Gregory v Deputy Federal Commissioner of Taxation (WA)
57 CLR 774(Judgment by: Dixon J)
Between: Gregory - Appellant
And: Deputy Federal Commissioner of Taxation (WA) - Respondent
Judge:
Dixon J
Judgment date: 7 October 1937
PERTH
Judgment by:
Dixon J
This appeal relates to a claim for exemption under sec. 5A of the Income Tax Assessment Act 1922-1934. The exemption is expressed in these words:-
"This Act shall not apply to any income derived from primary production in the Northern Territory of Australia by a resident of that territory prior to the first day of July, one thousand nine hundred and thirty-seven."
The taxpayer is engaged in what is agreed to be primary production, pearl fishing. From that pursuit he derives income in the Northern Territory, for which he claims exemption. He also carries on pearl fishing from Broome in Western Australia, and he derives income therefrom.
The question to be decided is whether the taxpayer is a resident of the Northern Territory. His claim to exemption depends upon that question.
It is unnecessary to restate the facts. They appear clearly from the taxpayer's evidence, which is not contradicted and which I accept. It is enough to say that he began by residing in Broome, where he acquired a house which he has owned for many years. A time came when he found that pearl fishing from Darwin presented attractions as great as or greater than at Broome and he established himself at Darwin. He conducted operations at Darwin in an organized manner and upon a considerable scale, and as time wore on, I think that he came to identify himself rather more with Darwin than with Broome. The development of his operations and interests in Darwin led him to live there for protracted periods.
The year of tax in respect of which the exemption is claimed upon this appeal is the financial year beginning on 1st July 1935 and ending on 30th June 1936. The assessment for that year of tax is based upon a return of the taxpayer's income derived in the calendar year 1934. I do not think that it is a matter of much importance in this case, but the question may be asked what period should be taken under sec. 5A for the purpose of considering whether a taxpayer is a resident in the Northern Territory so that his income is exempt for a given financial year. Is it the financial year, the ordinary year of income preceding the financial year, or, in such a case as this, the year for which his returns of income for the financial year are accepted? I am inclined to think that it is the year for which the returns are accepted, but my conclusion would be the same for either of the other periods.
In the calendar year 1934 the taxpayer was in Darwin for a period which might be 131 days or 113 days. He was in Broome 161 days and he was engaged in travelling for business purposes for some seventy-three days. In 1933 he was about an equally long time in Broome and Darwin. In 1933 he was a less time in Darwin than in Broome. In Darwin he had arranged a place of residence, a dwelling. He arranged with his manager for the reservation of a room in his house and agreed to pay a definite sum of money for it. He kept a motor car in Darwin. He identified himself with the social life of Darwin. He had, of course, permanent and definite arrangements for his business activities in Darwin.
A question of much importance in the present case is whether the word "resident" in sec. 5A should be interpreted in the same way as similar expressions are interpreted in the British Income Tax Acts. I think that the answer is that the word should receive the same meaning and application as "person residing" and "ordinary resident" have been given in England. No technical or artificial meaning has been placed upon these expressions and parallel expressions under the British income tax law. But certain principles have been laid down by judicial decision for interpreting and applying the expressions. The well-settled interpretation of the words includes in their application a man who resides in two or more places. That was first settled in Attorney- General v. Coote. [F1] The same view has been adopted in Cooper v. Cadwalader, [F2] Thompson v. Bensted, [F3] Pickles v. Foulsham [F4] and Peel v. Inland Revenue Commissioners. [F5] And finally the interpretation has been approved by the House of Lords in Levene v. Inland Revenue Commissioners [F6] and in Lysaght's Case. [F7]
In the present case I would not deny that the taxpayer had retained his residence in Broome in Western Australia. He had done nothing that would be enough to divest himself of the character of a resident of Broome which, speaking figuratively, clung to him from long association and usage, an association and usage which he had done nothing to dissolve or destroy. But I think he did most definitely acquire the concurrent character of a resident of Darwin. 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 fiat 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.
I hold that the facts of the case come within sec. 5A and that the taxpayer is entitled to succeed in his appeal. The appeal will be allowed, the assessment for the year will be set aside, there will be a declaration that the taxpayer is entitled to exemption under sec. 5A of the Income Tax Assessment Act 1922-1934 in respect of income derived from pearl fishing in or from the Northern Territory, and with that declaration the assessment will be remitted to the Commissioner of Taxation for re-assessment.
The appeal will be allowed with costs.