JJ.

29 June 1979

Sydney

I N TKE FEDERAL COURT O F AUSTRALIA)

NEW SOUTH lJALES D I S T R I C T REGISTRY

No.

of 1978

GENERAL

D I V I S I O N

I N THE MATTER of	the Income	T a x A s s e s s m e n t
- 1936	A c t

BETWEEN: THE CONMISSIONER O F TAXATION

O F T F E

COMMONVEALTK

O F AUSTRALIA

A p p e l l a n t	I
i

AND

-	: GEOFFREY DAVID APPLEGATE

R e s p o n d e n t

C o r a m :

Franki,

N o r t h r o p and

Fisher JJ.

29 June 1979

Sydney

O R D E R

JUDGES MAKING ORDER:	Franki , N o r t h r o p and Fisher JJ.
DATE OF ORDER:	29 June 1979
WHERE MADE:	Sydney
THE COURT ORDERS THAT:

T h e appeal

is dismissed

w i t h co s t s .

I N THE FEDERAL COURT OF AUSTRALIA)

)

NEW SOUTH WALES DISTRICT REGISTRY)	G . No. 31 of 1978
GENERAL DIVISION

I N TFEE MATTER of t h e Income Tax Assessment

Act 1936

THE COPP'IISSIONER OF TAXArCICN

OF THE CO!4i:IONVvTEALTH OF AUSTFULIA

Appellant

AND:	GEOFFREY DAVID APPLEGATE

Respondent

Coram: Franki, Northrop and Fisher JJ.

29 June1979

Sydney

REASONS FOR JUDGICENT

Thls appeal by t h e Commissioner of Taxation i s brought

pursuant t o leave granted by

t h l s Court upon condit ion t h a t

the appe l lan t pay	t h e respondent 's	cos t s of	t h e appeal i n
any event.

The of Northrop and Fisher JJ. which I have had t h e opportunity

re levan t

f a c t s have

been

s e t ou t i n t h e

j u d p e n t s

t o read and I do no t propose

t o dea l with t h e f a c t s i n

any d e t a i l .

I t seems c l e a r t h a t t h e respondent,

M r .

Applegate,

- 2 -

l e f t Aus t ra l i a

take up

h i s pos i t l on

i n Vi la

and

t h a t

i n the absence of some unforeseen circumstances he was

l i k e l y t o remain

t h e r e u n t i l he had

comple-l;ed h i s

assignment rvhich would probably t ake severa l years .

M r . Applegate l e f t Sydney on 8 November 1971 and

apa r t from hvo

b r i e f per iods he remained

i n Vila f o r the

balance of the re levan t t a x year.

The time a t rs!hich

t h e Commissioner of Taxation was t o form a view a s t o

t h e a s s e s s a b i l l t y f o r

tax i n respec t of

the year

ended

30 June 1972 might be expected t o have been some time

during t h e l a s t h a l f

t h e year

1972 and

i n t h e sub jec t

case t h e assessment was issued on 1 February 1973.

The

quest ion rmjch was argued before us was whether on t h e

f a c t s of

t h e case 1.k-

Applegate during t h e re levan t

period had "h i s permanent p lace ;f

abodeu outs ide

Aus t ra l i a wi th in t h e meaning

those words

i n s . 6 ( l ) ( a ) ( i )

of t h e Income Tax Assessment Act 1936 (" the Ac tn ) .

This

s ec t i on reads

t h a t unless

t h e

contrary i n t en t ion

appears:

" ' r e s iden t '

o r

' r e s iden t

Aus t r a l i a t

means

( a ) a person,

o ther than a company,

who

r e s ides

Aus t ra l i a and

includes a person -

(i) whose domlcile is in

Aus t ra l i a ,

unless

t h e

Commissioner

i s s a t i s f i e d

t h a t h i s permanent

p lace

abode

i s

outs ide

Aus t ra l i a . "

I n my opinion two fundamental matters must be

borne

i n mind.

The

f irst i s t h a t l i a b i l i t y t o t a x a r i s e s

annually and t h e quest ion of where t h e taxpayer ' s permanent p lace of abode is, i f re levan t , must be determined annually and secondly t h a t t h e words "h i s

permanent p lace of abode" a r e i n a sub-section which

contains the word ndomicilew.

I n t h e argument before u s nothing turned on t h e

meaning of

t h e words

"place of abodet1 and both p a r t i e s

adopted t h e view t h a t these words were t o be given a

broad meaning.

This seems t o be a reasonable approach

(see genera l ly P r i c e v.

West London

Investment Eullding

Society Limited b964T] 1 W.L.R. 616).

The word "permanentn i s a word which must be

construed i n t h e l i g h t of

t h e context i n which

it appears.

Lord Evershed pointed out i n McClelland v. Northern

I re land General Health Services Board p9577 1 W.L.R.

594 a t p.609

t h a t t h e word

'!permanenttt i s c l e a r l y capable,

according t o t h e context , of many shades of meaning.

I n t h a t case t h e House of Lords was considering

the expression "permanent

and pensionableu i n r e l a t i o n t o

employment and Lord Keith of Avonholm, although d i ssen t ing

i n t h e f i n a l conclusion s a id a t p.605

t h a t "A

mere

statement t h a t a person holds a permanent and pensionable

pos t is very imprecise. It contains no ind ica t ion of

t h e degree of permanence o r t h e nature and conditions

of t h e pension.I1

The Oxford English Dict ionary (1933),

Vol.

V 1 1 a t p.710

gives a s t h e f irst meaning of permanent

u C o ~ ~ t i n u i n g

o r

designed

t o continue

i n d e f i n i t e l y without

change;

abiding,

l a s t i n g ,

enduring;

p e r s i s t e n t .

Opposed

t o temporary."

In my

opinion t h e f a c t t h a t t h e phrase

"permanent

p lace of abodeu appears i n a context which includes t h e

word

I1domicilen i s of

g r ea t

s ign i f i cance .

The word

"personn i n s . 6 ( l ) ( a ) of

t h e Act does

no t appear t o be l imi ted t o male persons o r t o female

persons o r t o persons of any p a r t i c u l a r age.

Considering

t h e

s ec t i on i n r e l a t i o n

t o

an a d u l t male

person

whose

domicile of

o r i g i n was

Aus t ra l i a ,

it would

d i f f i c u l t

t o regard such a person a s domiciled i n Aus t ra l i a i f h i s

permanent p lace of

abode was

outs ide Aus t ra l i a i n t h e

sense t h a t he intended t o remain

forever i n t h a t o ther

country unless perhaps

it m u l d be s a id t h a t he had no

i n t en t ion t o abandon h i s domicile oP o r ig in .

(See

genera l ly Cheshire 's

P r iva te

In te rna t iona l

Law

9 th Edn.

a t pp.

160-166).

I n t h e case of an a d u l t male whose

domlcile of

choice was

Aust ra l ia

it i s d i f f i c u l t t o see

how he could be domiciled i n Aus t ra l i a i f he had l e f t

Aus t ra l i a with

the

i n t en t ion of

r e s id ing

elsewhere

permanently i n the sense of

f o r the r e s t of h i s l i f e .

The pos i t i on would

d ~ f f e r e n t

with a married woman

whose domicile was

i n Aus t ra l i a because she had married

a man whose domlcile was i n Aus t ra l i a and who

went

permanently

t o l i v e i n a

country

outs lde Aus t ra l i a

intending t o l i v e t he re f o r t h e r e s t of

he r l i f e .

- 5 -

consider , however, t h a t t h e sec t ion must be read 2s designed t o apply general ly and not only t o marrled

females o r t o any o ther p a r t i c u l e r category of

persor,s.

Accordingly i n my opinion the phrase tlpermanent

p lace of

abode outs ide Austral lal t is t o be read

a s

something l e s s than a permanent p lace of abocle i n which

t h e taxpayer

intends t o l i v e f o r t h e r e s t of

h i s l i f e .

There i s nothing i n t h e sub-section

which

requ i res

the

i n t e n t of

t h e taxpayer

t o be

t h e c r i t l c a l

f a c t o r even though

it is , of

course,

a re levan t f a c t o r .

Essentially t h e quest ion is whether,

as a n a t t e r of

f a c t the taxpayer 's

permanent p lace of

abode was

ou t s ide

Aus t ra l i a

a t t h e re levan t

time.

Senior counsel f o r t h e Cornmissioner

d id no t

contend

t h a t

i n t en t ion

t o l i v e ou t s ide Aus t ra l i a

f o r

t h e r e s t of t h e taxpayer 's

l l f e was required.

conceded t h a t i f , f o r example,

a young mzn l e f t Aus-tralia

intending t o spend t h e r e s t of h i s working l l f e i n a

particular

country outs ide Aus t ra l i a t h e mere

f a c t t h a t

he had

t h e i n t en t ion upon

re t i rement

re tu rn ing t o

Aus t ra l i a would

no t ,

a t l e a s t necessa r i ly ,

prevent

h i ~ n

from havlng a permanent p lace of

abode ou ts lde Aust ra l ia .

H i s submission was t h a t Ifa pel-manent p lace of

abode

outs ide

Aus t ra l i a f t required

in ten t ion

t o

l i v e outs ide

Aus t ra l i a

i n d e f i n i t e l y ,

without

any

d e f i n i t e

i n t en t ion

ever re-turnlng t o Aust ra l ia

i n the foreseeable

f u t u r e o ther

than

a t some remote,

a l b e i t specific,

po in t of

time.

consider t h a t i f

t h e re levan t quest ion was

whether M r .

Applegate had

"permanent p o s i t i o n n , i n

t h e sense of permanent employment,

i n Vila t h e answer

would be "yesM and l lkewise I consider he had a

permanent p lace of abode i n Vila a t t h e re levan t time.

The quest ion is one of degree and bearing i n

mind

t h e assoc ia t ion of

t h e phrase

"permanent p lace

of abode" with t h e word

l 'domicl l~-r"

and

t h e f a c t t h a t

t h e l i a b i l i t y f o r t a x f a l l s t o be

determined

annually

i n my

opinion t h e learned judge from those judgment t h i s

appeal i s brought was

cor rec t .

consider

t h a t t h e learned judge

co r r ec t l y

posed t h e re levan t t e s t when he s a id t h a t ". . .what

i s required is t h a t t he re be a permanent p lace of

abode

outs ide Aus t ra l i a and

t h a t t h e enquiry a s t o

whether t he re is o r no t is an 0 b j e ~ t l ~ e

one, notr.rithstanding

t h e f a c t t h a t

t h e

i n t en t ion of

t h e

taxpayer

i n r e l a t l o n

t o the length of

time t h a t he w i l l r e s ide i n a p lace

outs ide Aust ra l ia

i s a

re levan t

f a c t o r

t o be

taken

i n t o

account1'.

Whilst t h e Commissioner (and presumably t h e

Board of Review) was

e n t i t l e d t o look t o t h e events which

had happened s ince t h e end of t h e t a x year i n my

opinion

t h e quest ion of

t h e taxpayer ' s

i n t e n t a s t o the

length

h i s

s t a y i s no

than a

re levan t f a c t o r t o be

considered.

I n my

opinion t h e appeal should be dismissed

with

cos t s .

c e r t i f y t h a t t h i s and

the f i v e preceding pages a r e a t r u e copy

the

Reasons

f o r Judgment here in of h l s Honour

M r .

J u s t i c e Franki

P;L(

(;C, &-L((

Dated: %\ A-,,

!'[)L\

Associate

-?----..-*-.

--.--

-- ----- ---- --

-.p-. .

I N THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH TJALES DISTRICT REGISTRY	NO. G 31 o f 1978
GENERAL DIVISION
B e t w e e n :

THE COE.1MISSIONER OF TAXATION OF

THE COI?MONhTALTH OF AUSTRALIA

Appel lant

and

GEOFFREY DAVID APPLEGATE

Respondent

NORTHROP J.

REASONS FOR JUDGMENT

29 June, 1979.

This is an appea l brought by t h e Commissioner

l eave

o f

t h e Fede ra l

Court

o f

A u s t r a l i a

a g a i n s t

d e c i s i o n of

t h e Supreme

Court

o f

N e w South Wales

a l lowing

appeal

a g a i n s t

d e c i s i o n o f

t h e Board

Review

c o n f i n i n g t h e disa l lowance

t h e Coriunlssioner

o f

o b j e c t i o n by

t h e taxpayer

t o an

assessment o f

income

t ax f o r t h e y e a r ended 30 June 1972.

The appea l concerns

t h e ques t ion of

whether f o r p a r t of

t h a t y e a r of

t a x t h e

t axpaye r was

a non-res ident

w l t h i n t h e meanlng

t h a t

word when used i n s .25 (1) and s .23 ( r ) o f The Income Tax

Assessment Kck1936, a s amended; ehe Act .

The

f a c t s a r e n o t

i n d i s p u t e .

The

taxpayer

i s

s o l i c i t o r wbo

a t a l l r e l e v a n t times was

employed by

Messrs.

S ly and

R u s s e l l ,

f i r m o f

Sydney

S o l i c l t o r s .

During t h e y e a r ended

June 1972,

a t t h e r e q u e s t of

t h e

f i r m ,

t h e taxpayer went

t o V i l a i n t h e New

Hebrides

f o r t h e

purpose of

openingand managing t h e r e a branch o f f i c e on

beha l f

of t h e firm.

8 November

1 9 7 1 he l e f t Sydney and

journeyed

t o V i l a ,

where

a p a r t

from

two

b r i e f

p e r i o d s

he remained

f o r t h e ba lance o f t h e t a x yea r .

It is n o t

d i s p u t e d t h a t f o r t h e p e r i o d

8 November

1971 t o 30

June

1972 h i s Income was

de r ived from sou rces wholly o u t of

A u s t r a l i a .

The

t axpaye r was

marr ied.

A t t h e t ime of

1	l e a v i n g Sydney,	h i s w i f e was	expec t ing t h e i r f i r s t
1

c h i l d .

l e a v i n g Sydney,

t h e t axpaye r gave up

t h e

tenancy of

t h e f l a t i n which he and h i s w i f e had been

l i v i n g .

H e

l e f t no

a s s e t s

i n A u s t r a l i a ,

bu t

r e t a i n e d

h i s membership

i n A u s t r a l i a

t h e

H o s p i t a l s

Con t r ibu t ion

Fund.

Upon

a r r i v a l i n V i l a he

and h i s w i f e

s p e n t t h e

f i r s t two weeks

i n an h o t e l .

H e t h e n ob ta ined a

l e a s e of

a house

i n which he and h i s w i f e t h e r e a f t e r l i v e d .

The

term

t h e

l e a s e i n i t i a l l y was

f o r a p e r i o d of

twelve

months

w i th

op t ion o f

renewal

f o r a

f u r t h e r p e r i o d of

twelve months.

H e w a s

admi t ted

a s a

l e g a l p r a c t i t i o n e r

i n

t h e N e w Hebrides.

o b t a i n e d a

r e s idency permi t

f o r a

p e r i o d of twelve months and subsequent ly t h i s was

renewed

for a second term

of two y e a r s .

I n i t i a l l y h i s s t a f f

c o n s i s t e d o f

s e c r e t a r y

on ly ,

b u t

later

a d d i t i o n a l

s t a f f

w e r e

engaged.

The

t axpaye r and h i s w i f e had

in t ended t h a t

h e r confinement

f o r t h e b i r t h o f

t h e

c h i l d would

t a k e

p l a c e

i n V i l a ,

b u t ,

because

o f

t h e view t h e y

formed

concerning

t h e

n a t u r e

o f

t h e medical

t r e a t m e n t

a v a i l a b l e

t h e r e ,

she r e t u r n e d

t o Sydney

f o r t h e b i r t h of

t h e c h i l d .

Th i s occur red

i n February

1972.

The

t a x p a y e r s p e n t t h r e e

weeks

on ho l iday i n Sydney du r ing t h e Christmas

1971 per iod .

I n March

1972 he

r e t u r n e d t o Sydney where

s p e n t t h r e e

days

be fo re

r e t u r n i n g

t o V i l a w i t h

h i s w i f e

and

c h i l d .

S h o r t l y a f t e r t h e b i r t h of

t h e c h i l d ,

the

wife

t h e taxpayer

a p p l i e d

s u c c e s s f u l l y

i n Sydney

f o r c h i l d endowment

payments,

and t h e s e w e r e p a i d i n t o a bank

account i n Sydney

i n t h e

name

t h e w i f e ' s mother.

The

t axpaye r d i d n o t know

t h e a p p l i c a t i o n

f o r o r r e c e i p t

t h e c h i l d endowment

payments.

-1

Subsequent t o t h e t a x y e a r ending 30 June 1972,

a p a r t

from a ho l iday

i n A u s t r a l i a

about

a month,

t h e

taxpayer

and h i s w i f e r e s i d e d a t V i l a u n t i l J u l y 1973.

About

t h a t t ime

t h e taxpayer

became

ill

and

r e c e i v e d t r ea tmen t

i n h o s p i t a l .

I n J u l y he

was

t r a n s f e r r e d t o a

h o s p l t a l

i n

Sydney.

H e

r ece ived medical

adv ice t h a t

"he

should t a k e

easy" .

H e was

d i s i n c l i n e d t o r e t u r n

t o V i l a

t o l i v e

3 .

i n d e f i n i t e l y i n a

c r o p i c a l

c l ima te .

La t e

i n J u l y he

r e t u r n e d

t o V l l a b u t

h i s

f i r m

agreed

t o r e p l a c e

him.

I n September 1973,

he was

r e p l a c e d by

ano the r employee

t h e f i r m and he

and h i s fami ly r e t u r n e d t o Sydney.

Owing

t o a

f a l l o f f

i n i n t e r n a t i o n a l b u s i n e s s ,

t h e branch

l	o f f i c e of	t h e	f i r m J a t V i l a was	c l o s e d i n 1975.
I i	I

The

re levance

t h e ev idence of

e v e n t s

occur r ing a f t e r 30

June

1972 i s n o t c l e a r .

o b j e c t i o n

w a s t aken t o t h a t evidence and it can be used t o test t h e weight

to he given t o t h e evidence of

t h e t axpaye r a s t o h i s

i n t e n t i o n when

h e f i r s t went

t o V i l a i n November

1971 and

du r ing h i s s t a y t h e r e f o r t h e remainder

th'at

f i n a n c i a l

y e a r , c / f .

Nelungaloo Pty. Ltd. v. The Commonwealth (1947) 75

C.L.R.

495 p e r Will iams J. a t p.515,

W i l l i s v. The Commonwealth

(1946) 73 C.L.R.

105 p e r Dixon J. a t p.116.

I t was

always in t ended by

t h e t axpaye r and by

h i s f i r m t h a t a f t e r t h e

l a p s e

i n d e f i n i t e p e r i o d of

t i m e he wouid

r e t u r n t o t h e Sydney o f f i c e .

The

p e r i o d was

n o t

s p e c i f i e d

o r de f ined

i n t h e minds

e i t h e r of

t h e t axpaye r

t h e p a r t n e r s

o f

t h e

f i rm ,

b u t

was

a n t i c i p a t e d t h a t

it would be of

a s u b s t a n t i a l l eng th .

The taxpayer would

have remained i n V i l a beyond September 1973 i f it had n o t been f o r h i s i l l n e s s . A t t h e h e a r i n g b e f o r e t h e Board of

Review,

evidence was given by

one of t h e p a r t n e r s o f t h e

j o i n t

i n t e n t i o n

i n t h e

fo l lowing

terms:

There was no d e f i n l t e p e r i o d set.

H e was

asked

t o go t h e r e f o r an i n d e f i n i t e pe r iod .

There

was

obvious ly

t h e

e s t ab l i shmen t

o f

t h e

o f f i c e whlch

had t o be contemplated.

W e always looked a t a

p e r i o d of

couple of

y e a r s j u s t

t o g e t t o a

break-even

s t a g e ,

s o we

regarded t h a t a s j u s t

t h e e s t ab l i shmen t pe r iod .

But

M r .

Applega te ' s

func t ion was

n o t merely

t o establish

t h e o f f i c e ,

it was

t o e s t a b l i s h it and g e t it running,

because

were very conscious o f

t h e f a c t t h a t who

e v e r

went

t h e r e would

g e t a

c e r t a i n amount

o f

t h e

job

e x p e r t i s e t h a t would

ha rd

t o r e p l a c e

and

w e

c e r t a i n l y would

n o t want

t o d l s c a r d

a f t e r it had j u s t been achieved."

I n h i s own

evidence

t h e

a p p e l l a n t

s a i d :

c e r t a i n l y in tended t h a t n o t on ly would

e s t a b l i s h b u t manage

it and be t h e manager

of t h a t branch o f f i c e .

expectation was t h a t

I would be p e r m i t t e d t o r e t u r n i f I wanted

to,

whenever I wanted t o , b u t I would come

back

i f I was

e v e r r e c a l l e d .

Beyond

t h a t I

had

e x p e c t a t i o n .

The CHAIRMAN:

When you s a y you would

be pe rmi t t ed

t o r e t u r n ,

t h i s is because

o f

your

s t a t u s w i t h t h e f i r m and

a s s o c i a t e p a r t n e r

t h a t so?

---

Y e s ,

I would

t h l n k so .

The

c o n d i t i o n s were

n o t ea sy i n t h a t s o r t of

environment and

expected t h a t n o t on ly my

s t a y , b u t I

t h i n k

t h e

f i r m was

reasonably

t o l e r a n t

employer and I would have permiss ion t o

r e t u r n i f I

d i d n o t en joy it.

I n f a c t I

d i d enjoy it."

I n a

le t ter da t ed

September

1973 w r i t t e n

t o t h e

Commissioner

t h e taxpayer

s a i d :

" A t t h e t i m e o f l e a v i n g A u s t r a l i a i r l November 1971 it was my intention t o

set up a home f o r myself and my

f ami ly ,

so t h a t I

could a t t e n d t o t h e job

a s s lgned

t o me by my employer, namely t h e establishment

and

o p e r a t i o n

o f

V i l a

Branch

O f f i c e o f

t h e

Sydney f l rm.

I d i d n o t , under any c i rcumstances ,

i n t e n d

t o r e t u r n

t o A u s t r a l i a

a f t e r a

s h o r t p e r i o d o f

temporary absence.

Nor

d i d

e v e r i n t e n d t h a t I

would

never

r e t u r n t o

A u s t r a l i a .

A s

have

never

c la imed t o have

abandoned my

domic i le o f

o r i g i n ,

submit

t h a t t h i s i s i r r e l e v a n t .

The

p o s i t i o n

t o

which I kas appoin ted was

(and i s ) a permanent

p o s i t i o n

and

r e q u l r e d m e

t o establish

permanent abode o r r e s idence f o r myself

and

family .

c l e a r i n t e n t i o n was

t h a t I would

r e s i d e

o u t s i d e

A u s t r a l i a

permanently

b u t

n o t

i n d e f i n i t e l y . "

During

cross-examination

wh i l e g i v i n g evidence b e f o r e

t h e

Board o f s en t ence i n t h e paragraph

Review,

t h e taxpayer was

r e f e r r e d t o t h e l a s t

j u s t

set o u t and

i n r e l a t i o n t o it

s a i d :

"I t h i n k

t h e word

' i n d e f i n i t e l y '

is probably

on r e f l e c t i o n n o t a good choice of words;

i f

t h a t means wi thout f i n i t e term I

th ink it is

n o t r i g h t .	What	I meant t o s a y was,	n o t
f o r e v e r . "

i s necessary

t o s e t o u t t h e

r e l e v a n t p r o v i s i o n s

t h e

A c t

S e c t i o n

25 (1) prov ides

fo l lows:

"25. (1)

The

a s s e s s a b l e income

o f

t axpayer

s h a l l i nc lude

(a) where

t h e taxpayer

is a r e s i d e n t -

t h e g r o s s

income

de r ived d i r e c t l y o r

i n d i r e c t l y from a l l sou rces whether

i n

.or

o u t of

A u s t r a l i a ;

and

Cb)

where t h e taxpayer i s a non-res ident

t h e

g r o s s

income

de r ived

d i r e c t l y

o r

i n d i r e c t l y

from

a l l sou rces

i n A u s t r a l i a ,

which i s n o t exempt income."

S e c t i o n

2 3 ( r )

p rov ides

a s

fo l lows:

"23.

The

fo l lowing income

s h a l l be exempt from

income

tax:-

(r)

income de r ived by a non- res iden t

from

sou rces wholly

o u t o f

A u s t r a l i a ;

..."

This

p rov i s ion

appears

t o add

no th ing

t o t h e p r o v i s i o n s

conta ined

i n S. 25 (l)

(b) of

t h e A c t .

The

i n t e r p r e t a t i o n s e c t i o n o f

t h e

A c t p rov ides :

"6. (1)

I n t h i s Act ,

u n l e s s

t h e c o n t r a r y

i n t e n t i o n

appears

. .

' r e s i d e n t '

o r

' r e s i d e n t

o f

A u s t r a l i a '

means

(a)

a person ,

o t h e r t han a company,

who r e s i d e s i n

A u s t r a l i a

and

i n c l u d e s

person

(i)

whose

domic i le

i s

i n A u s t r a l i a ,

u n l e s s

t h e Commissioner

i s s a t l s f l e d t h a t

h i s permanent	p l a c e	o f	abode	i s o u t s i d e
Aus tya l i a ;

( i i )

who

has

a c t u a l l y been

i n A u s t r a l i a ,

con t inuous ly

o r i n t e r m i t t e n t l y ,

d u r i n g

more than one-half

t h e y e a r of

income,

u n l e s s

t h e Commlssloner

s a t i s f l e d t h a t

h i s u sua l

p l a c e o f

abode

is o u t s i d e

A u s t r a l i a

and

t h a t he

does

n o t

i n t e n d t o

t a k e

r e s idence

i n A u s t r a l i a ;

o r

..."

The

ex tens ion

o f

t h e

d e f i n i t i o n

o f

" r e s i d e n t "

conta ined

i n paragraph

(a) (ii)

does n o t apply t o t h e f a c t s of

t h l s appeal

b u t t h e paragraph

i s set o u t because

t h e need

t o c o n t r a s t

t h e terminology

i n t h a t paragraph w i t h t h a t i n paragraph

( a ) ( i ) .

From 8 November 1971 t o 30 June 1972 t h e income

r ece ived by

t h e taxpayer was

de r lved from sou rces wholly o u t

o f

A u s t r a l i a .

During

t h a t p e r l o d

t h e t axpaye r was

domici led

i n

A u s t r a l i a .

Thus

t h e i s s u e t o be decided

is whether du r ing

t h a t p e r i o d t h e taxpayer

was

non- res iden t .

This

i nvo lves

dec id ing whether

du r ing t h a t p e r i o d he

was

a " r e s i d e n t " c o n t r a r y

d e f i n e d i n t h e A c t t h e r e be ing ,

i n t e n t i o n

appear ing

i n

S. 25 (1) o r S. 23 ( r ) of

t h e

A c t .

Th i s

i s s u e was

t h e i s s u e

r a i s e d

i n t h e

appea l

from t h e Board

o f

Review and dec ided by

t h e d e c i s i o n of

t h e Supreme

Court

N e w South Wales.

I n s eek ing l eave t o appea l t o t h e

Fede ra l Court ,

s . 1 9 6

t h e Act,

t h e Commissioner

r e l i e d

i n t e r a l i a ,

upon

t h e

fo l lowing grounds:

"Leave

is sought t o appea l a g a i n s t t h e whole

the said judgment.

The grounds upon which such

a p p l i c a t i o n

is made

are : -

l . ( a )

That t h e appeal w i l l i nvo lve impor tan t

q u e s t i o n s

law

o f

g e n e r a l

a p p l i c a t i o n

o f

t h e

p r o v i s i o n s

o f

S e c t i o n s

6 ( l ) ,

23 (r)

and 25 of t h e Income Tax Assessment Act 1936

inc lud ing : -

(i)

The

p r i n c i p l e s t o be

a p p l i e d

i n

determining when and i n what c i rcumstances

person

a c q u i r e s

a permanent

p l a c e of

abode

o u t s i d e

A u s t r a l i a

w i t h i n

t h e

meaning

t h e

s a i d A c t .

(ii)

' The

p r i n c i p l e s t o be

a p p l i e d i n

determining when and i n what c i rcumstances a

person

ceased

t o be

r e s i d e n t

A u s t r a l i a

w i t h i n t h e meaning

o f

t h e s a i d Act.

(iii)

The

p r i n c i p l e s t o be

a p p l i e d i n

determining when and i n what c i rcumstances

income

de r ived by

r e s i d e n t

from

sou rces

o u t o f	A u s t r a l i a i s exempt	from	income
t a x .

(b) Numerous

o t h e r t axpaye r s have

de r lved income

i n

c i rcumstances

s u b s t a n t i a l l y

s i m i l a r

t o t h o s e

o f

t h e Respondent

and it is impor tan t t h a t t h e

p r i n c i p l e s

a p p l i c a b l e

t o t h e

a s s e s s a b i l i t y

o r o therwise of such income and t h e meaning

t o be

a s c r i b e d t o t h e words

'permanent

p l ace

o f

abode'

f i n a l l y determined."

15 June 1978 a F u l l Court of

t h e Fede ra l

Court

o f

A u s t r a l i a

g ran t ed

l eave t o t h e Commissioner

t o

appea l from t h e judgment

t h e Supreme Court of N e w South

Wales,

b u t on

cond i t i on t h a t t h e Commissioner pay

t h e

t a x p a y e r ' s

c o s t s of

t h e appeal

i n any event .

I n t h e

subsequent m t i c e o i ~ p p e a l ,

t h e

Commissioner

r a i s e d t h e

same

i s s u e

f o r d e c i s i o n by

t h i s Court

a s was

b e f o r e

t h e

Supreme Court of New South Wales.

When t h e appea l came on f o r

h e a r i n g b e f o r e

t h e

F e d e r a l

Court ,

Sen io r

Counsel

f o r t h e

Commissioner sought l e a v e t o amend

t h e Not ice o f Appeal t o

i n c l u d e a ground t h a t t h e Supreme Court o f New

South Wales

should have d i smissed t h e appea l from t h e Board of

Review on

t h e ground

t h a t t h e r e was

evidence t o suppor t t h e conc lus ions

o f f a c t o f t h e r e l e v a n t p r i n c i p l e s o f

t h e members

o f

t h e Board

i n t h e i r a p p l i c a t i o n

o f

l a w .

Th ls was

t h e f i r s t t i m e t h a t

i s s u e o f

t h i s k ind

w a s

r a i s e d ,

and

t h e a p p l i c a t i o n w a s

r e fused .

The proposed new ground depended upon

t h e e x e r c i s e of t h e

d i s c r e t i o n

con fe r r ed upon

t h e

Commissioner,

o r r a t h e r

i n t h i s

c a s e ,

t h e Board o f

Review,

s e e s .193

o f t h e A c t ,

by t h e words

" u n l e s s t h e Commissioner

s a t i s f i e d "

appear ing

i n paragraph

( a ) (i)

t h e d e f i n i t i o n

o f

" r e s i d e n t "

and would

have

r e q u l r e d

t h i s Court

t o examine

t h e

e x e r c i s e

t h a t

d i s c r e t i o n

con fe r r ed

on t h e Commissioner,

s e e Avon

Downs P ty . Ltd.

Fede ra l

Commissioner o f Taxat ion (1949) 78 C.L.R.

353 p e r Dixon J. a t

p.360,

Commissioner o f Taxat ion v.

Br ian Hatch Timber Co.

( S a l e s )

P ty . Ltd . Melbourne Home o f Ford Pty.

(1971) 128 C.L.R.

28 and t h e o t h e r c a s e s c i t e d i n

Ltd.

and O r s . v.

Trade P r a c t i c e s

Commission

and Anor;

F u l l Court ,

Fede ra l

Court

A u s t r a l i a

judgment 28 March 1979 p e r F rank i and Northrop JJ. a t pp.34-5.

S ince t h e new

ground a t tempted t o r a i s e an i s s u e of

a k ind

d i f f e r e n t from t h a t r a i s e d i n t h e Supreme

Court of

New

South

Wales

and

d i f f e r e n t from t h a t f o r whlch

l e a v e t o appea l

from

t h a t Court was

g ran ted ,

t h e a p p l i c a t i o n

f o r l eave

t o amend

t h e

Not ice

o f

Appeal

i n t h i s r e s p e c t w a s

re fused .

Any

person

who

r e s i d e s

i n A u s t r a l i a

i s ,

d e f i n i t i o n ,

r e s i d e n t w i t h i n t h e meaning of

t h e Act.

The word

" r e s i d e " has a verv wide meaninu.

s e e Commissioner

f o r Taxat ion v.

Miller

( 1 9 4 6 ) 73 C.L.R.

93 p e r Latham C.J .

a t pp.99-100.

One

o f

t h e d i c t i o n a r y meanings

t h e word

" r e s i d e l i s " t o dwel l permanently

o r f o r a

cons ide rab le

t i m e ,

t o have o n e ' s

s e t t l e d o r u sua l

abode,

t o 1 i v e . b o r e

p a r t i c u l a r p l ace" .

person

may

r e s i d e

i n more

t h a n one

count ry a t any one t i m e , see Robertson v.

Fede ra l Commissioner

o f Taxat ion (1937) 57 C.L.R.

147 p e r Dixon J. a t p.163 and

Gregory v.

Deputy Fede ra l Commissioner of ~axat ion(Westem

~ ~ t r a l l a ) ( 1 9 3

57 C.L.R.

774 p e r Dixon J. a t pp.777-8.

From 8 November 1971 t o 30 June 1972 t h e

raxpayer r e s i d e d a t V i l a b u t n o t a t t h e one house.

view

o f

t h e f a c t s can

s a i d t h a t du r ing t h d t p e r i o d

r e s i d e d

i n A u s t r a l i a .

The

extended d e f i n i t i o n

" r e s i d e n t "

conta ined

i n paragraph

( a ) (ii)

cannot

apply

s i n c e

t h e taxpayer

had

n o t

" a c t u a l l y been

i n A u s t r a l i a ,

con t inuous ly

o r

i n t e r m i t t e n t l y du r ing more

than

one

h a l f

t h e y e a r

o f

income".

Thls paragraph appears t o draw

a d i s t i n c t i o n between

"usua l p l a c e

o f

abode"

and

" r e s idence" b u t

i s n o t necessary

t o c o n s i d e r t h a t m a t t e r

f u r t h e r .

Under

paragraph

( a ) (i)

t h e d e f i n i t i o n ,

t h e meaning

" r e s i d e n t "

extended t o

i n c l u d e

persons ,

s u b j e c t

t o one

q u a l i f i c a t i o n ,

whose

domic i le

i s

i n A u s t r a l l a .

This

i n c l u d e s

persons

whose

domic i le

o f

o r i g i n

i s i n A u s t r a l i a

a s w e l l a s persons

who

have

acqu i r ed a

domic i le

o f

cho ice

i n A u s t r a l i a .

The

one

q u a l i f i c a t i o n

t o

t h i s extended meaning o f

" r e s i d e n t "

1s t h a t of

a person

whose

domic i le

i s i n A u s t r a l i a b u t

" h i s permanent

p l a c e

abode

i s

o u t s i d e

A u s t r a l i a " .

This

q u a l i f i c a t i o n

must

r e l a t e

t o

t h e y e a r o f

income

du r ing which

t h e income h a s been

der ived .

The con ten t ion made by

Sen io r Counsel f o r

t h e

Commission

was

t h a t i n t h e extended d e f i n i t i o n o f

" r e s i d e n t "

t h e phrase

" h i s permanent

p l a c e

abode

i s o u t s i d e A u s t r a l i a "

should be

cons t rued a s apply ing t o a person who

" in t ends t o

l ive

o u t s i d e

A u s t r a l i a

i n d e f i n i t e l y ,

w i thou t

any

d e f i n i t e

i n t e n t i o n

o f

e v e r

r e t u r n i n g

t o A u s t r a l i a

i n t h e

f o r e s e e a b l e

f u t u r e ,

excep t

a t some

remote

a l b e i t s p e c i f i c p o i n t

o f

t i m e " .

H e t hen

submit ted

t h a t s i n c e t h e t axpaye r possessed a

d e f i n i t e

i n t e n t i o n

t o r e t u r n

t o A u s t r a l i a

i n t h e

f o r e s e e a b l e

f u t u r e ,

d i d n o t

come

w i t h i n

t h e

q u a l i f i c a t i o n

con ta ined

i n paragraph

(a) (i)

t h e

d e f i n i t i o n

" r e s i d e n t " .

I n

op ln ion t h a t con ten t ion should be

r e j e c t e d .

The

qualification

a p p l i e s t o persons who

a l though

domici led

i n A u s t r a l i a ,

n o t

r e s i d e

i n A u s t r a l l a

w i t h i n

t h e

accep ted

meaning

t h e word

" r e s i d e " .

The

q u a l i f i c a t i o n

is stated m

an a f f i m t i v e form,

n m l y , where

the person has h i s p e m e n t p l a e

o f

abode

o u t s i d e A u s t r a l i a .

The

q u a l i f i c a t i o n

i s n o t

concerned

w i t h whether a person has abandoned h i s Australian

domic i le o r

has acqu i r ed a

new

domic i le o r n o t .

The

q u a l i f i c a t i o n i s

concerned w i t h t h e pe r sons '

permanent

p l a c e o f

abode.

The

ph rase "p l ace o f abode" may

have many meanings,

it can r e f e r

t o t h e b u i l d i n g o r p l a c e where

person

s l e e p s and

can

r e f e r

t o t h e b u i l d i n g

o r p l a c e

where

i s u s u a l l y

found,

f o r

i n s t a n c e ,

" h i s p l a c e

b u s i n e s s " ,

s e e P r i c e v .

W e s t London

Investment

Bui ld ing Soc ie ty [l9641 2 A l l E.R.

318 p e r Danckwerts L.J.

a t

p.321.

The ph rase i s o f t e n used

as belng

synonymous w i t h t h e

word " res idence" see, f o r example, Levene v.

Commissioners o f

In land Revenue [l9281 A.C.

217 and Commissioners, of In land

Revenue v.

Lysaght

[l9281 A.C.

234.

I n t h e p r e s e n t c a s e t h e r e can

be no doubt t h a t whatever meanlng

i s g iven t o t h e ph ra se ,

du r ing

t h e p e r i o d

i n q u e s t i o n

t h e

t a x p a y e r ' s

" p l a c e

o f

abode"

was

o u t s i d e A u s t r a l i a .

During

t h a t p e r i o d

he( ldid n o t

r e s i d e

i n

A u s t r a l i a .

H e had

r e s i d e n c e

i n A u s t r a l i a .

had

hone

i n A u s t r a l i a .

H e d i d n o t

c a r r y on

b u s i n e s s

o r work

i n Australia.

H e r ece ived

income

from

sou rces w i t h i n A u s t r a l i a .

I t fo l lows ,

t h e r e f o r e ,

t h a t t h e real

i s s u e

i s whether,

du r ing

t h e p e r i o d

i n q u e s t i o n ,

t h e

t a x p a y e r ' s

p l a c e

a f

abode

o u t s i d e A u s t r a l i a

was permanent or n o t .

The word "permanent" can have many shades of meanings.

This

i s i l l u s t r a t e d by

r e f e r e n c e

t o t h e S h o r t e r Oxford

Dictionary.

And

a s was

s a i d by du Parcq L.J.

i n Henriksen

( I n s p e c t o r o f Taxes)

v. Graf ton Hotel Ltd.

[l9421 2 K.B.

184 a t p.196:

" 'Permanent '

i s lndeed a

r e l a t i v e t e r m ,

and

n o t

synonymous

wi th

' e v e r l a s t i n g ' " .

The word

"permanent" must be cons t rued accord ing t o t h e con tex t

i n which it appears ,

see p e r Lord Evershed i n McClelland v.

Northern

I r e l a n d General Heal th Se rv i ces Board

[l9571 2 A l l E.R.

129 a t p.140.

I n t h e p r e s e n t

c a s e t h e ph ra se

"permanent

p l a c e

o f

abode"

appears i n a

t a x i n g s t a t u t e by which

income

t a x is l e v i e d on

income

d e r i v e d du r ing a

f i n a n c i a l yea r .

Where

t axpayer

r e s i d e s

i n A u s t r a l i a ,

che

a s s e s s a b l e

income

10.

of t h a t person soullces b u t where

i n c l u d e s t h e g r o s s

income

d e r i v e d from

a l l

t h e person

does

n o t

r e s l d e

i n A u s t r a l i a ,

then

s u b j e c t t o t h e extended meaning

g iven t o t h e word

" r e s i d e n t " ,

t h e

a s s e s s a b l e

income

o f

t h a t person

inc ludes

t h e

g r o s s

income

d e r i v e d

from

a l l sou rces

i n A u s t r a l i a

on ly ,

does

n o t

i nc lude t h e g r o s s

income

d e r i v e d from

sou rces

o u t s i d e

A u s t r a l i a .

The

t a x

i s

a s s e s s a b l e

g r o s s

income

r ece ived on

annual b a s i s and

i s a s s e s s e d on

annual b a s i s .

The word "permanent" a s used i n paragraph (a) (i)

t h e

extended

d e f i n i t i o n of

" r e s i d e n t " ,

must

cons t rued

a s having

a shade income

o f

meaning

a p p l i c a b l e t o t h e p a r t i c u l a r

yea r

under

cons ide ra t ion .

I n t h i s c o n t e x t it

u n r e a l

t o

c o n s i d e r whether

t axpayer

has

formed t h e i n t e n t i o n t o l i v e

r e s i d e o r t o have

p l a c e o f

abode

o u t s i d e o f

A u s t r a l i a

i n d e f i n i t e l y ,

w i thou t

any

d e f i n i t e

i n t e n t i o n

e v e r

r e t u r n i n g

t o A u s t r a l i a

i n t h e

f o r e s e e a b l e

f u t u r e .

The

A c t is

n o t

concerned w i t h

domic i le excep t t o t h e e x t e n t

necessary

t o show

whether a

t axpaye r has an A u s t r a l i a n domic i le .

What

i s of

importance is whether t h e taxpayer has abandoned any r e s idence

o r p l a c e of

abode he may

have had i n A c s t r a l i a .

Each y e a r

income must be

looked a t s e p a r a t e l y .

I f i n t h a t y e a r a

t axpaye r

does

n o t

r e s i d e

i n A u s t r a l i a

i n t h e s ense

i n which

t h a t word

has

been

i n t e r p r e t e d ,

bu t

h a s

formed

t h e

i n t e n t i o n

t o ,

and

i n

f a c t has ,

r e s i d e d o u t s i d e A u s t r a l i a ,

then

t r u l y

can b e s a i d t h a t h i s permanent

p l a c e o f

abode

is o u t s i d e

A u s t r a l i a

du r ing t h a t y e a r

income.

Th i s

i s t o be

c o n t r a s t e d

wi th

temporary

o r t r a n s i t o r y p l a c e

abode

o u t s i d e A u s t r a l i a .

I n any

even t

t h e extended meaning

" r e s i d e n t "

becomes

r e l e v a n t

on ly when,

du r ing t h e y e a r

o f

income

under

c o n s i d e r a t i o n ,

t h e

t axpaye r

does

n o t

r e s i d e

i n A u s t r a l i a .

Paragraphs

( a ) ( i ) and

(ii)

of t h e group o f persons who

d e f i n i t i o n

a r e

complementary

p r o v i s i o n s

e n l a r g i n g

t h e

do n o t r e s i d e i n Australia

b u t become

l i a b l e t o pay

income

t a x i n A u s t r a l i a .

The

f a c t s of

t h e p r e s e n t

c a s e

show

c l e a r l y t h a t

d u r i n g t h e pe r iod

8 November

1971 t o 30

June

1972 of

t h e y e a r

o f

income

ended

June

1972 t h e t a x p a y e r ' s

permanent

p l a c e

abode was

o u t s i d e A u s t r a l i a .

A t t h e commencement

t h a t per iod he

had

t h e

r e q u i s i t e

i n t e n t i o n t o abandon

h i s

p lace of of residence ou t s ide Australia.

residence

i n A u s t r a l i a

and

t o e s t a b l i s h a

p lace

During t h e whole of t h a t

per iod

i n f a c t

r e s ided

ou t s ide A u s t r a l i a ,

d i d n o t

r e s i d e

i n

Aus t ra l i a .

I n my

opinion, t h e appeal should be

dismissed with

c o s t s .

I m TIIE FEDERAL COURT OF AUSTRALIA	)
---
)

NEW	SOUTH WALES	D I S T R I C T REGISTRY	)	KO.	G 3 1 of	1 9 7 8
)

GENERAL

D I V I S I O N

)

I N THE MATTER O F THE INCOME TAX

ASSESSMZW ACT 1936

B E T W E E N :

THE COMYISSIONER OF TIUATIOM OF

THE COVNO>%EALTFI C F AUSTPALlA

A p p e l l a n t

- and -

GEOE'FREY EAVID APPLEGATE

R e s p o n d e n t

CORAM:	Frank1 , N o r t h r o p and Fi sher JJ.
--

--	29 June 1979 -

REASONS FOR JUDGbEWP

F I S H E R J.:

T h l s 1s an appeal brought by

th? C o m l s s l o n e r of

T a x a k l o n

( " t h e C u m l s s l o n e r " )

a g a l n s t a

dcc l s lon of

the

S u p r e m e

C o u r t of

New South Wales

ir. l t s A d m l n l s t r a t l v e L a w D l v l s l o n .

B y

i t s decislon

t h a t C o 7 J r t

a l l o w e d an

appeal

aqalns t

the decislcn

B o a r d of

R e v l c w N o .

T h e B o a r d had

c o n f l n n e d the disallowance

the C o r n n n s s l o n e r of

o h ? r c t l o n by

G e o f f r e y D a v l d A p p l e g a t e

( " t h e t a x p a y e r " )

a g a l n s t

I n c o m e

tax

a s s e s s m e n t

l s sued by

the

C o m n l s s l o n e r a g a l n s t the taxpayer

in respect

the year of

I n c o m e ended

June 1 9 7 2 .

In hls r-turr far that year the taxpayer clalmed that he had

estab1~shc.d

a per~nanent

place of abode odtslde Austt-alla and

accordlnqly was not llable to Austxallan lncome tax In respect

3f salary earned after 1 November 1971. Thc Commlssloner in rnaklng

111s assessment addcd to the assessabl? income as returned by the

taxpayer the salary cazned by thc taxpayer in h:-s employment subsequent to 1 November 1971. The taxpayer objected on the ground that tne Comnlssloner was 111 error in lncludlng in hls

taxable Income lncolne carncd durlng the perlod 1 November 1971

to 30 June 2.973 becausz such lncorrle was (:a?-ncd by hlm as a non-

resldant from sources outslde Australla and accordlnyly not

llable to lncluslon as assessable income. The Co~nmlsslowxc

rcqucst rzferi-eel tc tne Board of Kcvle!~. The Eoard upheld the

asscszment-.

for the ycar of income hut on appeal tine Supremc

Court JS New Soutil vJhlcs upheld Lhe t5i:payer's appeal.

Th,: q~?cst~an

for deterr#u.natlcn b.]

this CourC 1s thf currcct

constrllccion to placc upon the deflnltlon of "resldent" !+.h:ch 1s

conta~ned

in S.

6 (1) of the Income Tax Assessment

- Act 1936

("the Act") as fsllows:

"resldent or 'res~dent

of Australld' means -

(a)

a person, other than a company, who resides In Australla (I. whose domlclle IS ln Aust-ralla, unless the

Co~missloncr~

1s satlsf lcd that hls permanent

place of abcde 1s outslde Australla;

(l;.) who has actually been in Australla, continuously

or lntermlttently, durlny morc than one half

af the year of income, unless the Conorussi oiler

1s satlsfled that hls usual place of abode is

outslde of Australla and that he does not lntend

to take up risldence in A-~stralla:

(111)

who is an ellylble employee for the purposes

~f the Superannnat~on

Act 1.976 or 1s the spouse

o r a c h l l d under

1 3 y e a r s of

age sE

such a

pe r son ,

z rd

( h ) a company ..

. "

'The Coimrussloner's contention 1s t h a t t h e taxpayer was

du r lng

t h e r e l e v a n t p e r l o d

r e s l d c n t oE

A ~ s t r a l l a

i n t h a t he

was

pcrson \:ho

was donacllcd. I n A u s t r a l i a b u t LP

r e s p e c t of

whom

the

Cornmlssloner

was

c o r r e c t l y not

s a t l s f l c c l

t h a t h l s psrnlanent

p l a c e of

abode was

o u t s l d e A u s t r a l l a .

The

t a spayc r

f o r h l s p a r t

concedes

that:

111s

d o r u c l l e 1s

In A u s t r a l l a ,

bu t

submics t h a t

uy.;i~ t h e should have been

t r u e

c o n s t r u c t ~ o i ?

t h e

d e f l r l l t l o n

t h e Conmlsslonc-r

s a c l s f l s d t h a t h l s permanent

p l a c e of

abodc was

a t t h e

r e l e v a r t

t lme

o u t s l d c A u s t r a l l a .

I t

a c c c p ~ e d

t h a t

t h e

lncorne

cnder

cons lde rn t lon

kas

der~v?ad f r x n

sou rces whsl ly

o u t

of	A u s t r a l ~ a .

The

f a c t s a r e nor;

In d l s p ~ t t :

anci havlng b ~ e n

s e t o u t

i n

d ~ c a l l

the meinbcrs

t h e Board. need n o t bc,:

s t a t e d ex i laus t l r~c l \ .

he re .

TF.e

taxpaycr 1s a s o l ~ c l t l j r

\?l10 throughout t h e reLevant

t ime was empl.oye2 by

a l a r g e f ~ r r r

c f

Sydney

s o l i c ~ t o r s ,

S ly and

R u s ~ e l l . DurLng

t h e year of

income thc: f l r m opened a branch

o F f l c e i n t h e New IIebr-ldes a t V l l a .

The taxpaycr who had been

a d ~ ~ t t e d

t o p r a c t l c e i n 1968 was

i n 1971 i n - n t e d t o under take

t l lc rnanagcment

r h e new

branch

on beha l f

t h e E l r m .

E.t

C f l e

t lme :-IC

was

no t

a p a r t n e r

i n t h e flrrn bu t

" A s s o c l a t e " , havlng

been employc~11 f o r up r ; ~

t h r e e yea r s .

1Ie l e f t S;ldrlcy

fot- V l l a

h l t h h?-; w l f c on 8 ??-,verber

1971 f o r !hs

purpose of o p e n ~ n g

t h e

new branch on beha l f

111s employer and

rerna~neci I n V l l a f o r t h e

r e m a ~ n d c r

of t h e year cE income.

O n l e a v i n g Sydney

t h e taxpay\?r qax-c ~ p t h e tenancy

t h e

f l a t i n which

and

h i s w i f e were

l i v i n g .

I I e l e f t no

a s s e t s i n

A u s t r a l i a

a p a r t

from

l l f e p o l l c y

~111ich

h e k e p t up whyhllst

i n

t h e Be!,

Hebrides.

Upon

a r r l v a l i n V l l a he and h l s w i f e l l v e d

:or two i.~ecks

11:

a ho tc l

and then o l , t a~n+d t h e l f a s r of

a dwellirlq

houcc

i n V i l a .

The

term of

t h e l e a s e was

ln i t i a l l . y

t h e l v e months

wi th a

r l g h t of

renewal

f 3 r a f u r t h e r l l k e p e r ~ o d . Hc

opened

t h e branch o f f i c e on

beha l f

t h e fi.rm,

t h e s t a f f c o n s i s t l ~ g

l n i t l a l l y of

s e c r e t a r y ,

b u t

gradual.ly

i n c r e a s i n g c n t i l l t

cornprlsed

f o u r persons

I n addll'lor?

t o

t h e a p p e l l a n t

t h c t ine

h l s depa r tu re .

H e was

adniLted a s a practitioner

i n Ncw

H c b ~ i d e s

a ~ l d

acqul red a res idency pcrmit

f o r t h c pe r lod of

twelve

manths \111lch he subscc~uent ly	renehe3 f o r a second t c r v of	two
yea r s .

The

t a x p a y e r ' s w i f e was

cxpecl:incj

ths?lr

f l r s t c h l l d a t t h e

t i m e a f

t h e i r d e p a r ~ u r e

f r o n Sydncy.

They had

1nter.ded t h a t shc

would be conf ined in Vi la bu t be iny 'inhappy w ~ t h

the

q u a l l t y of

r l sd lca l

t r ea tmen t

a i r a i l ab l e

t h e i e ,

she

r e t u r n e d

t o Sydney

f o r

t h e

b i r t h of

h e r c h i l d whlch

~ c c u r r e d

i n 'c.Sruary

1972.

The taxpayer

l a lncd h e r i n Sydney pr;or

t o C h r l s t ~ a s

and r-rnalned

t h c r c on

holiday

f o r t h r e e w e ~ k s . Fe a l s o came

Syi.r~ey f o r 3

days

I n

March

1972 t o c o l l t c t h l s w i f e and

c h i l d

&nd r e t c r n

t h m t o V l l a .

Apart from t h e s e two v ~ s l t s

h,? and

h i s wife

and

c h i l d

r e m a n e d

i n V i l a f o r t h c ba lance o r t h e year

income.

Thloughouc

t h a t

t lme a:id

t h e r c a f t s r they l ~ v e d

i r l t h e

l ea sed

dwel l ing llouse.

Shol-tly a f t c r t hc b l r t h of

h e r chl1.d

t h e w l fe of

t h c taxpayer

a p l ~ l l c d

i n

Sydney

f o r c h ~ l c l

cndowrcnt.

The amourit t he reo f was

p a ~ d

lntc, t h e w i f e ' s mu tne r ' s banlc

account

a t We11ingLor1,

NEW

Soutk Kales.

7';hc

taxpajrer \\,as no t aware e i t h e r of h l s w l f e ' s

a p p l i c a t i o ~ l f

o r her

r e c c l p t of

c h i l d

endowmenr..

Over

Chr-~stmas L972

Llle

taxpayer

ancl

I l l s \,.L£?

ar:d

c h i l d

hol idayed f o r ] x s t over a mmth i n !?ew

Sc7~t1l

Wales, otherwise

ramyned i n V l l a thrnughout Lhc year of

inchme ended 30 J c n e

1973.

IIowevc-r about t h c rniddlc of tllp c ~ l e n d z r

year

1973 t h c

taxpayer became

111 wlth what

has ; ~ l t l r r ~ a t c l y

dlagnose3 a s typhold

f e v e r .

H c was

i n k o s p i t a l

i n V l l a

went t o Skdney for a week

l n J u l y 1973 Ear

epe( : ia l is t

rnedlcal

attention.

H i s Sydney

~ ~ V ~ S J T S

recommended

t h a t

"he should t a k e ~t c a s k " , and

he w a s

himsclf

d l s l n c l . i ~ c d

r e t n r n t o V l l a

and

l l v c permanently

i n

t h e t r o p l c a l c l~ ic ta te .

'l'he

f l r m agre+d t h a t he

shoxld bc

replacecl

and he r e tu rned t o V1la on

20 J u l y 1973 f o r l u s t o- er two months.

29 Scptcmocr

1971 hr. Logethci wi th t l s w l f e and

chllcl r e tu rned

t o Sydney.

I t 1s not d l spu ted t h a t b

f o r h l s i l l n e s s he

would

no t have r c tu rned t o Syaney a t t h l s t ~ m p ,

be lng happy and preparcd

t o s t a y

l n P l l a

" a s long

a s n e c ~ s s a r v " . R l s p o s l t l o n was

taken

by another enployse of

t h e f l r m , b ~ :

t he b~:ancl~

was

c l o s c d

dowc

I n 1075 i n consequence

a f a l l l n q i f f 111

l n t c r n a t ~ o n a l

buz lness .

Great

s l q n l f i c a n c e was

s t t a z h c d

t h e Commlssloner

t o t h e

taxpayer ' S s t a t ? 05 mlnd,

a;ld

i n p a r L l ~ : ~ l a r

t o 1 1 ~ s

i n t c n t l o n s

i n

r e s p e c t of r&r.dr:llrlg t o Au5I:ralid.

In 11:s

argun1er.t b e f c r e the

t ~ i a l

]ur!ge

he s u l m l t t e d t h a t because t h e taxpayer had

t h e

l n t e n t l o n

c v c n t u a l l y

t o

r e t u r n

t o A u s t r a l ~ a ,

he could

no t

q l ~ a l l f y

a s a norl-reslclent

und?r

t h e d e f ~ . n l t i o n . 7'h.s

was,

he s a i d , because

i t s proper

c c n s t r u c t l o n

t h c p a r t i c ~ . l a r sub-sect lon

t h c

d e f l r l i t i o n

on ly

app l i ed wilere

taxpayer

formed

C l r m i n t e n t l a n

t o l eave A u s t r a l i a

f o r e v e r bu t

althwdqh

he mlght

l i v e

i n another

coun t ry , he had no t

form&

t h e intention

t o make t h a t o t h c ~

count ry h l s home.

T h ~ s

sdbrr'lsslon was

r e l e c t e d , and

: r ~

rny

vlcw

c o r r e c t l y

r e j e c t e d b y

t h e

t r l a l

judge.

Rcfore

t h e

Commlsslonez's

s u b m l s s ~ o n again

placed

g r e a t

emnphasls

t h e

taxpayer's

i n t e n t l c n s l r l r e s p e c t

h1s

r e t u r n

t o Austral l-a.

1!o

per-son 7 . ~ 5 0

was

don~ lc l l cd 111 AusCral la ,

s a l & ,

could

n o n - ~ e s l d e n t u n l e s s

h e

i n t c n d e ~ l

t 3 l ~ v c

o u t s l d e

Australia

~ n d e f l n l t e l y , w l t h o ~ ~ t

any

<.;fl:l~te

l n t e n t l ~ n

,of

ever

returning

t o A u s t r a l l a

i n t h e

f o r e s ~ ~ c a b l r

f u t u r e euceplr. a t some

remotc! a l b e ~ t

s p e c ~ f l c

p o l n t

t l n ~ e .

I t was

on ly

i n t h e s e

circumstances t h a t a person c ~ u l d

he s a l d t o have 111s perrrancnt

p l e c e

abode

o u t s l d e

A u s t r a l l a .

Bgth of thesr! tes ts t o my

mlnd a t t a c h t o o mdch s1gnxf;cance

t o t h e t a x p a y c r ' s

subjective

s t a t c o;

rnlnd

wl th

r e f e r r r l ce

relLurnlng t o . nus t r a l l a

t o be

a p p r o p ~ - l a t e

f o r

pres ,?nt

purposi . -~ .

Mo:eover

s ~ c h

a degree o i s u b t l e t y

i s ha rd ly warranCed

i n t h e

p r e s e n t

c o n t e x t ,

namely

seeking

t o d ~ t e r m l n e

t a x p a y c r ' s

rcsJdcnce ,

i t s e l f primarily qdes t lon of

f a c t .

It would be a

d i f f e r e n t maxccr-

t h e

l s s u i ivzs

t n h l s d f m u c l l e w l th

i t s

a t t e n d a n t conscqucnces f o r t h c pc:-sonaL	lzw and	s t a t ~ s	of	t h e
taxpayer .

TV ry mlnd

t h e trial

judge

c o r r e c t l y fcund a g a l n s t t h e

Commlssloner.

The taxpayer contended,

and I n t h a t dudgc ' s vxew

and 111 m:.

v ~ c w

cor rec t l : ,

c o n t ~ n d e d ,

t h a t t h e lnquzry was whethe:

t h c r e was

pcrmanerlt

plac;,

abode o u t s i d e A u s t r a l ~ a . Such

an erlqulryr \JJ.?

t o be de t c rn~ lncd

upon

ob;~:ctlve

c a n s l d c r a t l o n

t h e f a c t s , one of

whlch was

t h e e:q>resse?

l n t e n t l o : ~

t h e t ax -

payer

a s t o t h e l e n g t h of

t ime he w l l l bz

o u t s l d e A u s t r a l i a .

O f

c r u c i a l significance wcre

n s t orily

t hc f a c t s concerping h l s

a c q u " s i t l ~ n

of a h c ~ s e

i n V l l a ,

but

a l s o t h a t 11c

was

in t end ing

and intk:ndecl by 111s f l r ~ n	t o remain inclefi11itcly,	a l b e i t fo r a
li~ni'cect t ~ t r e .

Thc

s e c t i s n

i s d i f f i c u l t t o apply p a r t l c u i a r l y

I F t l ~ e

e m p h a s ~ s

i s on

subjective

i n t c n t l o n .

I t i s inarlc doubly d l f l l c a l t

t h c

i n d i s c r i m i n a t e u s c of

t h e c i l f fe r inq

concepts o l ~ O I - ~ ~ c i l e ,

i e s i d c n c c , pcrmanent

p lncc of

absde and

~ s u ? l .

p l a c c of

abode.

Moreover- th,? concept of pernlancncc i s usfed i n a con tex t i n which

i t does n o t , and cc~1.d n o t , b c a - ~

prlnlary meaning of

" c T i e r l a s t ~ n g " . I t

would

amoL.nt

tc) a

c o n t r a d i c t i o n

i n terms

t o

suggest c h a t an independent pe-son

cnc ld be

d o ~ r ~ c i l e d

i n

A u s t r a l i a

Su t wl th hi s

pm-m&nent rss:dencc

o u t s I G e Adstx-alia ,

. ~ f

pe1-lnene:lc

bear: ~ t s

o rd ina ry

:neanlng.

But

it i s c l c a r t h a t t h e meanlng of

permanent

i s f a r from

~ n t r a c t a b l c ,

and

very much

t a k e s

i t s c s l c u r

from

i t s con tcx t

A s t h c Master of

t h e R o l l s , Lord Evcrshed

s a i d i n McCleLland v

Nortl.

i r e l a n d 1lsalr.h Board 1957 2 A l 1 . E . R .

129 a t p.140:

"Thc w o r d

(permanent) i s c l e a r l y capab le ,

according

t o t h e c o l t e x t , of

many

shades of

meaning."

I n

t h a t

c a s e

a d v e r i ~ s e m e n t

o f f e r ~ n q

"pcrmanent employment"

was

not

c o r ~ s t r z e d

a s en?ployrne:~c f 3 r

1: Ti b:~t

cn~ployment an

t h e

"gen2ra l" 2s opposed tc, t he tmnporary s t a f f .

Thc war-d "permanent"

i s a

r e l a t i v e ';erin

a:ld

not

n e c e s s a r i l y

sy~?onymous wi th

cirer-

l a s t l n g , (ss? Henriksen v Graf ton R?tel Ltd. 1342 2 K.B.

184 a t

p.136

du Parcq L.J.!.

Lord Clyde i n In land Rcvcnue

C o ~ m l s s i o n e r s

v Adam 132s S.C.

738 spoke of a r l g h t which had becn acquirl-d f o r

a perlocl of ~ l g h t

y e a r s

a s havlng

"a.

r c l a t l v e l y pernlanent

character-."

I n YcCel land ' s

c a s e ,

sl;p-a

Lord Kel th

~nci lcatc-d

t h a t

h e considered

t h a t a stat?mcnc

t h a t a p-rscn

h ~ l c i s

a permanent

p o s t

a s very

impreclsi:,

say lng a t p.136;

" l t c o n t a l n s no

i n d l c a t l o n of

t h e

degree of permancncc."

Lord Dennlng M.R.

a l s 3 accep t s t i a t t h e r e

a r e varying

clcgrees of permanence h i l d l n g i n

v Stir:% L837:.'

Q.B.

463 a t p .470,

an e l e c t c r d l c a s e , t h a t

"a person may

p r ~ p e r i y

bc s a l d t o bc

'resident'

I n a p l a c e h1.cn

111s ~ t a y

t h e r e has

cor ls lderable

d e j r e e

permanence."

P ~ 1 ~ c . r

J. l n 'rverrs v Barnera

I';?cklno Comxrx Llmltcd 1930 S.A.S.I?.

123 a t p.125 h e l d t h a t i n

a c o n t r a c t of

h l r l n g , t h e word

"p;.rmanent"

was

dsed Sy way

c a n t r a s t wl th

"occas l3na l

o r

seascn,?l h l r l n q " b1lt

t h a t

i t did

not

bind

e l t h c r p a r t y f o r any

t e r m .

'To

;r.y mlnc? lt i s s lgn~ .C lcan t

t h a t thp v,ord "permanent" ].S

used t o qual l f y the c : c ~ ~ - E s s ~ ~ ~ I

. I ? c c

~3f abode"

1 . e .

the?

p h y s l c a l

s u r r o c n d i n y ~

i n wlilch a person

l l v e s , am1 t o d e s c r ~ b e

t.hat

p l a c e .

1::

doss not

neccssarl1.y

d l r e c r a t t c -n t lon t~ t h c ta:<payezls

z t a t e of

n ~ n d

i n r e s p e c t of

t h a t o r ar,y ochcr plzsze.

Such a

s t a t e of

r n l ~ ~ d

1s crucl.;tL

t o t h e

de t e r~ r lna t lo : . of

111s

dom~.cl le

l.+. h i s ycrmanent

"homc" ,

and

i f he

r r f ta ins h l s A l ~ s r r a l ~ z n

dnmlc l le

c q r ~ s l d c r e d

r e s i 6 e n t of

Australia

u n t l l h?

a c q c l r c s a

p l a c e

abode of

a p a r t l c d l a ~

cha raccc r

elsi~.~hhc-re. Such

p l a c e of

a b ~ d ?

may be h l s "home" f o r t h z clme h(-lng bu t i t 1s not h l s

1;errnanent

'no~ne l f %c

pro>>cscs u l t lma t - ly

ma.ilnc_r h

home

c l sewhe-e .

Should h e , whilst

l l l ~ l n q

1n ins pern>anc-'~t

p l a c z of

abr,c?e. ;;handon

h l s i n t e n t i o n

ultimately

t o make

h l s h ~ m e

c-lscwhere, 111s y~errnaner.?

p l a c e of nh;)dc

l-,ec~,ne 111s permanent hsmr.

i-Ie w l l l l n

consecpencc be helL! t o have abandoned hl;

P ~ s t r a l l a n

d o n l c i l e

and t~ have clcqulrcd J	dc~r . l c l l e	of cho lce I n t h ~	count ry of	h l s
home.

1t fo l lows t h a t i t i s l n roy

v ~ c w

pro;oel:

ti,

p l y g r e a t e r

regard t o t h e natlir-e ar.d q u a l l t y zf

t h e use which

a ta>:payc+r

mdkes

a p a r t l c u l a r p l a c e of

aboclc

for

rhe purposs of

d c t e r n l n l n g

w k t h e r

i t

q u a l l C l c s

a s h l s permant-:nt

p l a c e

a f

abode.

H l s

l n t e n t ~ c n s

\ ~ l t h

r c s p e c t

t o t h e

d u r a t l o r ~

h l s r e s l d i n c e

l u s t one

c f

t he

f a c t o r s wtilch

h a s

i -e lwance .

O b v l ~ u s l y if h i s s t a y

i s piircly

tcn~porary

and he inzends t o move

on o r r? tur l i t o A u s t r a l ~ a

a t szme

dc f in i t . ? pqlnt.

c,f

t lrna-.

t h i s denlcxs

t h ? p l a c e of

a b ~ c i e

an essential

c h n ~ a c t ~ r l s t l c

h ticnc,

nanely d u r a b l J ~ t y . Moreover i t seems

apnrop r l a t e

t o

l l e w

z b ] r _ c t ~ v e l y

:he

n d t c r e and q~al.;tty of

t:~?

us? whlcil t h e taupayer makes of

t h c p l a c e of abode t o det?rnune

whether

11I.

h a s

t h e c h s r a c t t e r i s t ~ c s

i l l s

f l x e d p l a c e of

abode,

h i s h f i ~ ~ e .

I t L;

1.3 lny 11'11ld

lse1-1I'ectl y

c o n c l s ~ c n t

wlCh

t h e

s ~ t a b l i s t i l n g

a home

i n a p a r t l c u l a r p l a c e

Lhal.

t h e

t a x p s y a

1s zware t h d t t h e du rd t lon of

h l s cr-]ol'lr..nnt cf

t h e ho!rle,

altliough

l ~ c l e f l n l t c

i n l e n g t h , w l i l be

on ly f o r a l l rn l tcd pezlod.

'The

kno~.lcclge kf.at

cver i tual ly he w ~ i l

r e t u r n t o t h f

count ry of

h i s

c?o!nlcl l~ does not

i n TV

oplnlon d2ny hlnl

a c a p a c l t y t~ inake h i s

home

o u t s l d c

h i s count ry

d o r n ~ c l l e .

Such

conc izs~ .on i s

~ a r t ~ c u l a r l y

open

i n r h e p r e s e n t

c l i -c~?mstanccs

w n e r c ttir

taxpayer

not

c ~ ~ m p l e t c l y

fr-ec agent

1 n t h e c h s l c ? OF when

t o r e t u r n ,

l t being

a ma t t e r

f c r n e g c t l a t l o n between

hlm

and

h l s evployers .

To my inlnd

t h e nropt.r

c1;nstrucl:x~n tc, p l a c e iJpon

t h e ph ra se

"per~nai'lenl p l a c z

c f

abode"

i s that .

? t i s t h e

tai.payr:r

' s f l x e a l

an6 h a b l t u a l plac-.

abode.

I t 1s h i s homc, bu t n c t hls permanent

horn,?.

It conno1:es

a no re endurlng r e l a t . onsh lp \;l

t ; ~

t h e p i r t ~ c u l . a r

p l a c e of

abodi

than

t h a t of

a person who

1s o r d l n a r l l y r c s l d e n t

the,rc or who 11as there '112s us,-?a1 p l a c e of

aboclr.

Mdter la l f a c t o r s

f o r conslclerat lon

w i l l b e t h c c o n t l n u l t y 01-

otherkl-se of

t h c

t a x p a y e r ' s p r e sence ,

?he

duration

111s p r l s c n c e and

t h e

d u r a b ~ l ~ t y

h1.s

a s s o c l a t l o n v l t h

t h e p a r c l c u l a r

p l a c e .

T t f o l l cws then t h a t i n nly

oplrilon r h e intention of

t h c

taxpayer

a s f a r a s re ' iurnlng

t o A u s t r a l i a

i s concerned

lusr :

one of

t h e f a c t ~ r s

f o r

c o n s l d e r a t l o n .

R u t

l t

i s

f a z t o r

w h ~ c h

c o n s l d ~ ~ r

has

l e s s s l g n l f l c a n c e

r:tian

t1.e

taxpaycl- 'S l q t f n t l o n

l n

r e l a t l o n

t o h l s p l a c e

abode

Guts ide

A u s t r a l l h .

J n t e n t l o n

t o r e t u r n t o Adstral7-a

1s a

c r u c l a ?

fc-a ture I n cons lde r lng

'.:hether

t l ic

taxpayer

h a s

r c t a l n e d

A l s t r a l . 1 3 ~ dz~inlcl!.e.

I n t e n t ~ o r i

t o

make

h l s hciiie Tor

t h e belng t l m c i n h i s p l a c e of

ab(>de ~ u t s l d e

A u s t r a l ~ a

1s an

important

clement

i n c h a r a c t ~ r l s l n g

t h a t

p l a c e

abode a s h l s "permanent" p l a c e of

abode.

111 t h e p r e s e n t ma t t e r

op ln lon

t h a t

n o t w l t h s t a ~ 3 l n g

t h c f a c t t h a t he

intended

ultimately

t o r c t u r n

t c A u s t r a l l a ,

h e

'.<as capable of

~ s t a b l ~ s h l n g

a pc-inanent p l a c s c f

abode

I n t h e

sense abovcmcntloned w ~ t s i d e

C>£

A u s t r a l l a .

ha-JP f u r t h e r formcd

t h e view t h a t he did 311 f a c t establish S ~ I C ~

a pcirmanent

p l a c e

abode

dur lng t h e yezr

c f

lnccmc.

I n

t h e c l r c u n s t a n c e s

t h e r 6 f ~ r e

he I S a

"non-resl t lent"

* l t t ~ l n

t h e d e f l n l t l o n and

exempt

from

Australian	t a x on	h i s income	de r lved frcal s o x c e s o u t s l d e of
A u s t r a l l a .

The	appeal should b~ dcllsmsscd wl th c o s t s .

I cer!lfy that th~s

and the 9 preceding

pag.l

are a true copy of the Reason-

J,ogment

of M r Justlce Flsher

Dated 2y.6.w

[1979] FCA 66

29 Jun 1979