Tanddo and Commissioner of Taxation
[2022] AATA 4143(Decision by: Deputy President Bernard J McCabe)
Tanddo
and Commissioner of Taxation
Member:
Deputy President Bernard J McCabe
Subject References:
Taxation
whether applicant exempt from tax liabilities
where applicant deployed overseas by employer
whether applicants deployment subject to designation
decision affirmed
Legislative References:
Income Tax Assessment Act 1936 - The Act
Taxation Administration Act 1953 - The Act
Other References:
General Agreement on Development Cooperation between the Government of Australia and the Government of the Republic of the Philippines
Memorandum of Understanding between the Government of Australia and the Government of the Republic of the Philippines on co-operation to combat international terrorism
Decision date: 14 November 2022
Sydney
Decision by:
Deputy President Bernard J McCabe
1. The Tribunal affirmed the decision under review and gave oral reasons at the hearing for this matter. The reasons that follow are extracted from the oral decision and reasons which are included in the transcript.
2. This is an application for review of objection decisions made by the Commissioner of Taxation under Part IVC of the Taxation Administration Act 1953. The objection decisions dealt with objections that Mr Tanddo lodged in respect of Notices of Amended Assessments for the income year ended 30 June in 2010-2015. During this time Mr Tanddo was serving overseas with the Australian Federal Police (AFP), specifically in work he was assigned to do.
3. Mr Tanddo submitted that he was effectively entitled to favourable tax treatment because, according to his understanding, that was the way these things were done in these postings. He indicated during submissions the AFP tended to be cagey about the taxation implications for its officers serving overseas but pointed out he was aware of fellow officers serving in other places, (for example Indonesia) which, to Mr Tanddo's understanding, attracted a favourable tax treatment.
4. The favourable tax treatment in question comes about if a taxpayer is able to satisfy the requirements of section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936). The respondent accepts Mr Tanddo satisfies all except one of those requirements. The outcome of this case turns on the finding of fact I need to make about whether the applicant is exempt from income tax in the Republic of the Philippines on the basis of Article 14 of the General Agreement on Development Cooperation (GADC) between Australia and the Philippines. The GADC was entered into on 24 October 1994 and came into force on 12 March 1998. The respondent argues Mr Tanddo will only be entitled to the benefits stated in section 23AG if I am satisfied the particular program in which Mr Tanddo was engaged was registered, or designated, on a list that is ordinarily kept by the Department of Foreign Affairs and Trade (DFAT) of programs that are approved under the GADC.
5. The challenge has been trying to work out whether that is so. There has been summons issued and there have been FOI applications directed to DFAT. Despite this, there has been some difficulty getting an answer about whether the program under which Mr Tanddo was assigned was designated by DFAT. It became clear at hearing that DFAT does not have any record of designating the program as the AFP did not ask them to do so.
6. The evidence provided in an affidavit from Mr Adam McCormack, an employee of the AFP, established the program under which Mr Tanddo was engaged was negotiated on what I would infer to be an almost ad hoc basis. The terms of the agreement are recorded in a Memorandum of Understanding. It appears to have been negotiated after money was made available for a particular program. For whatever reason (and, ultimately, I am not in a position to make a judgment about there were good reasons for doing so), it does not appear the AFP ever sought for that program to be designated under the GADC. Whether that was through oversight, or whether that was a positive decision, there is simply no reason to doubt it did not occur.
7. I accept Mr Tanddo may be frustrated he has not been able to get a clear answer from the AFP about why they structured the program in this way. The challenge for me is that I am not really in a position to deal with the question of whether the AFP should have taken different steps in relation to the program. I must simply look at the limited question I need to address to resolve the dispute in this case, which is whether the program Mr Tanddo was engaged in was designated by DFAT.
8. The respondent has gone to considerable and commendable lengths to try and obtain information about what has gone on here. I have encouraged the parties to do that because if we could elucidate the backstory, it was more likely to give Mr Tanddo some reassurance, even if he was unsuccessful in the applications in front of me. There is now more information to hand, and I accept it is still not entirely satisfying from Mr Tanddo's point of view, but it seems to me those are questions that ought to do with the internal operations of the AFP. They are things which are probably better suited being raised with the Ombudsman or Mr Tanddo's union.
9. If I return to the question that is in front of me: based on the material before me, I have no alternative but to conclude that the agreement, or the program, under which the applicant was working in the Philippines, was not run by the GADC and, as a consequence, Mr Tanddo is not entitled to what are, effectively, the benefits under section 23AG of the ITAA 1936. In those circumstances, as much as I might have sympathy for the applicant in his present circumstances, I do not have any alternative but to affirm the objection decisions as they stand. I acknowledge that is an unfortunate outcome. Mr Tanddo has acted consistently and reasonably and he has every right to ask the questions that might shed light on how he ended up in this situation. Sadly, they are questions that are going to have to be asked of somebody else and all I can do is wish him luck in the endeavour to find out.
10. On that basis, the decision under review is affirmed.