Joachim and Commissioner of Taxation [2002] AATA 610; (2002) 50 ATR 1072; 2002 ATC 2088 (4 July 2002)

DECISION AND REASONS FOR DECISION [2002] AATA 610

ADMINISTRATIVE APPEALS TRIBUNAL ) No NT2001/513

Decision FOR the reasons given orally at the conclusion of the hearing in this matter, the decision under review is AFFIRMED.

TAXATION: Applicant had permanent residency in Australia but was employed on Sri Lankan vessels. Claimed exemption from Australian tax on basis not resident in Australia. Was resident by virtue of place of abode of family.

Income Tax Assessment Act 1997 - s995-1

Federal Commissioner of Taxation v Miller [1946] HCA 23; 73 CLR 93

Hafza v Director General of Social Security [1985] FCA 164; 6 FCR 444

Koitaki Para Rubber Estate v Commissioner of Taxation [1941] HCA 13; 64 CLR 241

1. At the conclusion of the hearing of the above matter the terms of the decision intended to be made and the reasons therefor were stated orally. After service upon the Respondent of a copy of the decision that was in fact made, the Applicant pursuant to Sub-section 43(2A) of the Administrative Appeals Tribunal Act 1975 requested the Tribunal to furnish to the Applicant a statement in writing of the reasons of the Tribunal for its decision.

2. The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service. Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reasons for the said decision.

3. The said transcript is annexed hereunto and furnished to the Applicant and to the Respondent as it is the reasons for the Tribunal's decision.

I certify that this and the preceding page are a true copy of the decision and reasons for decision herein of:

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MR ALLEN: In this matter, the applicant pursuant to a document lodged with the Tribunal on 4 July 2001 seeks review of an objection decision dated 23 April 2001 disallowing his objection to an assessment of taxation by the respondent. The facts of the matter are within a relatively small compass. The applicant, together with his family migrated to Australia from Sri Lanka in January 1994. At all relevant times, the applicant has been a fully qualified master mariner and is qualified for employment as such with any Australian vessel. Unfortunately, however, he has been unable to obtain any employment on an Australian vessel. Consequently, after a short period of employment ashore he was forced to seek employment through the agency of a Sri Lankan maritime manning agency.

This has resulted in the applicant being employed as a first officer on various vessels sailing under the Sri Lankan flag. The wages paid to him are those paid to a member of the Sri Lankan Merchant Service and as one can understand, are considerably less than equivalent wages for Australian mariners. Despite this, however, he at all relevant times in the tax year, did have permanent residency in Australia and his wife and children continued to reside in Australia. The applicant states that during the tax year in question, he spent some 316 days outside Australia, those days being aboard Sri Lankan registered vessels and the only time he spent in Australia was in between contracts of employment with the Sri Lankan agency.

He therefore, claims that his permanent abode was not within Australia and he cannot be considered as having been a resident during the financial year. The test as to whether taxation can be imposed upon the applicant is whether he is a resident of Australia and the term Australian resident is defined in the Income Tax Assessment Act 1997, section 995-1 as a person who is a resident for the purposes of the Income Tax Assessment Act 1936. When one goes to that Act, the term, resident or resident of Australia is defined in subsection 1 of section 6 as:

a) a person other than a company who resides in Australia and includes a person

i) whose domicile is in Australia unless the Commissioner is satisfied that his permanent place of abode is outside Australia.

So although there are other subparagraphs to the subsection, the real test in this matter is A, whether the applicant is in ordinary parlance someone who resides in Australia and if not, in any event, does he have a domicile in Australia. In Federal Commissioner of Taxation v Miller [1946] HCA 23; 73 CLR 93 Latham J as he then was, said:

I should have thought that there was no doubt that a man resided where he lived and I do not think that there is any interpretation of the word, reside by the courts which makes it impossible to apply the ordinary meaning of the word reside in the present case.

In Millers case, the applicant was resident on a boat, but the boat was at all relevant times within Papuan waters. The fact of residency has been canvassed in many cases. Perhaps one of the more recent is the remarks of his Honour, Wilcox J in Hafza v Director General of Social Security [1985] FCA 164; 6 FCR 444 at 449, where his Honour said:

There is a plethora of decisions arising in various contexts but predominantly Matrimonial Causes and revenue cases relating to the legal concept of residence. As a general concept residence includes two elements, physical presence in a particular place and the intention to treat that place as home at least for the time being not necessarily forever.

The concept was explained in a taxation case_, Koitaki Para Rubber Estates Limited v Commissioner of Taxation, Commonwealth_ [1941] HCA 13; 64 CLR 241 at 249 by Williams J:

The place of residence of an individual is determined not by the situation of some business or property which he is carrying on or owns but by reference to where he eats and sleeps and has his settled or usual abode. If he maintains a home or homes, he resides in the locality or localities where it or they are situate but he may also reside where he habitually lives. Even if this is in hotels or on a yacht or some other abode.

Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntary, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home.

It is important to observe firstly, that a person may simultaneously be a resident in more than one place. Secondly, that the application of the general concept of resident to any particular case must depend upon the wording and underlying purpose of the particular statute in relation to which the question arises. But where the general concept is applicable it is obvious that, as a residence of a place in which a person is not physically present, depends upon an intention to return and to continue to treat that place as home. A change of intention may be decisive of the question whether residence in a particular place has been maintained. It will be seen from that passage, that a person can be said to reside where they have their usual place of abode.

In this case, the applicant although a seafarer and spending most of his time aboard a vessel in international waters returns when his contracts have expired and before he obtains a new contract to his wife and children in Australia. They have been here as stated since 1994 and he himself has permanent residence in Australia. The matter was discussed even more fully in a case to which the applicant himself referred. This is case number 56 in Volume 15 of Commonwealth Taxation Board of Review Decisions, page 443.

That case dealt with a mariner who since 1939, had resided solely aboard ships, as the reasons of the chairman in that case set out at page 443:

The taxpayer undoubtedly ceased to reside in Australia in April 1939 when he took up his appointment on the ship and placed all his personal effects on board with the intention of living on the ship and without any definite intention of ever returning to Australia to live.

He continues however to refer to various cases there referred to by the Commissioner's representative. The first of those was, Re Young 1875 1 TC 57 and Rogers v Inland Revenue 1879 1 TC 225, and the learned chairman continued:

Each of those cases is distinguishable from this case by the facts that the master mariner concerned had, in the United Kingdom, a home in which his wife and children resided and in which he himself resided whenever his ship returned to the United Kingdom. It was on the basis of those facts that the court decided that the master mariner was a resident of the United Kingdom. Notwithstanding that he was absent from that country on his ship in the one case for the greater part and in the other for the whole of the year concerned.

There is a similar distinction between this case and 10 CTBR case 103. The statement by the Lord President in Rogers case 1 TC at page 226, that "every sailor has a residence on land" does not mean as I understand the Commissioner's representative to have contended that there is a legal presumption that every sailor has a residence on land whether or not he in fact has one. The Lord President was using the word residence, in the sense of a dwelling house. This having been stressed by him.

In the case of re Young, as the only appropriate meaning of the word, although that meaning is shown by later cases to be too narrow. All he intended to convey is in my opinion that a sailor whose home is in a certain country and who lives in that home whenever he returns to that country must be regarded as residing in that country even when he is absent from it.

In a like manner, the statement of Rowlatt J in Pickles v Fulsham 1923 9 TC 261 at 275 that "a sailor resides at the port where his wife and children live" can only be read as meaning that a sailor who has a wife and children who live at a particular port, must be regarded as residing at that port, even when he is away from it.

Taking those considerations into account and on the undisputed evidence in this matter, the applicant although employed on Sri Lankan flag vessels, maintains a home for his wife and children in Australia. It seems to me that under the ordinary principles of the law, he is a resident of Australia. In those circumstances, he is liable to Australian income tax. There was a question raised as to the Sri Lankan double tax agreement which is schedule 31 to the International Tax Agreements Act 1953 but having regard to the applicant's statement in exhibit A2, that he was not liable to Sri Lankan income tax because he was not residenced in Sri Lanka on the basis that he was a mariner, it would seem to me that that is a matter which need not be addressed.

If it were to be addressed however, I consider that the applicant's situation is exactly on all fours with the case of Chong and the Federal Commissioner of Taxation 2000 ATC 4315 and that the agreement in this case, using the word, may, leaves open the possibility of taxation by Australian taxation authorities. For these reasons therefore, the decision under review is affirmed.