Case P60

Judges: HP Stevens Ch

JR Harrowell M
BR Pape M

Court:
No. 1 Board of Review

Judgment date: 23 July 1982.

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J.R. Harrowell (Member)

I have had the benefit of reading the decision of my colleague Mr. H.P. Stevens, Chairman. I agree with his statement of the facts.

2. This matter falls to be determined under sec. 23(q) and 23(r). Section 23(q)(i) exempts from income tax ``where there is a liability for payment of income tax in the country where that income is derived - the Commissioner is satisfied that the tax has been or will be paid'';
F.C. of T. v. Efstathakis 79 ATC 4256 at p. 4258 said:

``The word `derived' in the context in which it is used in sec. 23(q) is synonymous with `arising' or `accruing' (
Harding v. F.C. of T. (1917) 23 C.L.R. 119 at p. 131 ;
F.C. of T. v. French (1957) 98 C.L.R. 398 at p. 420) . The source whence the income is derived is not to be determined as a legal concept but as a finding of what a practical person would regard as the real source of income; and it is ascertained as a practical hard matter of fact (
Nathan v. F.C. of T. (1918) 25 C.L.R. 183 at pp. 189-190 ). It is a question to be decided upon a particular set of facts and previous decisions upon other sets of facts are often of little help (
F.C. of T. v. United Aircraft Corp. (1943) 68 C.L.R. 525 at p. 538 ; cf.
F.C. of T. v. Mitchum (1965) 113 C.L.R. 401 at pp. 406 and 408 ).''

Later on the same page he referred to the decision of Williams J. in F.C. of T. v. French (1957) 98 C.L.R. 398 and the decision of Dixon C.J. in that case:

``Dixon C.J. agreed in the conclusion and reasoning of Williams J. (at p. 405). Taylor J. reached the same conclusion upon slightly different grounds. His Honour agreed that the English decisions were not apposite and made no reference to the usefulness by analogy of the English cases relating to income derived from trade or business activities. His Honour agreed with the observations of
C. of T. (N.S.W.) v. Cam & Sons Ltd. (1936) 36 S.R. (N.S.W.) 544 and concluded upon the basis of practical considerations alone that the source of

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ATC 292

income was found in the place where the taxpayer performed the services rather than the place of the contract or the place of payment (at pp. 421-422).''

3. On the facts of this case I find that the income, the subject of this reference, was derived by the taxpayer in Z, to use the nomenclature adopted by the Chairman, not in X. There was no evidence before the Board to show that the taxpayer was under any liability to pay income tax in Z on that income.

4. Section 23(r) exempts from income tax the income derived by a non-resident from sources wholly out of Australia. On the facts of this case I find that the taxpayer at all relevant times was a resident of Australia.

5. I uphold the decision of the Commissioner on the objection and would confirm the assessment for the year ended 30 June 1978.