This is the case where Applegate fight with federal court asking he don’t want pay a taxes when he was not in Australia most of time in that year saying he was not in Australia for whole year so he cant pay taxes. On 8/11/71 he surrendered a lease on his flat, went to Villa for an indefinite term with his wife to set up a law firm there, a branch office. He organized a house in Villa, entered into a lease for 12 months with an option to renew for 12months. He came back to Australia in December 1971 when his wife had a baby then went back to again. He had been sent to Villa for a long period, but not permanently.
He didn’t leave any assets in Australia before, although he retained his membership in a hospital benefits fund. In July 1973 he became ill and, in the light of medical advice, decided against remaining indefinitely in the New Hebrides. At his request, he was replaced and returned with his family to Sydney. But for the illness he would have remained in the New Hebrides. During the period he was there he returned to Australia for short periods, twice on vacation and once in connation with the birth of a child. Issue: Tax must pay on an annual basis; residency must be determined on an annual basis.
Was he a resident for the financial year ending 30/6/72? It’s very hard to say he is resident for tax purpose because he has another resident for where he is staying temporally. It seems realistic as well but rules are rules and nobody can go beyond it. The taxation office ask him to pay taxes and he declined and then case gone to court where both parties give the reasons why they wand want taxes and why Applegate don’t want to pay taxes. The taxpayer’s permanent place of abode was outside Australia and so he was a non-resident during the part of the year in question.
The income then earned by him from sources outside Australia was therefore not assessable. The Supreme Court of New South Wales (Sheppard J. ) held that in the income year ending 30th June 1972, the taxpayer was not, after November 1971, a resident in Australia. The commissioner appealed. The court held after hearing judge give decision saying, according to the Income Tax Assessment Act 1936, Applegate’s permanent place resident on that year was outside Australia and so he was a non-resident during the part of the year in question.
That’s why whatever he earned from sources outside Australia was therefore not assessable for tax. Appeal from a decision of the Supreme Court of New South Wales (Sheppard J. ) allowing an appeal by the taxpayer against the decision of the Taxation Board of Review No. 1 confirming the taxpayer’s assessment to income tax for the year ending 30th June, 1972. The material facts are set out in the judgments of Northrop and Fisher JJ and Solicitor for the appellant: Alan R. Neaves (Commonwealth Crown Solicitor) and Solicitors for the respondent: Sly & Russell.?J.
R. P. LEWISOHN. And the honorable curt came to decision on 27 June and following judgment were delivered. Northrop and Fisher JJ said I have had the opportunity to read and I do not propose to deal with the facts in any detail. It seems clear that the respondent, Mr. Applegate, left Australia to take up his position in Vila and that in the absence of some unforeseen circumstances he was likely to remain there until he had completed his assignment, which would probably take several years Mr.
Applegate left Australia Sydney on 8th November, 1971 and part from two brief periods, he remained in Vila for the balance of the relevant tax year. According to the Income Tax Assessment Act 1936 says resident for tax purpose and in this case Mr. Applegate during the relevant period had “his permanent place of abode” outside Australia. Resident or resident of Australia’ means – a person, other than a company, who resides in Australia ? and includes a person whose domicile is in Australia, unless the Commissioner is ? satisfied that his permanent place of abode is outside Australia.
He said two fundamental matters must be borne in mind. The first is that liability to tax arises annually and the question of where the taxpayer’s permanent place of abode is, if relevant, must be determined annually and secondly that the words “his permanent place of abode” are in a subsection which contains the word “domicile”. From this all point rules and regulations of taxation act Mr. Applegate is paying tax for another place he is not resident on Sydney so he don’t need to pay tax on Sydney and he dismiss appeal in this case.
And tax commissioner again went to the Federal Court of Australia against Supreme Court of New South Wales allowing an appeal against a decision of the board of review confirming the disallowance by the commissioner of an objection by the taxpayer to an assessment of income tax for the year ended 30th June 1972. The appeal concerns the question of whether for part of that year of tax the taxpayer was a non-resident within the meaning of that word when used in s. 25(1) and s. 23(r) of the Income Tax Assessment Act 1936, as amended. The facts are not in dispute.
The taxpayer is a solicitor who at all relevant times was employed by Messrs. Sly and Russell, a firm of Sydney solicitors. During the year ended 30th June 1972, at the request of the firm, the taxpayer went to Vila in the New Hebrides for the purpose of opening and managing there a branch office on behalf of the firm. On 8th November 1971, he left Sydney and for Vila where, apart from two brief periods, he remained for the balance of the tax year. It is not disputed that for the period 8th November 1971, to 30th June 1972, his income was derived from sources wholly out of Australia.
The taxpayer was married. At the time of leaving Sydney, his wife was expecting their first child. On leaving Sydney, the taxpayer gave up the tenancy of the flat in which he and his wife had been living. He left no assets in Australia, but he retained his membership in Australia of the Hospitals Contribution Fund. Upon arrival in Vila he and his wife spent the first two weeks in a hotel. He then obtained a lease of a house in which he and his wife thereafter lived. The term of the lease initially was for a period of twelve months with an option of renewal for a further period of twelve months.
He was admitted as a legal practitioner in the New Hebrides. He gets a residency permit for a period of twelve months and subsequently this was renewed for a second term of two years. Initially his staff consisted of a secretary only, but later additional staffs were engaged. And lots of issue has been take as a evidence of this case like Me Applegate’s wife came Sydney to give a birth of her child because they have medical insurance, he visited for holidays stayed few weeks and lots more to prove that he is resident for tax purpose.
It is necessary to set out the relevant provisions of the Act. Section 25(1) provides the assessable income of a taxpayer shall include where the taxpayer is a resident – the gross income derived directly or indirectly from all sources whether in or out of Australia; and where the taxpayer is a non-resident – the gross income derived directly or indirectly from all sources in Australia, which is not exempt income. Section 23(r) provides as follows “23. The following income shall be exempt from income tax, income derived by a non-resident from sources wholly out of Australia.
a person, other than a company, who resides in Australia and includes a person – whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia; who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia.
From 8th November 1971, to 30th June 1972, the income received by the taxpayer was derived from sources wholly out of Australia. During that period the taxpayer was domiciled in Australia. Thus the issue to be decided is whether during that period the taxpayer was a non-resident. This involves deciding whether during that period he was a “resident” as defined in the Act, there being no contrary intention appearing in s. 25(1) or s. 23(r) of the Act.
This issue was the issue raised in the appeal from the board of review and decided by the decision of the Supreme Court of New South Wales. Full Court of the Federal Court of Australia granted leave to the commissioner to appeal from the judgment of the Supreme Court of New South Wales, but on condition that the commission pay the taxpayer’s costs of the appeal in any event. In the subsequent notice of appeal, the commissioner raised the.
Same issue for decision by this Court as was before the Supreme Court of New South Wales. When the appeal came on for hearing before the Federal Court, senior counsel for the commissioner sought leave to amend the notice of appeal to include a ground that the Supreme Court of New South Wales should have dismissed the appeal from the board of review on the ground that there was evidence to support the conclusions of fact of the members of the board in their application of the relevant principles of law.
In Federal Court of Australia again from the solicitors’ taxation office and Mr. Applegate in different date of hearing and discussion both parties give the points evidence whether he have to pay a tax or not whether his income in under the Australia income taxation recourses is he resident of Sydney for that taxation year.
Solicitor of Applegate strongly says the facts of the present case show clearly that during the period 8th November, 1971, to 30th June, 1972, of the year of income ended 30th June, 1972, the taxpayer’s permanent place of abode was outside Australia. At the commencement of that period he had the requisite intention to abandon his place of residence in Australia and to establish a place of residence outside Australia.
During the whole of that period he in fact resided outside Australia, he did not reside in Australia. And he asked honorable court to dismiss the case. But the solicitor of taxation office and commissioner of taxation office argued on this case they said that the taxpayer was during the relevant period a resident of Australia in that he was a person who was domiciled in Australia but in respect of whom the commissioner was correctly not satisfied that his permanent place of abode was outside Australia.
The taxpayer for his part concedes that his domicile is in Australia, but submits that upon the true construction of the definition the commissioner should have been satisfied that his permanent place of abode was at the relevant time outside Australia. It is accepted that the income under consideration was derived from sources wholly out of Australia he added the Applegate’s wife was expecting their first child at the time of their departure from Sydney.
They had intended that she would be confined in Vila but being unhappy with the quality of medical treatment available there, she returned to Sydney for the birth of her child, which occurred in February 1972, on Christmas 1972 the taxpayer and his wife and child holidayed for just over a month in New South Wales and try to show lots of evidence. At the last decision came honorable Federal Court of Australia give the decision Court said ‘permanently’ means less than everlasting. Permanent must be construed by reference to the particular year under consideration.
In regard to 1972 year, had he established a permanent place of abode outside Australia? Court said he had; he had intended going there for a substantial period of time, he had established a home there, had taken his family there and given up his lease in Australia. For that year he was a resident outside Australia. In the circumstances therefore he is a “non-resident” within the definition and exempt from Australian tax on his income derived from sources outside of Australia and appeal has been dismissed.