Federal Commissioner of Taxation v. Applegate.

Judges:
Franki J
Northrop J
Fisher J

Court:
Full Federal Court

Judgment date: Judgment handed down 29 June 1979.

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Franki J.: This appeal by the Commissioner of Taxation is brought pursuant to leave granted by this Court upon condition that the appellant pay the respondent's costs of the appeal in any event.

The relevant facts have been set out in the judgments of Northrop and Fisher JJ. which I have had the opportunity to read and I do not propose to deal with the facts in any detail. It seems clear that the respondent, Mr. Applegate, left Australia to take up his position in Vila and that in the absence of some unforeseen circumstances he was likely to remain there until he had completed his assignment which would probably take several years.

Mr. Applegate left Sydney on 8 November 1971 and apart from two brief periods he remained in Vila for the balance of the relevant tax year. The time at which the Commissioner of Taxation was to form a view as to the assessability for tax in respect of the year ended 30 June 1972 might be expected to have been some time during the last half of the year 1972 and in the subject case the assessment was issued on 1 February 1973. The question which was argued before us was whether on the facts of the case Mr. Applegate during the relevant period had ``his permanent place of abode'' outside Australia within the meaning of those words in sec. 6(1)(a)(i) of the Income Tax Assessment Act 1936 (``the Act''). This section reads that unless the contrary intention appears:

```resident' or `resident of Australia' means -

• (a) a person, other than a company, who resides in Australia and includes a person -
  • (i) whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia.''

In my opinion two fundamental matters must be borne in mind. The first is that liability to tax arises annually and the question of where the taxpayer's permanent place of abode is, if relevant, must be determined annually and secondly that the words ``his permanent place of abode'' are in a subsection which contains the word ``domicile''.

In the argument before us nothing turned on the meaning of the words ``place of abode'' and both parties adopted the view that these words were to be given a broad meaning. This seems to be a reasonable approach (see generally
Price v. West London Investment Building Society Ltd. (1964) 1 W.L.R. 616 ).

The word ``permanent'' is a word which must be construed in the light of the context in which it appears. Lord Evershed pointed out in
McClelland v. Northern Ireland General Health Services Board (1957) 1 W.L.R. 594 at p. 609 that the word ``permanent'' is clearly capable, according to the context, of many shades of meaning.

In that case the House of Lords was considering the expression ``permanent and pensionable'' in relation to employment and Lord Keith of Avonholm, although dissenting in the final conclusion said at p. 605 that ``A mere statement that a person holds a permanent and pensionable post is very imprecise. It contains no indication of the degree of permanence or the nature and conditions of the pension''. The Oxford English Dictionary (1933), vol. VII at p. 710 gives as the first meaning of permanent ``Continuing or designed to continue indefinitely without change; abiding, lasting, enduring; persistent. Opposed to temporary''.

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ATC 4309

In my opinion the fact that the phrase ``permanent place of abode'' appears in a context which includes the word ``domicile'' is of great significance.

The word ``person'' in sec. 6(1)(a) of the Act does not appear to be limited to male persons or to female persons or to persons of any particular age. Considering the section in relation to an adult male person whose domicile of origin was Australia, it would be difficult to regard such a person as domiciled in Australia if his permanent place of abode was outside Australia in the sense that he intended to remain forever in that other country unless perhaps it could be said that he had no intention to abandon his domicile of origin. (See generally Cheshire's Private International Law 9th edn. at pp. 160-166.) In the case of an adult male whose domicile of choice was Australia it is difficult to see how he could be domiciled in Australia if he had left Australia with the intention of residing elsewhere permanently in the sense of for the rest of his life. The position would be different with a married woman whose domicile was in Australia because she had married a man whose domicile was in Australia and who went permanently to live in a country outside Australia intending to live there for the rest of her life. I consider, however, that the section must be read as designed to apply generally and not only to married females or to any other particular category of persons.

Accordingly in my opinion the phrase ``permanent place of abode outside Australia'' is to be read as something less than a permanent place of abode in which the taxpayer intends to live for the rest of his life.

There is nothing in the subsection which requires the intent of the taxpayer to be the critical factor even though it is, of course, a relevant factor. Essentially the question is whether, as a matter of fact the taxpayer's permanent place of abode was outside Australia at the relevant time.

Senior counsel for the Commissioner did not contend that an intention to live outside Australia for the rest of the taxpayer's life was required. He conceded that if, for example, a young man left Australia intending to spend the rest of his working life in a particular country outside Australia the mere fact that he had the intention upon retirement of returning to Australia would not, at least necessarily, prevent him from having a permanent place of abode outside Australia. His submission was that ``a permanent placed of abode outside Australia'' required an intention to live outside Australia indefinitely, without any definite intention of ever returning to Australia in the foreseeable future other than at some remote, albeit specific, point of time.

I consider that if the relevant question was whether Mr. Applegate had a ``permanent position'', in the sense of permanent employment, in Vila the answer would be ``yes'' and likewise I consider he had a permanent place of abode in Vila at the relevant time.

The question is one of degree and bearing in mind the association of the phrase ``permanent place of abode'' with the word ``domicile'' and the fact that the liability for tax falls to be determined annually in my opinion the learned judge from whose judgment this appeal is brought was correct.

I consider that the learned judge correctly posed the relevant test when he said that ``... what is required is that there be a permanent place of abode outside Australia and that the enquiry as to whether there is or not is an objective one, notwithstanding the fact that the intention of the taxpayer in relation to the length of time that he will reside in a place outside Australia is a relevant factor to be taken into account''. Whilst the Commissioner (and presumably the Board of Review) was entitled to look to the events which had happened since the end of the tax year in my opinion the question of the taxpayer's intent as to the length of his stay is no more than a relevant factor to be considered.

In my opinion the appeal should be dismissed with costs.