The Roll-over Relief Claimant and Commissioner of Taxation
[2006] AATA 728
•23 August 2006
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 728
| ADMINISTRATIVE APPEALS TRIBUNAL TAXATION APPEALS DIVISION | ) ) No NT2005/360 ) | ||
| Re | The Roll-over Relief Claimant | ||
| Applicant | |||
| And | Commissioner of Taxation | ||
| Respondent | |||
| DECISION | |||
| Tribunal | Mr Julian Block, Deputy President | ||
| Date | 23 August 2006 | ||
| Place | Sydney | ||
| Decision | The objection decision under review is affirmed. | ||
Mr Julian Block, Deputy President
CATCHWORDS
Same sex relationship between two women – whether they are spouses for the purposes of section 126-5(1) (c) of the 1997 Tax Act – whether a court order obtained after an agreement had been implemented can, despite the fact that it was expressed to be retrospective, have the effect that it conferred the necessary causal connection –consideration of the legislation – the objection decision under review is affirmed.
Income Tax Assessment Act 1997; ss 126-5(1) (c), 104-5, 104-10, 395-1, 995-1
Property (Relationships) Act 1984 (NSW);
Income Tax Assessment Act 1936; s.6
Explanatory Memorandum for the Taxation Laws Amendment (No 5) Bill 1990); Schedule Part 1, definitions
Sex Discrimination Act 1984;
Oxford English Dictionary
Human Rights & Equal Opportunity Commission v Mount Isa Mines Limited (1993) 46 FCR 301
Re Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589
Taxation Determination 1999/53
CIC Insurance v Bankstown Football Club Limited 187 CLR 384
Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia 147 CLR 297
Re Brown and Commissioner of Superannuation (1995) 38 ALD 344
Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27
Ghaidan v Mendoza [2004] UKHL 30
| REASONS FOR DECISION | |
| 23 August 2006 | Mr Julian Block, Deputy President |
PART A - introduction and background
The objection decision under review is the disallowance by the Respondent of an objection by the Applicant against a private ruling made by the Respondent under Part IVAA of the Income Tax Assessment Act 1997 (referred to in these reasons as “the Act” or “ITAA 97”).
The Applicant was represented by Ms C Ronalds SC and Ms L Goodchild of counsel instructed by Andrea Wilson & Associates, solicitors; the Respondent was represented by Mr Henry Burmester Q.C. and Mr Roger Quinn of counsel instructed by the Australian Government Solicitor.
The Tribunal had before it the T documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975; it also received from each of the parties Statements of Facts and Contentions and written submissions. I have in some instances drawn on the written submissions and record my indebtedness to them.
This application was heard in confidence and this decision must be couched in terms which do not identify the Applicant or the lady with whom she lived in a same-sex relationship, and who is referred to in these reasons as “her partner” or as “the partner”. Ms Ronalds asked also that the identities of the parcels of real property which are germane to this decision be kept confidential; those two parcels of real property are thus referred to as “the K Property” and “the S Property” respectively.
It is convenient by way of commencement to set out the facts (which fall within a narrow compass) and which are set out in Part II under the head of “Facts” in the Respondent’s Statement of Facts and Contentions dated 21 April 2006 (anonymised in accordance with clause 4 above) as follows:
“…
PART II FACTS
5. Between 1991 and August 2002 the Applicant lived in a same sex relationship with [her partner] (“partner”).
6. The Applicant and her partner purchased a property [known as the “K Property”] as tenants in common on 24 May 1995. The K Property was let out while the Applicant and her partner lived in rental accommodation.
7. On 28 May 1998, the Applicant and her partner purchased as joint tenants another property [known as the “S Property”]. This property was the main residence of the Applicant and her partner from the date of acquisition until the breakdown of the relationship.
8. The relationship between the Applicant and her partner ended in August 2002.
-Termination Agreement
9. On 13 February 2004, the Applicant and her now former partner executed a termination agreement pursuant to which:
(a) the interest of the partner in the S Property was transferred to the Applicant; and
(b) the interest of the Applicant in the K Property was transferred to her partner.
10. The termination agreement was effected in March 2004. According to the partner the termination agreement was put in place by the parties on the understanding that there would be no capital gains tax liability arising on the transfer of either of the above properties.
11. When it became clear that the transfer of the properties triggered a capital gains tax event within the meaning of the Income Tax Assessment Act 1997 (“the ITAA97”), and that the taxation liability of the partner amounted to $22,780 and that of the Applicant to $19,262, the partner took the steps outlined in the following paragraphs.
Application to the Local Court
12. On 1 November 2004, the partner filed an application in the Local Court seeking by consent with the Applicant who was a respondent to that application, declarations and orders under the Property (Relationships) Act 1984. A copy of the consent orders appears at T4-17.
13. Relevantly, the consent orders provided that:
(a) the partner transfer her right title and interest in the S Property to the Applicant;
(b) the Applicant transfer her right title and interest in the K Property to the partner;
(c) the Applicant pay the partner the sum of $91,000,
14. The partner and the Applicant also sought an order that the proposed consent orders were to be antedated to take effect from a date prior to 13 February 2004.
15. On 6 December 2004, the Court made the following final orders:
1) that, by consent, orders, declarations and notations be made in terms of the document titled “consent orders” dated 13/02/2004 filed herein and attached hereto, to take effect from 12/02/2004;
2) the Applications are otherwise dismissed.
16. On 23 December 2004, Magistrate Mitchell in delivering his Reasons for Judgement noted:
The parties made no secret of the fact that, in bringing their application, they seek to set a stage for a claim for a taxation benefit of a type which is available, at the discretion of the taxation authorities to a great many “spouses” involved in “marriage breakdown”. It seems to me to be desirable that [the parties] have the opportunity to put their case to the taxation authorities and see if they can share in the financial largesse provided by the Commonwealth to persons in heterosexual relationships otherwise analogous to theirs.
Application for Private Ruling
17. On 8 March 2005 the Applicant’s solicitor lodged with the Respondent an Application for Private Ruling dated 24 February 2005 (the “Application for Ruling”) as to whether the Applicant and the partner were entitled to roll-over relief of capital gains tax in accordance with sec 126-5(1) by reason of the orders of the Local Court dated 6 December 2004.
18. On 17 March 2005, the Respondent issued a letter to the Applicant’s solicitor seeking further information in order to issue the Ruling.
19. On 30 March 2005, a response was received from the solicitor which stated the following:
1) The [S and K] Properties were transferred from both names to individual names in the year ending 30 June 2004 as set out in the Application;
2) Only the S Property had been the main residence of both or one of the parties from February 2002 to date.
20. On 21 April 2005 a Notice of Private Ruling (the “Ruling”) was issued by the Respondent. Relevantly, the Ruling held as follows:
(a) that there was no entitlement to roll-over the capital gain made on the transfer of the Applicant’s interest in the K Property to the former partner as part of a marriage breakdown settlement;
(b) the Applicant could not disregard any capital gain made on the transfer of her interest to the former partner.
21. On 20 June 2005 the Applicant objected to the Ruling.
22. On 19 July 2005 the Respondent disallowed the Applicant’s objection.
23. On 16 September 2005, the Applicant lodged with the Tribunal an application for review of the decision by the Commissioner dated 19 July 2005 to disallow the Applicant’s objection dated 20 June 2005 against the Ruling dated 21 April 2005.
…”
The provisions of the Act which are relevant for the purposes of this decision are conveniently set out in the Respondent’s written submissions under the head of “Legislation” in clauses 13 to 16 as follows:
“…
13. Section 126-5 of the Income Tax Assessment Act 1997 (1TAA97) provides as follows:
1) There is a roll-over if a *CGT event (the trigger event) happens involving an individual (the transferor) and his or her 'spouse (the transferee), or a former `spouse (also the transferee), because of:
(a) a court order under the Family Law Act 1975 or a corresponding *foreign law; or
(b) a maintenance agreement approved by a court under section 87 of that Act or a corresponding agreement approved by a court under a corresponding *foreign law; or
(c) a court order under a *State law, *Territory law or foreign law relating to de facto marriage breakdowns.
14. Section 995-1 of the ITAA97 defines the expression CGT event to mean:
“any of the CGT events described in Division 104. A CGT event described by number (for example: CGT event A1) refers to the relevant event in that Division.”
15. Section 104-10 of the ITAA97 provides that CGT event A1 happens if you dispose of a CGT asset. A “CGT asset” is also defined by sec 995-1 to have the meaning given by sec 108-5 which relevantly defines a CGT asset as “any kind of property”. The CGT event on the present facts was the disposal of the [K Property]. The table at sec 104-5 of ITAA97 provides that CGT event A1 occurs when a disposal contract is entered into or if none, when the entity stops being the assets owner. According to a letter at T3-8 the [K Property] was transferred to the partner on 13 February 2004.
16. Section 126-5 of the ITAA97 refers to a ‘spouse'. Spouse is defined in section 995-1 of the ITAA97 as follows:
Spouse of a person includes a person who, although not legally married to the person, lives with the person on a genuine domestic basis as the person's husband or wife.
…”
There are two issues for determination by the Tribunal. The Applicant can succeed only if:
(a) As required by s.126-5(1)(c) of the Act the relevant transfer (in this case the transfer by the Applicant to her partner of her interest in the K Property) was made because of a court order under a State law relating to de facto marriage breakdowns; and
(b) The Applicant and her partner were spouses as defined in s.995-1 of the Act.
The issue referred to in clause 7 (a) above is referred to in these reasons as the “causal issue” while the issue referred to in clause 7 (b) above is referred to as the “definitional issue”.
It will be noted that as set out previously in these reasons an agreement was executed between the Applicant and her partner on 13 February 2004, that the agreement was effected in March 2004, and that a court order (referred to henceforth in these reasons as the “Court Order”) under the Property (Relationships) Act 1984 (NSW) was obtained in December 2004, but taking effect retrospectively as from 12 February 2004, i.e. one day prior to the date of the agreement between the Applicant and her partner.
The judgment of the Local Court appears at T4-21/27; the first two paragraphs on T4-24 (anonymised as set out previously) read as follows:
“…
It has now become clear that the transfer of the two properties from the joint names of the parties to the parties individually may have triggered a “capital gains event” within the meaning of the Income Tax Assessment Act, the incidence of which may, to a significant degree, adversely affect the parties. It is conceded that the taxation liability of the Applicant may amount to some $22,780.00 and that of the Respondent to some $19,262.00. Having in mind that, under section 126.5(1) of the “Tax Act”, capital gains rollover relief may be available where property is alienated or transferred in accordance with the order of a court made pursuant to the law of a state, [the Applicant and her partner] seek the declarations and orders proposed in the minute of 13th February, 2004.
The relevant provision of the Income Tax Assessment Act refers to “spouses” and “marriage breakdown” and it will be a matter for a private income tax ruling and, perhaps, ultimately for another court whether the parties’ position can be brought within the ambit of section 126.5(1). In her affidavit of 31st October, 2004, [her partner] indicates that she and [the Applicant] intend to refer to the provisions of the Property (Relationships) Act to draw the analogy between their position and the position of spouses involved in marriage breakdown to which the Tax Act refers. It is to prepare themselves for that exercise that the parties have brought the present application and, in so doing, have sought to set aside the termination agreement of 13th February, 2004.
…”
There is no dispute between the parties as to certain matters; in particular:
(a)The Respondent accepts that as between the Applicant and her partner there was in fact a same-sex relationship.
(b)The Applicant does not deny that the Court Order was obtained, and specifically with retrospective effect, in order (so it was hoped) to bring the Applicant within s.126-5(1) (c) of the Act.
The Applicant must, if she is to succeed in respect of this application, succeed in respect of each of the causal issue and the definitional issue. I agreed that I would, in this decision, deal with both of the issues even if I found that the Applicant did not succeed in respect of one of them. Put in other words, to find that the Applicant fails under one issue without making a finding in respect of the other issue would not be satisfactory, more particularly if on appeal it was held that this decision in relation to one issue only was erroneous.
PART B - the causal issue
The Tribunal accepts that the Court Order was within the power of the court which made it.
The Respondent referred the Tribunal to Human Rights & Equal Opportunity Commission v Mount Isa Mines Limited (1993) 46 FCR 301 (Mount Isa Mines (supra)) at [55]-[56] where His Honour Lockhart J said:
“…
55 In my opinion the phrase "by reason of" in s. 5(1) of the SD Act should be interpreted as meaning "because of", "due to", "based on" or words of similar import which bring something about or cause it to occur. The phrase implies a relationship of cause and effect between the sex (or characteristic of the kind mentioned in s. 5(1) (b) or (c)) of the aggrieved person and the less favourable treatment by the discriminator of that person…….
56 What is the test to be applied to determine whether conduct is discriminatory under s. 5(1) of the Act? Similar legislation in the United Kingdom has received considerable judicial scrutiny and two schools of thought have emerged there. One is that the test requires causation in the sense that there must be a causative link between the defendant's behaviour and detriment to the complainant and does not necessarily involve any consideration of the reason which led the alleged discriminator to treat the complainant less favourably than he treats or would treat a person of a different sex or status. Put another way, one asks the question: would the complainant have received the same treatment from the alleged discriminator but for his or her sex (it was thus expressed by Lord Goff of Chieveley in Eastleigh)? This test was adopted by the House of Lords in Birmingham confirming earlier English authorities and reaffirmed by the House in Eastleigh Borough Council by a majority (Lord Bridge of Harwich, Lord Ackner, and Lord Goff of Chieveley; Lord Griffith and Lord Lowry dissenting).
…”
It cannot be doubted that the term “because”, of necessity implies a relationship of cause and effect between two events. In this case the transfer of the K Property occurred because of the agreement dated 13 February 2004.. Ms Ronalds in closing submissions questioned the relevance of the judgment in Mount Isa Mines (supra) on the basis that it dealt with different legislation. This is so but it does not alter the validity of its reasoning...
In any event the issue of court orders with retrospective effect cannot be effective so far as backdating is concerned. Court orders are effective generally on the dates on which they are made. In Re Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 the High Court considered the effect of backdating of orders. A creditor had presented a petition for sequestration but before that petition could be heard the debtor presented his own petition. The Full Federal Court had ordered sequestration on the creditor’s petition and backdated it to before the debtor’s petition. The High Court at page 597, (overturning the decision below) said:
“…
… the court has, in our opinion, no power to backdate a sequestration order to make it take effect either before, or contemporaneously with, the commencement of the bankruptcy resulting from the acceptance of the debtor's petition. In a number of cases in which a bankruptcy petition was wrongly dismissed and the debtor was thereafter adjudicated bankrupt on his own petition, the appellate court, in allowing an appeal, has directed that the receiving order made against the debtor should be amended as if dated on the day on which the petition was wrongly dismissed, and should be deemed to be made on the creditor's petition: In re Haynes. Ex parte Kibble (1890) 7 Morr 50; In re Johns. Ex parte Spears (1893) 10 Morr 190; In re Teale. Ex parte Blackburn (1912) 2 KB 367. The practice established by those cases can be justified by the power that an appellate court has in allowing an appeal to make the order which should have been made in the first instance. However, the Act itself provides when a debtor becomes a bankrupt – either upon the making of a sequestration order (s.43(2)) or upon the acceptance by the registrar of the debtor's petition (s.55(3)(b)). Apart from the power of an appellate court to put right what was wrongly done in the first instance, no court has power to cause a debtor to become a bankrupt on a date earlier than that for which the Act provides. Neither the general power conferred by s.30(1)(b) of the Act to make such orders as the court considers necessary for the purpose of carrying out or giving effect to the Act, nor the power given to the Federal Court by its rules to antedate its orders (O.35, r.3) extends to permit the court to make an order which would bring about a result different from that prescribed by the express provisions of the Act and so serious in its possible consequences.
…”
It must be remembered that under s.104-5 of the Act, CGT event A1 (disposal of a CGT asset) occurs, as a matter of timing, “when disposal contract is entered into or, if none, when entity stops being asset’s owner”.
In the same context, s.104-10 of the Act (restricted to subsections (1) (2) and (3)) reads as follows:
“…
104.10
Disposal of a CGT asset: CGT event A1
(1) CGT event A1 happens if you dispose of a CGT asset.
(2) You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur:
(a) if you stop being the legal owner of the asset but continue to be its beneficial owner; or
(b) merely because of a change of trustee.
(3) The time of the event is:
(a) when you enter into the contract for the disposal; or
(b) if there is no contract—when the change of ownership occurs.
Example: In June 1999 you enter into a contract to sell land. The contract is settled in October 1999. You make a capital gain of $50,000.
The gain is made in the 1998‑99 income year (the year you entered into the contract) and not the 1999‑2000 income year (the year that settlement takes place).
Note 1: If the contract falls through before completion, this event does not happen because no change in ownership occurs.
…”
The consequence is that the relevant transfer occurred because of the agreement between the Applicant and her partner and not because of the Court Order. It may be noted that TD 1999/53 issued on 3 November 1999 (the “Determination”) is directly in point. The subject matter of the Determination reads as follows:
“Taxation Determination
TD 1999/53
Income tax: capital gains: if a CGT asset is transferred by agreement between spouses and a court order later sanctions its transfer, was the transfer of the asset made ‘because of’ the court order in terms of section 126-5 or 126-15 for roll-over to apply?
…”
Clause 1 of the Determination answers the question posed in the heading in the negative in the following terms:
“…
1. No. A CGT asset transferred between spouses by agreement, before a court order made under the Family Law Act 1975 or a State, Territory or foreign law relating to de facto marriage breakdowns, is not transferred ‘because of’ the court order. The court order does not cause the CGT event (the transfer) to happen. Therefore, there is no roll-over under section 126-5 or 126-15 of the Income Tax Assessment Act 1997 for the CGT event that happens on the transfer of the asset.
…”
Ms Ronalds contended that the Determination, which is binding on the Respondent but not the Applicant, is not correct. It is not necessary for me to deal with the detailed submissions by Ms Ronalds on behalf of the Applicant as to the Determination; suffice it to say that in my view it is correct. But, and as I have said, it is my view that (regardless of the Determination) the relevant transfer occurred because of the agreement and not the Court Order and it follows that the Applicant cannot succeed in respect of the causal issue.
PART C - the definitional issue
The definitional issue requires the Tribunal to consider the question of whether the definition of “spouse” in s.995-1 of the Act is wide enough to encompass a de facto relationship between persons of the same sex.
In CIC Insurance v Bankstown Football Club Limited 187 CLR 384 the High Court said at page 408:
“…
It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure [34]. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy [35]. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd [36], if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent [37].
…”
And in Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia 147 CLR 297 at page 321 the court said:
“…
The fundamental rule of interpretation, to which all others are subordinate, is that a statute is to be expounded according to the intent of the Parliament that made it; and that intention has to be found by an examination of the language used in the statute as a whole. The question is, what does the language mean; and when we find what the language means, in its ordinary and natural sense, it is our duty to obey that meaning, even if we think the result to be inconvenient or impolitic or improbable.
…”
The relevant definition is an inclusory definition; Ms Ronalds contended that it is wide enough to include a de facto relationship between two persons of the same sex.
The definition of “spouse” in s.995-1 of the Act makes it clear that the couple need not be married. This was so in respect of the definition of spouse (in almost identical terms) contained in the Income Tax Assessment Act 1936 (the “1936 Act”) as follows:
“…
“spouse” in relation to a person, includes another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person;
…”
The Explanatory Memorandum for the Taxation Laws Amendment (No 5) Bill 1990 (the “EM to the Tax Bill”) and in particular the Schedule which inserted the definition of “spouse” into s.6 of the 1936 Act reads as follows:
“This Bill will amend certain taxation laws administered by the Commissioner of Taxation so that they comply, as far as possible, with the policy of the Sex Discrimination Act 1984; That Act declares discrimination on the grounds of sex, marital status and pregnancy to be unlawful in a number of areas of community life.”
Hitherto the taxation laws have been exempted from the operation of the Sex Discrimination Act by regulations made under that Act.
“…
The Bill will insert a definition of “spouse", to include a de facto spouse, in the Income Tax Assessment Act 1936 (the Assessment Act) to apply generally throughout that Act. This will have the effect of removing discrimination between a legally married spouse and a de facto spouse where the latter would otherwise be treated as a single person. In many areas the Assessment Act already applies as if the term "spouse" includes a de facto spouse. The insertion of the definition will necessitate several consequential adjustments to other provisions of the Assessment Act …
…
The Schedule will also insert a definition of "spouse", to include a de facto spouse, in subsection 6(1). With the exception of those provisions in the Assessment Act in which a de facto spouse is specifically included within the meaning of spouse of a person, the term "spouse" takes its common law meaning of a partner in a legal marriage. The insertion of a definition of "spouse" to include a de facto spouse will remove, as far as possible, discrimination between legally married spouses and de facto spouses where the latter would otherwise be treated as single.
…”
It is to be noted that the Tax Bill was brought in in order to amend certain taxation laws in accordance with policy contained in the Sex Discrimination Act 1984 (the “SD Act”); it noted in particular that unless a de facto relationship is included, the term “spouse” takes its common law meaning as a reference to partners in a legal marriage.
The terms “husband” and “wife” are not defined and must therefore have their ordinary meanings. In Re Brown and Commissioner of Superannuation (1995) 38 ALD 344 (Brown (supra)) the Tribunal said at page 349:
“…
For whatever other changes the words "husband and wife" may have undergone over the years they retain, in our opinion, their complementary gender connotations. A "wife" is the female partner of a marital relationship and a "husband" is the male partner.
…”
It may be noted that the Tribunal in Brown (supra) consisted of Her Honour Justice Matthews, then President of this Tribunal and two other members of the Tribunal. The relevance of that decision was criticised by Ms Ronalds on the basis that it dealt with different legislation. This is so, but, as with Mount Isa (supra), the reasoning remains valid. A consideration of Brown (supra) indicates that Her Honour Matthews J and her colleagues dealt with the issue in considerable depth, and that having done so, concluded that complementary gender connotations were retained by the references to “husband” and “wife”. I include clauses 29 to 33 of the judgment in Brown (supra)(but omitting the last two sentences of clause 33 which are quoted in clause 29) as follows:
“…
“Husband” and “wife”
(29) Extensive submissions were made during the hearing both as to the meaning of the individual words “husband” and “wife” as well as to that of the composite phrase “lived with that other person as that other person's husband or wife”. In many respects the issues raised under each were similar. However, for the purposes of the present discussion the obvious commencement point is to examine the meaning of the critical words in s 8A (1) of the Act, namely “husband” and “wife”.
(30) These are ordinary words in frequent use in the community. It is common ground that in their traditional sense they refer respectively to the male and female partners in a marriage relationship. This traditional use is reflected in the dictionary definition of the words. In the Macquarie Dictionary the primary meaning of “husband” is “the man of a married pair (correlative of wife)”. The definition of “wife” is “a woman joined in marriage to a man as husband”.
(31) By way of aside, it is interesting to observe the difference between these definitions. One cannot escape the conclusion that they may reflect a lingering sexism on the part of the dictionary compilers. It is difficult to find any other explanation for the element of subjugation which appears in the definition of “wife” but which is singularly absent from that of “husband”. This is perhaps one aspect in which the meaning of these words has now moved on since the dictionary was compiled.
(32) Mr Hinkley urges that the meaning of the words has changed in other respects. Indeed he argues that it has changed so far as to include not only unmarried heterosexual couples, but also homosexual couples. The words have now lost their gender connotations, he says.
(33) It is unnecessary for us to determine in these proceedings whether the words “husband” and “wife” now include men and women who live together in a de facto relationship without having undergone a formal marriage ceremony. We are inclined to think that they might. If so, the meaning of the words has indeed moved on since the compilation of the Macquarie Dictionary. However any such movement, if it has occurred, reflects changing social attitudes towards the necessity of undergoing a marriage ceremony in order to have a marital relationship. It does not, in our view, reflect any diminution of the gender connotations in these words.
…”
The Respondent’s contentions are supported by Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27 (Fitzpatrick (supra)) when the House of Lords was called upon to consider whether the surviving partner of a homosexual relationship was a “spouse” for the purposes of the Rent Act 1977 (the “Rent Act”). The word “spouse” had been defined in the Rent Act to include “a person who was living with the original tenant as his or her wife or husband”. The House of Lords rejected a submission that “spouse” could be interpreted as including two persons of the same sex intimately linked in a relationship and held at page 34 that “spouse” in the context of the Rent Act meant “a man and a woman, and the man must show that the woman was living with him as “his” wife; the woman that he was living with her as “her” husband”.
The Oxford English Dictionary definitions of “husband” and “wife” are as follows:
“Husband:
2. a. A man joined to a woman by marriage. Correlative of wife.
Wife:
2. a. A woman joined to a man by marriage; a married woman. Correlative of husband n. 2. (The ordinary current sense.)”
Ms Ronalds referred the Tribunal to a judgment of the House of Lords in England in Ghaidan v Mendoza [2004] UKHL 30. As Ms Ronalds herself (fairly) conceded the relevance of that judgment is dubious given that it was decided in the context of the Human Rights Act 1998, legislation which has no counterpart in Australia.
As I have said, Ms Ronalds contended that the definition of “spouse”, an inclusory definition, is wide enough not only to include a marriage or a de facto relationship between a male and a female but also a de facto relationship between two persons of the same sex. She cited in support of this proposition a wealth of State and Territory legislation; I note that in the context of the fact that the statute to be interpreted is a Federal Statute the relevance of that (State and Territory) legislation is not clear to me. See by way of example clause 51 of the Applicant’s written submissions inclusive of footnote 14 referred to in that clause as follows:
“…
51. The very existence of section 126-5(1)(c) reflects an intention to capture all asset transfers made pursuant to a court order granted under the PRA and similar legislation enacted in other jurisdictions.14
14 In the Australian Capital Territory the Domestic Relationships Act 1994 and the Legislation (Gay, Lesbian and Transgender) Amendment Bill 2002 recognise same-sex cohabiting couples in property division and inheritance law defining a “domestic relationship” in Section 3(2). Queensland made amendments to property division legislation in the Property Law Amendment Act 1999 and gave recognition to same sex couples in other areas of law and defined a “de facto partner” when it enacted the Discrimination Law Amendment Act 2002. Victoria enacted comprehensive legislation to give recognition to same sex couples when it defined a “domestic relationship” in its Statute Law Amendment (Relationships) Act 2001. In Western Australia recognition to same sex couples is found in the Acts Amendment (Lesbian and Gay Law Reform) Act 2002 in which it defines a “de facto relationship”. In the Northern Territory recognition of same sex couples has been enacted in legislation titled Law Reform (Gender, Sexuality and De Facto Relationships) Act 2003 in which Act it defines a “de facto relationship”. In Tasmania the Relationships Act 2003 and Relationships (Consequential Amendments) Act 2003 extensively recognises same sex couples in all areas of law defining “significant” relationships in Section 4. South Australia is the only state or territory not to have passed legislation giving recognition to same sex couples although the Statutes Amendment (Relationships) Bill 2004 has not yet been presented to the Upper House for proclamation. (Based on material in the article Cutting a Different Cake by Jenni Millbank, Associate Professor of Law, University of Sydney, Law Society Journal, November 2005, at p.57.)
Legislation has also been enacted in New South Wales, Queensland, Victoria and the Northern Territory to refer the powers in relation to de facto couples’ property disputes to the Commonwealth. The legislation concerned is the Commonwealth Powers (De Facto Relationships) Act 2003 (NSW), the Commonwealth Powers (De Facto Relationships) Act 2003 (Qld.), the Commonwealth Powers (De Facto Relationships) Act 2003 (Vic.) and the Commonwealth Powers (De Facto Relationships) Act 2003 (NT). Western Australia has its own Family Court accessible to both heterosexual and same sex couples and therefore does not need to enact similar legislation.
…”
That contention is in my view contradicted both by the express words of the definition and also by the EM to the Tax Bill to which I referred previously in these reasons. There was no evidence before the Tribunal that the word “spouse” has a meaning which can encompass persons of the same sex. The EM to the Tax Bill in its terms made it clear that in conformity with the SD Act, the 1936 Act was to be amended so as to treat a man and a woman in a de facto relationship as spouses. It did not go so far as to include persons of the same sex, although if this had been the legislative intention, it would have been simple enough to do so. Put in other words it is clear enough that the legislature was prepared to go so far but no further. The inclusion of the word “marriage” in section 126-5(1) (c) of the Act reinforces this view; Australia does not have legislation which permits marriage between two persons of the same sex.
In the interests of completeness. I emphasise that I do not accept the basic premise set out in clause 51 of the Applicant’s written submissions. Section 126-5(1)(c) of the Act reflects an intention only to grant roll-over relief to transfers between spouses because of a court order made under a statute referable to de facto marriage dissolutions.
There will undoubtedly be many who consider that the definition of “spouse” should include persons of the same sex and the Tribunal itself has some sympathy with this point of view. It may be that at some time in the future the Act will be amended to this effect. But it is not the law at this time and it therefore follows that the Applicant cannot succeed in respect of the definitional issue.
Accordingly the objection decision under review must be affirmed.
I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of JULIAN BLOCK, DEPUTY PRESIDENT
Signed: Associate
Date/s of Hearing 12 August 2006
Date of Decision 23 August 2006
Counsel for the Applicant Ms C Ronalds SC and Ms L Goodchild
Solicitor for the Applicant Andrea Wilson & Associates, solicitors
Counsel for the Respondent Mr Henry Burmester Q.C. and Mr Roger Quinn
Solicitor for the Respondent Australian Government Solicitor
Key Legal Topics
Areas of Law
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Taxation Law
Legal Concepts
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Statutory Construction
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Causal Connection
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Spouses for Tax Purposes
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