Federal Commissioner of Taxation v Rickard

[1952] HCA 24

HIGH COURT OF AUSTRALIA

Webb J.

FEDERAL COMMISSIONER OF TAXATION v. RICKARD

(1952) 86 CLR 97

20 May 1952

Taxation

Taxation—Assessable income—Australian defence force—"Member of a body, contingent or detachment of that Force engaged on service out of Australia"—"Detachment"—Military officer—Special duties in London—Sole appointee—Pay and allowances—Exemption—Income Tax Assessment Act 1936-1945 (No. 27 of 1936—No. 4 of 1945), s. 23 (s) (ii) (1), (2).

Decision

May 20.
WEBB J. delivered the following written judgment:-
This is an appeal from a decision of the Board of Review under the Income Tax Assessment Act 1936-1945. (at p98)

2. The respondent taxpayer objected to the inclusion in his assessable income for the year ended 30th June 1945 of military pay and allowances totalling 379 pounds which he had received in that year as a major in the Australian Defence Force. He based this objection on his service in London during part of that year; service which he claimed was rendered by him as a detachment of the Australian Defence Force. The appellant commissioner disallowed the objection, but the Board of Review upheld it. (at p98)

3. The taxpayer enlisted in October 1939 as a lieutenant in the 2/1st Australian Field Regiment and served in Palestine, Egypt, Libya, Greece and Ceylon. He returned to Australia in August 1942, and in 1943 commenced work on combined operations (naval bombardment). He took part in the planning and execution of the amphibious landing at Lae. Subsequently he was attached to the British Pacific Fleet, and, whilst so attached, the British Joint Communication Board requested in February 1945 that a representative from Australia should join that board's Bombardment Sub-Committee, which had under discussion combined codes and procedures for the control of gunfire, with the object of providing one book for all inter-service use, apparently in the war then being waged. The Australian Naval Board considered that the taxpayer was the most suitable representative and recommended his release for this important duty. On 18th March 1945 he was posted as Australian representative on the Bombardment Sub-Committee. This appointment was not included on the War Establishment of the Australian Military Forces. Whilst he was absent on this duty he remained a major on the list of the 16th Australian Field Regiment and later of the 2/1st Australian Field Regiment, as a seconded officer. (at p99)

4. Section 23(s)(ii)(1) of the Income Tax Assessment Act 1936-
1945 exempts from income tax the pay and allowances earned by a person as a member of the Defence Force (i) out of Australia; and (ii) in Australia if, within a period comprising the year of income and twelve months thereafter he leaves Australia for service out of Australia, and during the period of twelve months immediately following the date on which he leaves Australia, or commences so to serve, is on service out of Australia for a continuous period of not less than ninety days: provided that this shall not apply to exempt such pay and allowances of a person who does not serve as "a member of a body, contingent or detachment of that Force engaged on service out of Australia". (at p99)

5. It was conceded by the commissioner that the taxpayer was entitled to the exemption if his service in London was as a member of an Australian Defence Force body, contingent or detachment engaged in service out of Australia. He had complied with the other conditions prescribed. (at p99)

6. The taxpayer was not serving in London with any other member of the Australian Defence Force; so he does not claim that while there he was a member of a body or contingent engaged in service out of Australia. But he does contend that he was himself a detachment of the Australian Defence Force. A detachment can consist of one person. I understand the commissioner does not dispute that. But he contended that in the proviso to s. 23(s)(ii)(1) "detachment" involves a plurality of persons, in view of its association with the words "body" and "contingent". Whilst there may be something to be said for the application of the ejusdem generis rule, still I hesitate to apply it if it is correct to speak of "a member of a detachment" where the detachment consists of only one person. Now I think the expression "A member of a detachment, in fact the only member," would be unobjectionable, and so I see no reason why plurality should necessarily be attributed to "detachment" in s. 23(s) merely because of its association with "body" and "contingent"; more particularly as that construction could work injustice in some cases. A detachment of one might perform military service of greater merit and value than a detachment of several called upon to perform the same kind of service, and it would be absurd and unjust that the individual constituting the detachment of one should be held disentitled because he acted alone. (at p99)

7. But the commissioner contended here - although he appears not to have done so before the Board of Review - that "service" as used in s. 23(s) meant service in the face of the enemy, and for this he relied on s. 23(s)(ii)(2), which extended the exemption in question to the pay and allowances of a member of an air crew of a squadron in Australia, if the role of the squadron was operational and involved flights out of Australia. Under this provision a member of an air crew would have been entitled to the exemption even if he made no flight out of Australia; and in any case a flight might have been operational, although made far from enemy activity. Moreover, service anywhere outside Australia in a sea-going ship was also sufficient to secure the exemption. But accepting these provisions for members of air crews as indicating the kind of service that Parliament contemplated when enacting s. 23(s)(ii), still it was not contended by the commissioner, and could not, I think, properly be contended, that the exemption was confined to those engaged in actual combat. So to confine the exemption would have been to exclude from it army medical personnel as well as those engaged in necessary administrative work in the face of the enemy. Such administrative work might have included the compilation of instructions as to the control of fire-power against that enemy, and still would have been military service, and if rendered in the Pacific outside Australia during the war would, I think, have been of an operational character. But if so it would not have ceased to possess that character because it was rendered in London, which, when the taxpayer was there, was still under attacks by the common enemy, or threats of attacks, although dwindling, and, although the gun-fire instructions which the taxpayer was helping to compile might have been on a comprehensive scale and for the most extensive use in the war then being waged on a world-wide scale. (at p100)

8. In those circumstances the magnitude of the instructions and the extent of their proposed use could not have deprived this military duty of its operational character. (at p100)

9. It is not, I think, material that the sub-committee in London was not on the Australian War Establishment. A detachment of the Australian Defence Force could co-operate with the forces of another Power without losing its identity as a portion of the Australian Defence Force on the special service involved. Here the special service was of a representative nature and necessarily precluded loss of identity. The taxpayer was not on the subcommittee simply as Major Rickard; he was there as the representative of the Australian Defence Force and as a part of it. The sub-committee's task, comprehensive as it was, still bore directly on operations against the common enemy and was discharged under his attacks, or threat of attacks. (at p101)

10. So far I have assumed that operational service was required to secure the exemption. But I do not think there is a sufficient indication of that in the provision for members of air crews, or elsewhere in the Act. There is at all events no necessary implication that operational service was required and so I think that military service of any kind sufficed. (at p101)

11. I think then the taxpayer's service in London was as a detachment of the Australian Defence Force within the meaning of s. 23(s)(ii)(1), and that he was entitled to the exemption claimed by him. (at p101)

12. As the sum of 379 pounds was not assessable and the balance of taxpayer's income was under 250 pounds, no tax was payable in respect of the year in question. See s. 81(1)(a). (at p101)

13. The appeal is dismissed, the decision of the Board of Review affirmed, and the assessment set aside. (at p101)

14. The appellant commissioner will pay the respondent taxpayer his costs of this appeal. (at p101)

Orders

Appeal dismissed. Decision of the Board of Review affirmed. Assessment set aside. Appellant to pay the respondent's costs of appeal.