Stockton v Commissioner of Taxation

LOGAN J: 1 Ms Rebekah Stockton is a citizen of the United States of America (USA), now aged 21. She came to Australia from the USA on a working holiday on 1 September 2016, aged 18. That was in the course of what these days is called a "gap year", in between concluding her high school education in Florida, USA and commencing tertiary education at college, also in the USA. Ms Stockton left Australia to return to the USA on 23 June 2017. 2 The principal question for resolution in this taxation appeal is whether, during the 2017 income year, Ms Stockton was, for the purposes of our income tax law, a resident of Australia. Were it to be concluded that she was a resident during that year, a subsidiary question would arise. That subsidiary question is whether the effect of s 18 of the Income Tax Rates Act 1986 (Cth) (Rates Act) is to deem her to be a resident from the first day of the month in which she arrived in Australia until the last day of the month in which she departed from Australia, i.e. for the period from 1 September 2016 until 30 June 2017. 3 The Commissioner of Taxation (Commissioner) cast his assessment of income tax for the year ended 30 June 2017 on the footing that Ms Stockton was not a resident for the purposes of our income tax law during that income year. He assessed her taxable income as $15,494.00 with the tax payable thereon as $4,008.65. The Commissioner maintained that position when making his decision of 31 July 2018 in respect of Ms Stockton's objection against that assessment. Ms Stockton has appealed to this Court against that objection decision. On her falls the burden of proving that the Commissioner's assessment is excessive. 4 Both Ms Stockton and her father, Mr Charles Stockton, gave evidence. Each was a transparently honest witness. Understandably, Ms Stockton's was the lengthier evidence, both by affidavit and orally. She was candid and frank in her oral evidence as to her purpose in coming to Australia, how and where she spent her time here and her educational and other life aspirations. The account set out below is based both on my unhesitating acceptance of the evidence given by Ms Stockton and her father, as well as on documents which were consensually admitted into evidence. In the result, there was no real dispute as to the facts. 5 From her birth and until coming to Australia, Ms Stockton had lived with her parents at the family home in Florida. Over time, the family expanded. Ms Stockton now has two younger siblings, a brother born in 2001 and a sister born in 2004. Her extended family also lives in the USA. She does not have, and has never had, any relatives resident in Australia. 6 From 6 June 2016 until 22 August 2016, Ms Stockton undertook remunerative work as a nursing assistant at an aged care facility in Florida. 7 As at the time she left Florida for Australia, Ms Stockton had her own room in the family home. That room was retained for her while she visited Australia. It was there that she left clothing and other personal items surplus to her anticipated needs during that visit. It was to there she returned at the conclusion of her visit to Australia. She stayed there until July 2018, for most of that time undertaking pre-medical college studies in Florida. Thereafter, she has pursued further tertiary education in Portland, Oregon. In Oregon, to adopt an American idiom, she is presently 'working her way through college'. It is not necessary to detail the nature of her work there. 8 Ms Stockton flew directly to Australia from the USA. It was her first visit abroad. She had no prior association with Australia. She entered Australia pursuant to a Work and Holiday visa (subclass 462) (working holiday visa) indorsed in her USA passport. She had applied for and was granted the working holiday visa in July 2016. That visa entitled her to live and to work in Australia for no more than 12 months. She considered that her visit was a "gap year adventure between high school and college". That is indeed what it proved to be. She neither overstayed the time limit on her working holiday visa nor sought any extension thereof. 9 Upon arriving in Australia in September 2016, Ms Stockton completed the standard form incoming passenger card. On that form, she declared that she was a "visitor or temporary entrant" and that her country of residence was the USA. Upon leaving Australia in June 2017, Ms Stockton completed the standard form outgoing passenger card. On that form, she declared she was a "visitor or temporary entrant departing" and that her country of residence was the USA. She returned to the USA via a brief stopover in Germany. By the end of June 2017, she was back in the USA. 10 Whilst in Australia, Ms Stockton stayed at diverse different locations and types of accommodation. Chronologically, these were: Brisbane: 1 September 2016 to 27 December 2016 (a) from the date of her arrival to 8 September 2016, at a house in Brighton; (b) from 8 September 2016 to 20 September 2016, at a house in Mansfield; (c) from 20 September 2016 to 26 September 2016, at a house in Coorparoo; (d) from 26 September 2016 to 2 October 2016, at a house in Holland Park; (e) from 2 October 2016 to 27 December 2016, at two different addresses in Kippa-Ring. Eastern Seaboard and Canberra: 27 December 2016 to 25 January 2017 (a) from 27 December 2016 to 2 January 2017, at a unit at Surfers Paradise on the Gold Coast, Queensland; (b) from 2 January 2017 to 5 January 2017, at the Nimbin Rox YHA in Nimbin, NSW; (c) from 5 January 2017 to 9 January 2017, at the Cape Byron YHA in Byron Bay, NSW; (d) from 9 January 2017 to 11 January 2017, at the Newcastle Beach YHA in Newcastle, NSW; (e) from 11 January 2017 to 21 January 2017, at the Bondi Beachouse YHA in Bondi Beach, NSW; (f) from 21 January 2017 to 25 January 2017, at the Canberra City YHA in Canberra, Australian Capital Territory. Melbourne: 25 January 2017 to 28 May 2017 (a) from 25 January 2017 to 30 January 2017, in a house in Saint Kilda East; (b) from 30 January 2017 to 4 February 2017, in a house in Maribyrnong; (c) from 4 February 2017 to 18 February 2017, in a house in Springvale; (d) from 18 February 2017 to 27 March 2017, in a house in Cranbourne South; (e) from 27 March 2017 to 1 April 2017, in a different house in Springvale; (f) from 1 April 2017 to 28 May 2017, in a unit in Bonbeach. Brisbane: 28 May 2017 to 18 June 2017 (a) At friends' houses, at three different locations. Sydney: 18 June 2017 to 23 June 2017 (a) At a friend's house at Baulkham Hills 11 Over her time in Australia, Ms Stockton had two different periods of employment: (a) from 1 October 2016 to 25 December 2016, she worked as an aged care assistant at an aged care facility at Kippa-Ring in Brisbane called "Beaumont Care". Initially, she worked 20 to 30 hours per week, which increased to 40 hours per week during November and December 2016; and (b) from 13 February 2017 to 27 May 2017, she undertook both receptionist and dental nursing duties in Melbourne at two sites where "A-Plus Dental Clinic" operated dental clinics. One clinic was situated at Chelsea Heights, the other at Forest Hill. Throughout this period, she worked about 25 hours per week at one or the other of these clinics. 12 On her employment related Australian tax file number declaration, Ms Stockton declared that she was a non-resident. 13 Ms Stockton's move to Melbourne was the result of a decision which she made in December 2016. Her reason for this decision was "because it sounded like an appealing city and because I wanted to explore other parts of Australia". She also decided at that time that she would use the journey down to Melbourne as a sightseeing vacation. She had purchased a car in November 2016. After a short time, she found this vehicle was not truly roadworthy, returned it, secured a refund and purchased another. She used and maintained this other vehicle thereafter both for sightseeing and to go to and from work. She disposed of this vehicle in June 2017, prior to leaving Australia. 14 Aside from youth hostels, Ms Stockton secured most of her Australian accommodation using the "AirBnB" booking facility. In other instances and as indicated above, she was able to stay with friends. 15 Ms Stockton's return to Brisbane in late May 2017 was prompted by her prior enjoyment of her time in that city and a desire to catch up with friends there prior to departing from Australia. Her visit to Sydney was also prompted by a desire to stay with a friend who lived at that location. Each of these friendships was formed during Ms Stockton's time in Australia. 16 Before coming to Australia and, I infer, throughout her time here and thereafter, Ms Stockton had a bank account in the USA. While here, she opened and operated two bank accounts with the Commonwealth Bank, one for day to day use, the other for savings, transferring funds from one to the other as required. Her Australian sourced wages were paid into her savings account. She has retained a small balance in her Australian savings account against the contingency that she might return to Australia one day. 17 For the purposes of Australian income taxation law, the definition of "resident" or "resident of Australia" is found in s 6(1) of the Income Tax Assessment Act 1936 (Cth) (1936 Act). It is not necessary to set out the definition in its entirety, only those parts on the basis of the alleged application of which to the circumstances just related Ms Stockton contends lead to a conclusion that she was an "Australian resident" during the 2017 income year. Those parts are: resident or resident of Australia means: (a) a person, other than a company, who resides in Australia and includes a person: … (ii) 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 the person's usual place of abode is outside Australia and that the person does not intend to take up residence in Australia; … 18 As can be seen, the definition is of the 'means and includes' variety. It embraces not just those who reside in Australia according to an ordinary meaning of the words in the chapeau to paragraph (a) but also those who may or not fall within that meaning but are nonetheless included by one or the other of the inclusory sub-paragraphs. 19 As to the ordinary meaning of what is entailed in the words, "a person who resides", observations made by Viscount Cave LC in Levene v Commissioners of Inland Revenue [1928] AC 217 (Levene) have long been regarded in Australia as definitive (see, notably, Gregory v Deputy Federal Commissioner of Taxation (1937) 57 CLR 774, at 777 - 778 (Gregory), per Dixon J and Commissioner of Taxation v Miller (1946) 73 CLR 93, at 99 - 100, per Latham CJ), a position recently confirmed by the Full Court in Harding v Commissioner of Taxation (2019) 365 ALR 286 (Harding) (special leave to appeal refused by the High Court, 13 September 2019: Commissioner of Taxation v Harding [2019] HCA Trans 91). 20 Harding was decided by the Full Court after judgement was reserved in the present case. I offered, and the parties took up, an opportunity to file supplementary submissions in respect of matters arising from statements made in the reasons for judgement delivered in that appeal. Harding then became the subject of what proved to be an unsuccessful application by the Commissioner for special leave to appeal to the High Court of Australia. I considered that the interests of justice were best served by deferring the delivery of judgement in this case until the fate of that application was known. I have considered those supplementary submissions in conjunction with those earlier made. 21 In Levene, at 222, the Lord Chancellor observed: ... the word "reside" is a familiar English word and is defined in the Oxford English Dictionary as meaning "to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place." No doubt this definition must for present purposes be taken subject to any modification which may result from the terms of the Income Tax Act and Schedules; but, subject to that observation, it may be accepted as an accurate indication of the meaning of the word "reside." In most cases there is no difficulty in determining where a man has his settled or usual abode, and if that is ascertained he is not the less resident there because from time to time he leaves it for the purpose of business or pleasure. 22 As to principle, reference might also usefully be made to Hafza v Director-General of Social Security (1985) 6 FCR 444 (Hafza). Though Hafza concerned a provision of the Social Services Act 1947 (Cth) (since repealed) which had incorporated the definition of "resident" from the 1936 Act, it is frequently cited with approval in taxation cases for the discussion, at 449 - 450, of the meaning of "resident" offered by Wilcox J: 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 involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248; and Keil v Keil [1947] VLR 383 - 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 - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 235. It is important to observe firstly, that a person may simultaneously be a resident in more than one place - see the facts of Lysaght (supra) and the reference by Williams J to "a home or homes" - and, secondly, that the application of the general concept of residence to any particular case must depend upon the wording, and underlying purposes, of the particular statute in relation to which the question arises. But, where the general concept is applicable, it is obvious that, as 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. [emphasis added] 23 Thus, both the nature, duration and quality of physical presence in a particular place as well as intention are relevant to determining whether and where an individual is a "resident". Further, as used in s 6(1) of the 1936 Act without the adjectival equalisation, "principally", it is entirely possible for a person to be a "resident" of Australia, even if principally resident elsewhere: Gregory, at 777. 24 While undeniably relevant, an examination of an individual's intention with respect to residence can yield mixed or even conflicting signals when considered in conjunction with physical presence. This was appreciated long ago by Lord Buckmater in another leading case, Commissioners of Inland Revenue v Lysaght [1928] AC 234, at 248, in his observation that, "A man might well be compelled to reside here completely against his will". The example chosen by his Lordship was that of a man compelled by the exigencies of business to reside at a particular place but it is readily possible to think of many other exigencies. Without in any way being exhaustive, these might be found in family or cultural duties, military or diplomatic service posting directions or imprisonment or immigration detention. An individual might, for example, intend to comply with such duties or posting directions even though, given a free choice, they would, preferentially, locate themselves elsewhere. 25 An elaboration on these twin features of physical presence and intention by Derrington J in the original jurisdiction in Harding was recently expressly approved, at [61], by Davies and Steward JJ (with whom I agreed) in the subsequent appeal. The authority of that elaboration is in no way diminished by the reversal, on another ground, of the outcome in the original jurisdiction in Harding v Commissioner of Taxation (2018) 108 ATR 137; ATC 20-660. In that elaboration, Derrington J stated: 42. The question of "presence" is relatively straight-forward and that is particularly so when there is evidence of a person's physical presence in a particular place. However, where a person has more than one residence or the question is whether they remain resident in a particular location given that they spend significant time in other locations, different issues arise. In such situations there needs to be consideration of the connecting factors or the continuity of association between the person and the particular location. Here, the question is whether the connecting factors or the continuity of association are such that they establish that the person retains a "presence" in the community as a resident. Factors such as a home, a family unit, possessions, relationships with people and institutions and the like are all relevant to the determination of whether the person has maintained a presence in the community as a resident despite being physically absent. 43. The determination of whether or not a person has the intention to treat a particular place as their home will involve a consideration of numerous factors. Certainly, the evidence of the taxpayer as to their intention at the relevant time will be significant as would be any contemporaneous statement made by a taxpayer as the location of their residency. However, the objective manifestation of a person's intention is often a more accurate indicator of their state of mind at a particular time in the past than is an assertion about that alleged prior intent. A person's present belief about what their intention may have been in the past will necessarily be affected by their sub-conscious and the context in which they called upon to identify that past intention. That is especially so when, at the relevant time, the person did not then consider what their then intention may have been. 44. Even evidence of a person's contemporaneous statement as to their intention at a particular time in the past should be approached with a degree of care. Whilst that is likely to be more accurate than their present assertion of what their previous intention was, the value of the contemporaneous evidence will be affected by the circumstances of the statement and reasons for the making of the statement. 45. That being so, the more cogent evidence of a person's prior intention as to where they resided are the objective facts which reflect the person's then intention. In ascertaining whether a person intended to make a particular place their residence or to terminate their residency in a place, the facts and circumstances surrounding their mode of living will be a strong indicator of their presence in or continued association with a particular place and the intention accompanying that presence. 26 The application in the circumstances of a particular case of the ordinary meaning of "resident" inevitably involves questions of fact and degree. At the margin, there may also be cases where, without any violation of principle, reasonable people might reasonably differ as to whether or not an individual was a "resident" within the ordinary meaning of that word. That does not mean that there is anything deficient about continued adherence in income tax law to its well-settled, ordinary meaning, any more than it means that there is anything deficient about continued adherence to other terms of well-settled meaning such as "income" or "capital", which can also yield similar characterisational difficulties at the margins. What it does mean is that there is nothing beneficial to be served by rehearsing numerous examples of outcomes on particular facts and comparing and contrasting them with the circumstances of the present case. Indeed, so doing may entail risks of error. Those risks are twofold. First, so doing may misleadingly elevate into a matter of principle a particular fact which, in the overall context of one case, proved decisive, whereas that same fact in a different context may be neutral or even suggest a different conclusion as to residence. Secondly but related to the first, there is a risk of diverting attention away from the ordinary meaning of the text of the statute. 27 In Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241 (Koitaki Para Rubber Estates), a case which concerned whether a company was to be regarded as "resident" for the purposes of the 1936 Act, Williams J (with whom McTiernan J agreed), at 249, offered, in an observation about the residence of individuals, a salutary reminder that the type of residence chosen by an individual may not be decisive in terms of whether that individual is to be regarded as a "resident": 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 place of abode: See Halsbury's Laws of England, 2nd ed. vol. 17, pp. 376, 377. 28 Also in Koitaki Para Rubber Estates Ltd, and recalling the even by then myriad cases on the subject of whether an individual or company was a "resident", Starke J, at 246, considered that "It is unnecessary for me to traverse again the "weary road of the tax cases"." Given the risks which I have mentioned, I consider that I have trod far enough down that same weary but now further elongated road to highlight the principles which I must apply in deciding whether Ms Stockton was a "resident" according to the ordinary meaning of that word. 29 Just as it was in Taylor v Natwest Australia Bank Limited (1992) 37 FCR 194, a bankruptcy case where an issue was where a bankrupt was "ordinarily resident", Ms Stockton's self-description as to her status, as recorded by her on her passenger cards and her tax file number application, is relevant but not determinative as to whether or not she was an Australian resident in the 2017 income year. As Deputy President Hack SC, Senior Member Kenny and I pointed out in Re Dempsey and Federal Commissioner of Taxation (2014) 98 ATR 698; 2014 ATC 10-363, at [119], such self-descriptions always fall for consideration against the background of the overall circumstances of a given case. 30 The same may be said of the class of visa pursuant to which a person has entered Australia. Indeed, given that income tax legislation is concerned with derivation of income, not the legality of derivation, it is entirely possible that a person who has entered Australia without a visa or has lived and worked here without a visa entitling them to work could be a "resident" for the purposes of the definition in the 1936 Act and liable to taxation in Australia. It does not axiomatically follow that a person's entry into Australia pursuant to a visa limited as to duration of stay means that they cannot be regarded as a "resident" of Australia in terms of the ordinary meaning of that term in s 6(1) of the 1936 Act. For example, a foreign academic who came here on sabbatical leave over most of a given income year with his or her family, rented or was allocated particular residential premises near a given university, lectured full time at that university, sent children to the local school, joined or whose spouse joined in local church, sporting or community group activities and who used the premises occupied as a base from which to conduct short term, recreational touring might well be regarded as a resident of Australia during that particular income year. 31 Looking at the overall circumstances of the present case, Ms Stockton was a paradigm unsettled itinerant during her time in Australia in the 2017 income year. As a matter of deliberate choice, she had no settled employment or place of abode in Australia. She was a free spirit, truly "independent-minded", as her father described her. She never had any plan to live and work at any one location for any particular length of time, much less did she do so. As it transpired and happily, Ms Stockton enjoyed her time in Australia, formed friendships here and was reluctant to leave. But leave she did, as she had always intended. In this case, Ms Stockton's self-descriptions on her passenger cards and her tax file number application are completely congruent with the objective facts of where and how she chose to live, work and tour. 32 Each of these factors was aptly cited by Mr Butler of Counsel for the Commissioner, as telling in favour, when considered as a whole, of a conclusion that Ms Stockton was not an Australian "resident", within the ordinary meaning of that term, during the 2017 year. 33 A case to the contrary was attractively developed by Mr Hyde Page of Counsel, who truly put everything which might be submitted in favour of that contrary conclusion. It is certainly possible, as he submitted, to find cases where those who have, for example, resided only in hotels have nonetheless been regarded as "resident" in a particular country: see, for instance, Levene. But in such cases, an element of habit as to residence in a particular country has been discernible with the type of accommodation being but a matter of individual choice and convenience. It was further put that an individual might be resident in more than country, so there was no necessary antipathy between concluding that Ms Stockton remained a resident of the USA but was also a resident of Australia during the 2017 income year. This absence of necessary antipathy I readily accept as a matter of theory. But theory must yield to the reality of a given case. 34 Here, the only habit or pattern in Ms Stockton's choice of accommodation was that of opportunism antithetical not just to settling in any one locale but to settling anywhere at all in Australia while she was here. The type of visa which Ms Stockton sought and obtained gave her the freedom to do this. Ms Stockton's association with Australia during the 2017 income year was only ever casual. 35 Of course the particular length of time that Ms Stockton came to stay in Australia is relevant, and 10 months or so is plainly most of the 2017 income year. But that length of time was wholly determined by the fortuitous chance of her continuing favourable experience of life and work here, not by any pre-determined intention, realised in fact, usually to live here either for 10 months or for any other particular length of time. The only pre-determined intentions which Ms Stockton had were to embark on the adventure of seeking in Australia such work as she could obtain and touring as, where, and when opportunity and whim took her, and for as long as she enjoyed these experiences, not to over-stay the term of her visa and to return to her family in the USA so as to commence college studies. 36 One proposition put on behalf of Ms Stockton was that "questions of residency should be addressed with a time-horizon based on the tax year in question, rather than the taxpayer's life as a whole". If this were intended as nothing more than a reminder that a conclusion as to residency must be reached in respect of a given income year, it is unremarkable. But that does not mean that circumstances either before or after that income year are irrelevant to the forming of that conclusion. Just this point was made by Dixon J in Gregory, at 778: 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. 37 For these reasons, I conclude that Ms Stockton was not an Australian "resident", within the ordinary meaning of that term, during the 2017 year. 38 Ms Stockton was, though, present in Australia for more than half of the 2017 income year (295 days in all). It was only the Commissioner's state of satisfaction as to her usual place of abode that meant that paragraph (a)(ii) of the definition in s 6(1) of the 1936 Act was inapplicable to her. One of her grounds of objection challenges the inapplicability to her of paragraph (a)(ii) of the definition and thus the state of satisfaction reached by the Commissioner. 39 Like paragraph (a)(i) of the definition of "resident" considered in Harding, paragraph (a)(ii) of the definition comprises two parts. The first part is concerned just with identifying whether a person "has actually been in Australia, continuously or intermittently, during more than one half of the year of income". The second part is what was termed in Harding, at [20], a "carve out". It is an exception, dependent upon a state of satisfaction by the Commissioner. To adopt an exactly apposite observation made by Davies and Steward JJ in Harding, at [20], that exception does not "create an administrative or procedural step to be fulfilled"; instead, it reserves "to the Commissioner a function which forms part of the criteria for residence". 40 Taxation liability criteria dependent upon a state of satisfaction by the Commissioner are not unexaminable in the exercise of the judicial power of the Commonwealth in hearing and determining a taxation appeal: Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353, at 360, per Dixon J (Avon Downs). In Kolotex Hosiery (Australia) Pty Ltd v Commissioner of Taxation (1975) 132 CLR 535, at 568, Gibbs J allowed, in respect of this type of taxation liability criterion that, once error on the part of the Commissioner in being satisfied (or not satisfied) of the kind identified by Dixon J in Avon Downs had been established, "it is right for the court to reach its final conclusion as to whether or not the Commissioner ought to be satisfied by reference to all the material before the Court"; see also to like effect in that case per Stephen J, at 576. 41 In Harding, at [3] - [4], I opined that there may be constitutional reasons related to the prevention of arbitrary exactions by the Executive which explained why the role of the Court in a taxation appeal when confronted with a liability criterion dependent on the Commissioner's satisfaction was not akin to judicial review for jurisdictional error. It is not presently necessary to explore that subject, much less to determine whether, as was put on behalf of Ms Stockton, a discernible error of fact made by the Commissioner in respect of the material before him was sufficient to allow the Court to decide how, on the whole of the evidence, the Commissioner ought to have been satisfied. That is because, having regard to the reasons given by the Commissioner for his objection decision, it is evident (at [15] of those reasons) that he proceeded to reach his satisfaction on the basis of an overly narrow, erroneous conception of the meaning of "place of abode" as it appears in paragraph (a)(ii) of the definition. He assimilated "place of abode" with meaning "home". 42 The error in such a conception was exposed on appeal in Harding. In that case, "place of abode" was qualified by the adjective "permanent" in the relevant part of the definition whereas here it is qualified by the adjective, "usual". The points made by Davies and Steward JJ in Harding (with which I agreed), at [26] and [40], that place of abode "also refers to a town or a country" and additionally by me at [6] - [8] as to the nature of the Commissioner's erroneous conception of the meaning of "place of abode" are pertinent to the present case. As it happens, on the facts of this case, Ms Stockton's usual "place of abode" in the USA, before, during and after her visit to Australia happened to be her family home in Florida. But to elevate those facts into a principle that "place of abode" means a person's home would be to commit just the type of vice about which I cautioned in Harding and to which I have again referred above. 43 It would be possible, as with the ordinary meaning of "resident", to tread along another "weary road" of earlier tax cases in relation to paragraph (a)(ii) of the definition. That path was diligently mapped out for me in submissions made on behalf of Ms Stockton and its alleged navigational errors no less diligently highlighted in the Commissioner's submissions in response. None of the cases concerned bind me. Further, such cases turned on particular facts and any observations in them as to principle in relation to usual "place of abode" were offered without the definitive statements made in Harding as to the meaning of "place of abode". The references which I have made to Harding are not just necessary but sufficient. 44 The upshot then is that it falls to me to decide how, on the whole of the evidence, the Commissioner ought to have been satisfied as to Ms Stockton's "usual place of abode". On the whole of the evidence, there is just no doubt that the Commissioner ought to have been satisfied that Ms Stockton's usual place of abode was certainly the USA and, as it happened, her family home in Florida. That is where she had usually lived for her whole life before coming to Australia. That is to where she returned to live for an extended period after she visited here. And that is where, during her visit here, she intentionally, and permissively, retained her residential base. None of this was coincidental. That her room at the family home remained reserved for her with such of her belongings as she did not consider necessary to take to Australia tells against any conclusion that her coming to Australia marked a departure from the hitherto residential habit of a lifetime. Even now, though her further studies have taken her at least temporarily away from the Florida family home to Oregon, her place of abode still remains in the USA. Each of these facts is eloquent as to where her usual place of abode was located in the 2017 income year. Ms Stockton was a welcome guest entrant to Australia but always a self-supporting, unsettled itinerant, not just of finite but of uncertain duration of presence. Her usual "place of abode" was in the USA. Therefore, approaching the subject of what constitutes a place of abode untrammelled by the Commissioner's erroneous, narrow conception, my conclusion is the same as that reached by the Commissioner when he made his objection decision (and, inferentially, his assessment). Ms Stockton did not fall within paragraph (a)(ii) of the definition, because, on the true meaning of that provision, the Commissioner should have been satisfied that she fell within the exception. 45 The result is that, on neither of the bases raised by her grounds of objection, was Ms Stockton a resident of Australia in terms of the definition in s 6(1) of the 1936 Act during the 2017 income year. She has therefore not proved that the assessment for that year was excessive. 46 Strictly, this conclusion renders it unnecessary to answer the subsidiary question as to the effect of s 18 of the Rates Act. However, what answer to give to that question was fully canvassed in submissions. In these circumstances and to meet the contingency that my conclusion as to her not being a resident may be in error, it is desirable that an answer be given to the subsidiary question. 47 Materially, s 18 of the Rates Act provides: Part-year residency period (1) Subject to subsection (2), the following periods are part-year residency periods in relation to a person in relation to a year of income: … (c) where the person commenced to be a resident during a month of the year of income and continued to be a resident until a time during a subsequent month of the year of income when the person ceased to be a resident - the period from the beginning of the first-mentioned month until the end of that subsequent month. 48 Upon the footing that she fell within the "183 day test" found in paragraph (a)(ii) of the definition of resident in s 6(1) of the 1936 Act, Ms Stockton contended that, notwithstanding s 18 of the Rates Act, this meant that she was a "resident" for the purposes of the 2017 income year for the whole of that income year, even though she had arrived after its commencement and departed from Australia before its end. 49 An immediate difficulty with this contention is that it lacks textual support in s 18 of the Rates Act. There is nothing in the text of s 18 which suggests any intention, even by necessary implication, to qualify the general reference to "resident" by excluding those to whom paragraph (a)(ii) of the definition of "resident" in s 6(1) of the 1936 Act is applicable because, there being no exception arising from the Commissioner's satisfaction as to usual place of abode, they are, per force of time spent in Australia, taken to be a "resident". Especially that is so given that s 4 of the Rates Act requires that the 1936 Act and thus the definition of "resident" be "incorporated, and … read as one, with [the Rates] Act". The evident purpose of s 18 is to provide generally for a deemed period of residency when, but irrespective of how, a person becomes a "resident" as defined during a given income year. 50 As to "how", I can see no logical basis for distinguishing between any of the bases upon which a person might, in terms of the s 6(1) definition, be a "resident". Indeed, it is quite possible that a person might be a resident according to the ordinary meaning of that word and also under, materially, paragraph (a)(ii) of the definition. If, in the example posited as to an academic who came to Australia on sabbatical leave, that academic arrived after the start of an income year, was present more than 183 days and secured during the income year a teaching, research or administrative appointment in Australia extending well beyond that income year, it may be difficult, if not impossible, reasonably to be satisfied that keep usual place of abode during that income year was other than Australia and that they were also, after their arrival, a resident within the ordinary meaning of that term in any event. 51 As it happens, this view as to the unqualified application of s 18 of the Rates Act coincides with that expressed by Deputy President Handley in Re Groves and Federal Commissioner of Taxation (2011) 85 ATR 323, a case to which my attention was quite properly drawn both by Ms Stockton and by the Commissioner. In that case, at [20], the Deputy President observed of s 18 of the Rates Act and the "183 day test": If this section were not to apply in a case such as the applicant's, the section would have no utility and it should be assumed that was not the intention of the legislature. I am satisfied that the respondent's submission that the applicant should be treated as having a part-year residency period of 11 months is correct. 52 For these reasons, were Ms Stockton, on either or each of the bases posited on her behalf, to have been a "resident" as defined - and my conclusion is that she was not - the effect of s 18 of the Rates Act would have been that she was only a resident of Australia for the period 1 September 2016 to 30 June 2017. It would not, however, have had the effect of deeming her to have been a resident in July and August 2016. 53 For completeness, I should add that a sequel to the submission made on behalf of Ms Stockton as to residency and the meaning of s 18 of the Rates Act would necessarily be that, subject to any double taxation relief, she would be taxable in Australia on the USA employment sourced income which she derived during the 2017 income year, prior to her arrival in Australia. There was some exploration in submissions as to what the double taxation consequences might be but the comprehensive rejection of each of the necessary premises renders it unnecessary for me to embark on that exploration. It suffices to record that the consequence of concluding that Ms Stockton was not a "resident" of Australia during the 2017 income year means that she was not liable to income tax in Australia in respect of that USA derived income. The Commissioner has never sought to assess her other than on this basis. 54 For these reasons, Ms Stockton's appeal against the objection decision must be dismissed. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

At a glance

Court

Decision date

Before

Source

Judgment (10 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (9)

Cited By (3)