Federal Commissioner of Taxation v. Efstathakis.
Judges:Meares J
Court:
Supreme Court of New South Wales
Meares J.: The respondent is a Greek national. Some time prior to August 1968 she applied in Greece for the position of personal secretary-typist to the Greek press attache in Australia. The Greek Press and Information Service Office and its staff are part of the Greek Ministry of Foreign Affairs. Having been told unofficially in Greece that she would get the job she sought and was granted an assisted migrant passage to Australia arriving here in August 1968 and from then, until her appointment to the Greek Press and Information Service, she sought and obtained employment in Australia in the private sector.
She was appointed as assistant-typist of the Greek Press and Information Service in Sydney by a Ministerial decision in Greece of 12th December, 1969, which was formally gazetted in that country on the following day. She was advised of her appointment on 17th December, 1969, and on 23rd December, 1969, duly took an oath of office and thereafter became a permanent public servant with the Greek Government and was issued with a special identity card and a ``service passport''. She was required to and did join the Greek Government Superannuation scheme, and according to her evidence, being a public servant of that country, she was, in accordance with the Greek law, deemed to be domiciled in Greece from the date of her appointment irrespective of where she might be called on to serve from time to time. It was conceded that all her income here including her official salary was liable to tax in Greece and she stated in evidence that she became subject to being transferred to any country where her country was represented. Her salary, after the necessary deductions for tax and superannuation had been made, was paid in
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Australia by cheques drawn by the Greek Government on a Greek Bank and forwarded to the Greek Press and Information Service in Sydney.In July, 1969, the respondent married a gentleman of Greek nationality who, in 1965, had arrived in Australia on a migrant visa from Egypt with his mother and father with the intention of staying permanently in Australia. He obtained permanent employment here and his intention of permanently residing in Australia crystallized in his seeking and being granted Australian citizenship in November 1970. The appellant met her future husband in late 1968. They now have a daughter and in December 1972, they purchased a home unit in which they presently reside and which is subject to a mortgage repayable over a period of 25 years. The appellant has lived continuously in Australia from August 1968 to the present, with the exception of visits of a matter of weeks to Greece. In 1974 and 1975 she described herself in her outgoing passenger card, pursuant to the Migration Act, 1959, as a resident departing temporarily, and in her incoming passenger card relating to her arrival in Australia in 1968, she described the purpose of her journey to Australia as being for ``settlement in Australia''. As and from her appointment in December 1969, the Consul General performed the duties of the press attache until the first press attache, a Mr. Katoulis, arrived in January, 1970. With the information then available to him as to the rate of tax levied by the Greek Government on personal exertion income the Commissioner reached a figure of $1,657 as being the respondent's assessable income earned in the last six months of the year ending 30th June, 1970, and the respondent was duly assessed for tax on such income in the sum of $252.07. There is no dispute as to the correctness of the assessment assuming that the respondent was taxable.
An exemption was claimed by the respondent under the undermentioned four heads: -
- 1. Section 23AAA of the Income Tax Assessment Act 1936 which exempts certain income of consular representatives and of their staffs and families but which is subject to the specific limitation provided in subsec. (6) that ``This section does not exempt from income tax any income derived by, or by a member of the family of, a person who is an Australian citizen or is ordinarily resident in Australia.''
- 2. Section 23(a)(ii) of the said Act which, subject to certain conditions, exempts certain income of a representative in Australia of the government of a foreign country or a member of the official staff of such representative ``if the representative or member, as the case may be, is not an Australian citizen and is not ordinarily resident in Australia...''
- 3. Article 37 of the Vienna Convention on Diplomatic Relations as applied in Australia by the Diplomatic Privileges and Immunities Act 1967 which, when read with Article 34 of the Convention, operates to exempt, inter alia, from Australian income tax the official income of the administrative and technical staff of a foreign mission in Australia, but Article 37 of the Convention restricts the exemption to individuals who are ``not nationals of or permanently resident in the receiving State.''
- 4. Section 23(q) of the Income Tax Assessment Act which exempts income derived by a resident of Australia from sources out of Australia where that income is not exempt from income tax in the country where it is derived. (The Commissioner acknowledges that the income in question is not so exempt.)
A disputed question of fact was as to whether the respondent was a member of the administrative and technical staff of a foreign mission in Australia within the meaning of the Vienna Convention on Diplomatic Relations. Tendered in evidence were five certificates. The first was a certificate of the Consul General for Greece dated 21st July, 1970, which stated that the respondent was ``a permanent member of the staff of this Consul General'' and that her remuneration came from Greece. A second certificate under the hand of the Ambassador of Greece dated 6th July, 1972, stated inter alia that she was a member of the staff of the Greek Press and Information Service. A third certificate under the hand of the Consul General for Greece dated 9th August, 1972, stated the respondent was working for the
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Greek Press and Information Service, ``which is attached to the Royal Consulate General of Greece in Sydney and that her salary was forwarded to her from the Royal Ministry of Foreign Affairs''. A fourth certificate under the hand of the Consul General stated that the respondent ``was an employee of our Consulate General, the Greek Press and Information Service being a section of it''. A fifth certificate under the hand of the Ambassador of Greece dated 30th July, 1973, stated that the respondent ``being a member of the Consulate General of Greece in Sydney (Press and Information section) is considered, in accordance with the Greek law, as domiciled in Greece''. In her evidence before the Board of Review the respondent stated that the Press and Information Service was located in Sydney in the office of the Consul General but in answer to a question by Mr. Fairleigh Q.C., a member of the Board, as to whether the work she was doing was associated with the Embassy as such or with the Consulate office she replied:``I understand what you say but I can't explain to you properly. That is why I am thinking how to put it. I work for the Embassy, that is what you want to know, is it not? I worked under the diplomatic how you call it?''
To a further question by Mr. Fairleigh as to why her work should be described as attached to the Embassy rather than attached to the Consulate office she replied:
``Of course the work I do is the work that comes from the Embassy and the Ambassador and the press attache belong to the Embassy. We don't have anything to do with the Consulate job that is here. We are only situated in the same office with them.''
Later on in her evidence she said that at the relevant time:
``We are a section of the Consulate but really we come from the Embassy, under the Embassy.''
Whereupon the Chairman said:
``Would it be possible for you to get a statement to that effect from someone in authority, either the Ambassador or the Consul, that that was the position during 1970?,''
and another member, Mr. O'Neill, added:
``That you were under the control of the Embassy and not under the control of the Consul,''
to which the answer was:
``Of course I can, but it will be from the recent Ambassador, the one that is now.''
The Chairman then said:
``It is important that it relates to the particular year ended 30th June, 1970, and that could be of great assistance if you can get it.''
It was then made clear to the respondent's representative that the certificate that was required was a certificate to the effect that the respondent belonged to and worked under and reported directly to the Ambassador and not the Consul General and was under the control of the Ambassador and the suggestion was made by Mr. Fairleigh Q.C., that a certificate should be sought from the Ambassador within the terms of Article 37(2) of the Vienna Convention to the effect that she was a member of the administration and technical staff of the Greek mission.
In describing the Certificate of the Ambassador of Greece on 6th July, 1972, as being equivocal the Chairman said:
``Subject to what my colleagues think, if we could just have that certificate taken a little further to the extent where it is indicated the Greek Press and Information Service is under the control of the Consulate General or part of the Embassy or part of the Consulate General set-up... that is the sort of thing I would indicate to you would be of assistance to us so that when reciting the facts we could state exactly what Mrs. Efstathakis' position is so far as employment is concerned. Of course this is critical to the issue on the question of how she fits into the staff of this foreign power.''
Notwithstanding the concern of the members of the Board to have the situation clarified and their views as to the importance of obtaining further evidence, a further document tendered subsequent to the hearing of the evidence before the Board of Review but before its finding, was one signed on behalf of the Ambassador dated 30th July,
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1975, which described the respondent as being secretary of the Greek Press and Information Service at the Consulate General of Greece in Sydney, that the Greek Press and Information Service operated from the Consulate General of Greece in Sydney and that the respondent had been included in the staff returns of the Consul General of Greece in Sydney as secretary from the date of her appointment until the date of the certificate.It is agreed that the principles which I should apply in determining the appeal are those set forth by Walsh J. in
Krew v. F.C. of T. 71 ATC 4213 at p. 4216 where his Honour said:
``In the circumstances of this case I think that I am not limited to the question whether the Board's decision was open to it on the evidence which it heard. I have to consider whether or not its decision was right... I am not limited to asking myself whether the findings of the Board were based on a misapprehension of the evidence or of the questions which had to be decided or were manifestly wrong. I must make my decisions as to the facts.''
It is further agreed that there is no presumption that the Commissioner's original assessment was correct, cf.
C. of T. v. Finn (1960) 103 C.L.R. 165 at p. 169.
The respondent's claim for exemption under sec. 23AAA and 23(a)(ii) is on the grounds that under the former section she was not a member of the family of a person who is an Australian citizen or was not ordinarily resident in Australia and under the latter section that she was not ordinarily resident in Australia. In
Levene v. I.R. Commrs. (1928) A.C. 217, Viscount Cave L.C. at p.225 said of the expression ``ordinary residence'' used in various of the English Income Tax Acts:
``I think that it connotes residence in a place with some degree of continuity and apart from accidental or temporary absences. So understood, the expression differs little in meaning from the word `residence' as used in the Acts; and I find it difficult to imagine a case in which a man while not resident here is ordinarily resident here.''
In
I.R. Commrs. v. Lysaght (1928) A.C. 234, Lord Buckmaster said at p. 248:
``If residence be once established ordinarily resident means in my opinion no more than the residence is not casual and uncertain but that the person held to reside does so in the ordinary course of life.''
Any submission that the respondent was resident in Australia during the relevant time only because of the exigencies of her service is, in my opinion, beside the point. The respondent, as already indicated, has continuously resided in Australia from August 1968 until this date. In July 1969 she married a Greek citizen who had resided in Australia continuously since 1965 and who, at the end of 1970, became a permanent citizen of Australia. She and her husband, since the date of their marriage, have set up a marital establishment and had their home in Sydney ever since that date.
In the light of these facts the respondent was, in my opinion, at the relevant time ordinarily resident in Australia within the meaning of both sections and was additionally a member of the family of a person ordinarily resident in Australia within the meaning of sec. 23AAA. Mr. O'Neill, a member of the Board did not deem it necessary to consider the application of either section but I agree generally with the reasons advanced by the Chairman and the third member of the Board, Mr. Fairleigh Q.C., to support their views that the respondent was not entitled to exemption under either of the sections.
To be entitled to exemption under Article 37 of the Vienna Convention (supra) two conditions must be fulfilled, viz: that the respondent is a member of the administrative and technical staff of a foreign mission in Australia and that she was not at the relevant time permanently resident in Australia.
The evidence established that the Consul General described the respondent as a permanent member of the staff in one certificate and as an employee of the Consulate General in another, that the Ambassador in his certificate of 30th July, 1973, described the respondent as a member of the Consulate General in Greece in Sydney and notwithstanding the concern of the Board, clearly expressed, for positive evidence that the respondent was a member of the administrative and technical staff of
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the Greek Embassy the final certificate from the Ambassador of that country far from certifying to that effect, stated that the Greek Press and Information Service of which the respondent was a member, operated from the Consulate General in Greece in Sydney and that the respondent had been included in the Consul General's staff returns. There was, moreover, no evidence that the Greek Embassy had obtained permission to establish part of its mission away from Canberra, notwithstanding the fact that since 1967 the Australian Government had warned all foreign diplomatic and consular services in Australia that no diplomatic privileges and immunities under the 1967 Act could be extended indefinitely to any officers or staff of diplomatic missions stationed outside of Canberra, or any evidence that the respondent was at any relevant time included in any returns by the Greek Embassy as to its members.As I see the position there is really no evidence that the respondent was a member of the administrative and technical staff of the Greek Embassy, and there is a strong presumption raised by the abovementioned certificates that she was in fact, a member of the Consulate General.
I am unable also, with due respect, to accept the view of the majority of the Board that the respondent was not permanently resident in Australia within the meaning of Article 37 of the Convention.
In my opinion the word ``permanent'' is used in a comparative sense. It is not used in the sense of everlasting but in contradistinction to words such as temporary or transitory.
Henriksen v. Grafton Hotel Ltd. (1942) 2 K.B. 184 at p. 196;
Applegate v. F.C. of T. 78 ATC 4054; cf. In
re Gape Dec'd (1952) 1 Ch. 743.
Just as in considering the question of domicile, acts and events subsequent to the time at which a question of domicile arises are admissible, In re Grove (1888) 40 Ch.D. 216, so acts and events subsequent to the relevant period are admissible on the question as to whether or not the respondent was permanently resident in Australia in the tax year under review.
In this connection the facts I have relied upon in considering whether or not the respondent was ordinarily resident ``in Australia'' are in point.
I turn finally to the question as to whether the respondent is exempt on the basis that her income during the relevant time was derived from a source outside of Australia. Notwithstanding the views of the majority of the Court in
F.C. of T. v. French (1957) 98 C.L.R. 398 of the importance attributed in that case to where the work of the taxpayer was performed, in
F.C. of T. v. Mitchum (1965) 113 C.L.R. 401, Barwick C.J., in delivering the judgment of the court, after pointing out that what is the source of the income or whence it is derived is a ``hard practical matter of fact'' (see
Nathan v. F.C. of T. (1918) 25 C.L.R. 183 at pp. 189, 190) said at p. 407:
``The conclusion as to the source of income for the purpose of the Act is a conclusion of fact. There is no statutory definition of `source' to be applied, the matter being judged as one of practical reality. In each case, the relative weight to be given to the various factors which can be taken into consideration is to be determined by the tribunal entitled to draw the ultimate conclusion as to source.''
and at p. 408:
``It is sufficient for present purposes to say that neither French's case ((1957) 98 C.L.R. 398) nor any other of which I am aware lays it down that for the purposes of the Act the source of wages, salary or remuneration for services performed is necessarily, in default of special circumstances, in the place where the work is done or the services performed.''
And in Mitchum's case it was held that the Board of Review had not erred in law in having found that the source of the income was not an Australian source even though it was in respect of a sum calculated for the period the respondent worked in Australia.
Looking at the matter in a practical way, what was the respondent's source of income? She applied for and was appointed to her position by the Greek Government, she was an employee of that Government as evidenced by the publication of her appointment in the official Gazette of that Government and her oath of office, and the
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income which was brought to tax was derived by the respondent from Greece. Notwithstanding that the respondent's work was in Australia, I agree with the majority of the Board of Review generally, and for the reasons advanced by them, that her income was derived from a source out of Australia within the meaning of sec. 23(q).The appeal accordingly is dismissed. The appellant will pay the costs.
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