Case P83

Judges:
MB Hogan Ch
P Gerber M
GW Beck M

Court:
No. 3 Board of Review

Judgment date: 22 September 1982.

---

M.B. Hogan (Chairman)

The decision of my colleague, Dr. Gerber, sets out the agreed facts on which this reference proceeded. I would add that the objection is taken in broad terms claiming that:

``The taxpayer is entitled to a rebate of $216 under the provisions of sec. 79A of the Income Tax Assessment Act 1936 as amended.''

On behalf of the taxpayer, the case was pressed on the basis that the taxpayer qualified as a resident of Zone A in terms of para. (a) of subsec. (4) of sec. 79A. I note that information on the file of papers before

---

ATC 408

the Board to which no objection was taken by the representative of the Commissioner, establishes that the taxpayer was physically present in the area embracing the ports of Karumba and Weipa and the surrounding seas for more than one-half of the year of income.

2. In Case P82,
82 ATC 399 , I have drawn attention to the relevant authorities dealing with the question of what constitutes residence for purposes of the Australian Income Tax Assessment Acts, emphasising as Dixon J. (as he then was) did in the case of
Gregory v. D.F.C. of T. (1937) 57 C.L.R. 774 that the interpretation placed on the words ``person residing'' and ``ordinary resident'' in the English cases, in general, provides the key to an understanding of the scope of the word ``resident'' in the Income Tax Assessment Acts. Particularly pertinent to this reference is the observation (at p. 777) that:

``The well settled interpretation of the words [which emerge from a series of cases listed by his Honour] includes in their application a man who resides in two or more places.''

His Honour then went on to find that Gregory, though he was at Darwin only 19 weeks in the year of appeal as against 23 weeks in Broome, none the less acquired the concurrent character of a resident of Darwin for purposes of sec. 5A of the 1922 Act. In assessing the weight which he had given to various factors his Honour appended to the above finding the following explanation at p. 778:

``So far as intention plays a part, I think that his intention developed in the direction of making Darwin his chief and principal place of business activity and social life. Possibly his dwelling or housing arrangements in Darwin were less regular than in Broome, but the difference arose from the fact that he had long owned a house in Broome, and that he was unable to sell it and therefore lived in it. I think I am entitled to take into account the fact that he negotiated for and took a lease of a flat in Darwin although the lease was after the period with which the appeal is concerned. I take little notice of the fact that his daughter paid him visits at Broome and not in Darwin. That, I think, arose from the time at which her school holidays fell.

The matters on which I place most stress in deciding this question of fact are his business interests and the necessity of his presence in Darwin and the fact that in dividing his attention between two businesses he gave as much or more attention to Darwin and the kind of social and living arrangements that he made in Darwin. It is true that the most permanent arrangements were made outside this period but the English cases show that events which occurred before and after a given period may be considered as throwing light on and disclosing the significance of habits and conduct within the period.''

3. As to the position of mariners in relation to residence on land, I have drawn attention in my reasons for decision in Case P82, 82 ATC 399, to the decisions in
Re Young (1875) 1 T.C. 57 and
Rogers v. I.R. Commrs. (1879) 1 T.C. 225 which were accepted by Viscount Cave in his decision in
Levene v. I.R. Commrs. (1928) A.C. 217 . The decision of the Court of Appeal in
Bayard Brown v. Burt (1911) 5 T.C. 667 deals with the situation of those living on a vessel at an anchorage and I have drawn attention to the views of Dixon J. (as he then was) in
F.C. of T. v. Miller (1946) 73 C.L.R. 93 in relation to those living on a moving craft plying upon the rivers and territorial waters of Milne Bay in war time. Adverting to these precedents and relying upon the views expressed in Rogers' case (supra) and on the concept developed by Viscount Sumner in
I.R. Commrs. v. Lysaght (1928) A.C. 234 , that ``the word `resident' indicates a quality of the person charged...'' with tax under the U.K. Income Tax Act, I proceeded to find the taxpayer there was a resident of Groote Eylandt for the whole of the year of income notwithstanding her absences at sea for considerable periods from the anchorage at Groote Eylandt. That conclusion was assisted by the fact that the material before the Board indicated that, in that year, the year of the taxpayer's first income tax return for many years, the taxpayer had no residential affiliation with any part of Australia other than Groote Eylandt - in other words, no quality attached to her by

---

ATC 409

way of residence linking her with any part of Australia other than Groote Eylandt.

4. In this reference, the material before the Board indicates that the taxpayer resided in Cairns in the previous year of income and accepted assessment as a resident in that city in respect of that year of income. He continued to reside at Cairns throughout July before proceeding to Weipa, where he worked in adjacent waters, refuelling and provisioning in Weipa at least once a week. In September, he returned to Cairns for a refit to his vessel which kept him in Cairns throughout October, when he returned to Weipa, from which port he operated until 15 December 1978 when he shifted his operational base to the port of Karumba whence he returned to Cairns on 22 April 1979. For the balance of the year of income, he lived in Cairns ``waiting for work''.

5. This taxpayer then, as opposed to the taxpayer in Case P82, has strong residential links with Cairns overriding from earlier years. He continued those links through July of 1978, resumed them during the refit of September/October, and, again, for the months of May/June 1979. During the year, the taxpayer remained unmarried though the Board was informed that he had a girlfriend in Cairns to whom he became engaged after the end of the year of income and subsequently married. The Board was given to understand that the taxpayer now resides in Cairns.

6. In Gregory's case (supra), Dixon J. found at p. 778 that the taxpayer ``did most definitely acquire the concurrent character of a resident of Darwin'', having remarked that the taxpayer ``had done nothing that would be enough to divest himself of the character of a resident at Broome''. It appears to me that the evidence in relation to this present taxpayer indicates that he has done nothing to divest himself of the character of a resident of Cairns. But that alone is not fatal to his claim. The primary question that has to be answered is whether he has acquired the concurrent character of a resident of the Gulf ports of Weipa and Karumba. Certainly he had transferred his employment for substantial portions of the year of income - amounting in all to somewhere near seven months the Board was informed - but that is a far cry from the degree of settlement into Darwin's business and social life that Gregory had achieved in the case before the High Court. The present taxpayer spent the whole of his period at the Gulf ports aboard his vessel, either at anchor in harbour or at sea about his employments. There was a quality of impermanency to the arrangements which is inconsistent with the quality which Viscount Sumner pointed out in Lysaght's case is to be looked for in a ``resident''. Having regard to that element of impermanency, it seems to me that no one answering Viscount Sumner's question - ``Then where is he resident himself?'' - could say with certainty that this taxpayer was a resident of Weipa or Karumba. Certainly on the material before the Board, I am not prepared so to find.

7. The taxpayer's claim in the objection is a broad claim to entitlement to a rebate of $216 under sec. 79A, and, though the claim to be a resident of Zone A in terms of the definition of resident in para. (b) of subsec. (4) of sec. 79A was not argued before the Board, it appears to me that the generality of the claim in the objection would be ``sufficiently explicit to direct the attention of the Commissioner...'' to a potential claim under para. (b) of subsec. (4) (vide Williams J. in
H.R. Lancey Shipping Co. Pty. Ltd. v. F.C. of T. (1951) 9 A.T.D. 267 at p. 273 ). From the material before the Board it is apparent that the taxpayer, in the year of income, spent over 200 days operating out of Karumba and Weipa, both of which ports are in Zone A. The question is whether the material before the Board establishes that the taxpayer had ``actually been'' in the area of Zone A during more than one-half of the year of income. Clearly, the taxpayer spent more than one-half of the year operating out of Karumba and Weipa which are towns situated in ``that portion of the mainland of Australia...'' defined in para. 1 of Pt. 1 of Sch. 2 to the Act. The refined question which then arises, is whether, in carrying out his duties as skipper of a trawler which entails spending as a general rule six days out of seven at sea, the taxpayer can be said to have ``actually been'' in that part of mainland Australia comprised of Karumba and Weipa for more than one-half of the year of income. Reluctantly, I have come to the conclusion that the taxpayer cannot be said to have ``actually been'' in those ports during

---

ATC 410

that period. The test under para. (b) of subsec. (4) of sec. 79A appears to my mind to require physical presence in the area if it is to be satisfied. The area is ``that portion of the mainland of Australia''. Whether the mainland of Australia can for purposes of the Income Tax Assessment Act be said only to extend to the perimeters of the ``ports, harbours, bays, mouths of rivers and adjacent parts of the sea enclosed by headlands'' (see Wheaton's Elements of International Law quoted by McTiernan J. in
N.S.W. v. The Commonwealth (1975) 135 C.L.R. 337 at p. 379 ) or whether it extends ``one marine league'' beyond those boundaries, are questions this Board cannot answer; but there is nothing in the material before the Board which would even raise the suggestion that the taxpayer's trawling operations were limited to what might be called territorial waters. The material establishes only that the taxpayer spent the greater part of his time in the region of Karumba/Weipa offshore and I can find nothing that would support a conclusion that the taxpayer had ``actually been'' within the confines of mainland Australia in that period.

8. Nevertheless, consistent with my decision in Case P82, I would take the view that this taxpayer should be found to be a resident of Cairns in relation to the year in question. The resemblances to the case of Levene are most marked. The taxpayer had accepted that he was a resident of Cairns in the prior year of income. He continued to reside in Cairns for at least the first month of this year of income before proceeding to Weipa. At every break from the workforce, he returned to Cairns and stayed there until he took up operations at Weipa and after finishing the season at Karumba he returned towards the end of April to Cairns where he remained for the balance of the year of income. I have already found that he did not achieve concurrent status as a resident of Karumba/Weipa (see para. 6 of these reasons) and the Board was given to understand that during the year, the taxpayer was passing through the period of courtship with the girl to whom he later became engaged, and, still later, whom he married. She apparently was at all times a resident of Cairns and it is accepted that the taxpayer is now a resident of Cairns. The question of residence is, as Viscount Cave pointed out in Levene at p. 224 ``one of fact and degree''. On the facts it appears to me that all this taxpayer has done is to leave Cairns for the purpose of working in the North during the prawning season. The answer to Viscount Sumner's question as posed in para. 6 above appears to me to be clearly that this taxpayer remained a resident of Cairns (which is a town in Zone B) for the whole of the year of income.

9. That being so, the taxpayer is clearly a resident of ``the prescribed area'' and the whole of the provisions of sec. 79A apply to him. In terms of subsec. (2) of sec. 79A, the taxpayer is a resident of Zone B who has actually been in Zone A - the periods in port in Weipa and Karumba constitute, in my view, actual presence in the area of those ports - and falls to be dealt with under para. (c) of that subsection. That is the manner in which the Commissioner has dealt with the taxpayer in the assessment which is the basis of this reference; however, the Commissioner taking the view that only one-sixth of the time spent in the Karumba/Weipa area was actual presence in Zone A, has accordingly allowed one-sixth of the deduction allowable in respect of Zone A in addition to allowing five-sixths of the deduction in respect of Zone B. This appears to me to be, in the unusual circumstances of this case, an exercise of the discretion in para. (c) which produces an anomalous result. The fact is that for over six months of the year of income, the taxpayer operated from two ports which are situated in Zone A. The express purpose of the section is to provide relief ``in recognition of the disadvantages to which [residents of the prescribed area] are subject because of uncongenial climate conditions, isolation and the high cost of living in Zone A''; though not physically present or resident ``in that area'' in terms of the definition of ``resident'' in subsec. (4), the taxpayer, by reason of his being based in Zone A, has certainly endured, for more than six months, the uncongenialities of the climate, the isolation, and, most certainly, the high cost of living in the Zone. In these circumstances, it is appropriate that the discretion be exercised to allow the full deduction available to a resident of Zone A in the year of income.

---

ATC 411

10. The assessment should be varied accordingly.