Case P38

Judges: MB Hogan Ch
P Gerber M

GW Beck M

Court:
No. 3 Board of Review

Judgment date: 7 May 1982.

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Dr. G.W. Beck (Member)

This is another case of a bank officer departing Australia to serve in a branch of his employer in Oz and claiming that the salary paid to him in Oz is not assessable in Australia. The matter to be decided is precisely the same as that in References B.253 and 254/1980 [ Case N81,
81 ATC 414 ], i.e. whether the taxpayer was a resident of Australia during the time he spent in Oz.

2. The taxpayer's parents apparently separated many years ago and almost his entire schooling was at a boarding school. On 6 January 1969 after leaving school, he joined the staff of a bank and was sent to a remote town for six months. Thereafter he was placed on what the bank calls ``relieving staff'' and he proceeded to move for short periods and at short notice to bank in branches all over the State. He applied for a transfer to the London office of the bank in August 1974 and in January 1975 he took up a posting there which ended in January 1977. He resumed duty with the bank in his original State in Australia after a period of leave and was once again put on relieving staff. Around mid-1978 he was in a branch in a small country town when he was invited to accept a post in the Oz branch. He was, he said, anxious to leave Australia (``wanted to get away from the place'' were the words he used in evidence) and he thought Oz would not only satisfy that wish but it would also offer a ``desirable lifestyle''. On 18 August 1978 he went to Oz leaving no property in Australia. The initial appointment was for twelve months. Shortly after arriving in Oz he met an Oz national who he relatively quickly seems to have decided would make a most satisfactory wife. He also apparently soon decided that he would not return to Australia to live because the lifestyle in Oz was better and he did not want to subject his future wife to the racial prejudices that he believed existed in Australia. The taxpayer could not, of course, point to a moment in time when that decision was made, but his father who attended to give evidence said he visited his son in January 1979 and at that time the taxpayer told him that he was going to stay in Oz and marry.

3. The possibility that the Oz branch of the bank would close by the end of 1979 caused the management to ask the taxpayer to stay on beyond the August 1979 termination date of his original appointment. He said this suited him for the reasons already given. The bank branch closed early in October 1979 and on 5 November 1979 the taxpayer was repatriated to Australia. He left various household chattels at his fiancee's flat in Oz, and he intended to return there with a view to marrying in December 1979. A one-way ticket from Brisbane to Oz issued by an international airline on 15 November 1979 for a flight on 29 November 1979 was tendered. The ticket was, however, not used because the taxpayer's father with whom he was staying after returning from Oz was admitted to hospital for major surgery. The father was apparently in a dangerous condition for some time and in no state to care for himself when he was eventually discharged from hospital a few days before Christmas 1979. The father in evidence said he lived alone, he had none of his son's property stored at the house, and his son had lived with him ``very little since he first went to boarding school'' but that the taxpayer cared for him for two months after his discharge from hospital.

4. The taxpayer said that he had put out feelers with a view to getting another job and staying in Oz around July-August 1979 and he and another party had ideas for a business arrangement in Oz which he expected to be

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ATC 181

successful. He was unsuccessful in obtaining a job and the tentative business arrangement was abandoned when he did not return to Oz in November 1979. After using up his available leave he returned to work with the bank in Australia in January 1980 and at the time of the hearing he remained employed by the bank. He still wanted to marry and live in Oz and his fiancee had visited him in Australia once since his return and was expected again in the near future. He went to Oz in July-August 1980. The fiancee has a good job in Oz. The taxpayer tendered letters written in January and February 1980 in which he unsuccessfully sought employment in Oz.

5. All of this makes the taxpayer's romantic attachment for the maid of Oz sound lukewarm and the story of its progress seems merely a plausible reason for his abandoning Australia and embracing Oz. What appears to detract from the credibility of the taxpayer's evidence is his failure to rejoin his fiancee after his father's recuperation, but I think to give too much weight to that aspect would be unfair. According to the taxpayer's evidence, they both want to live in Oz, but there is at present no work for the taxpayer in Oz and they are, it seems, waiting and hoping that something will come along. Although one might not share the taxpayer's patience, the position as he and his fiancee seem to see it is understandable, and I believe he would, if given the chance, go to Oz to live permanently in the strictest sense of that word.

6. Up to the time of departure to Oz, this taxpayer had an Australian domicile but no permanent place of abode. He was more or less a wandering Arab of the banking world with temporary assignments and fairly definite termination dates at bank branches all over the State. Perhaps during the period he spent in London he could be regarded as having a permanent place of abode but it does not really matter whether he did or not; in Australia he had no such place. Upon arrival in Oz he viewed the possibility of living there favourably, but it could not be said that he immediately took up permanent abode as interpreted by the Full Federal Court in
F.C. of T. v. Applegate 79 ATC 4307 . His appointment at that time was for twelve months and initially his period of abode in Oz had none of the indefiniteness that was critical to the description ``permanent'' in that case. However, between August 1978 when he arrived and January 1979 when he told his father he was going to stay in Oz and marry, he obviously decided to make his stay indefinite. In finding that Applegate took up permanent abode in Vila, Fisher J. said, at p. 4316:

``Of crucial significance were not only the facts concerning his acquisition of a house in Vila, but also that he was intending and intended by his firm to remain indefinitely, albeit for a limited time.''

In evidence this taxpayer said he acquired some household equipment in Oz which was at the time of hearing still stored at his fiancee's flat, and I am of the view that in that August to December 1978 period he made a firm and recognisable decision that life in Oz suited him, he had found someone he wanted to marry and that he would stay. As I interpret the decision in Applegate from the time that this taxpayer made that decision to stay indefinitely he had a permanent place of abode in Oz, but it is not possible to pinpoint the exact date of the decision. In view of the onus that a taxpayer bears there must be some evidence by which one can reasonably identify a starting point and the best that I can do is work on the basis of the taxpayer's father's evidence. The father was quite explicit that the taxpayer had made up his mind to stay in Oz by January 1979. I therefore conclude that he was not a resident of Australia from the beginning of January 1979 until his return to Australia on 5 November 1979. Most of the inferences drawn from both the N.S.W. Supreme Court and the Full Federal Court decisions regarding Applegate set out in References 253-254/1980 [ Case N81, 81 ATC 414] (which, as already pointed out, were concerned with another bank officer who went to Oz) are also relevant for this taxpayer's reference. I have not repeated them in this decision, but they stand behind my reasoning from the facts as I understand them. I have totally ignored Court and Board decisions pre-dating Applegate .

7. I direct that the income derived from a source outside Australia between 1 January and 30 June 1979 be deleted from the taxpayer's assessable income for that year.

Claim allowed