Willard v FC of T

Members:
Dr L Kirk SM

Tribunal:
Administrative Appeals Tribunal, Sydney

MEDIA NEUTRAL CITATION: [2022] AATA 3723

Decision date: 2 September 2022

Dr L Kirk (Senior Member)

1. Mr Paul Willard ('the Applicant') was at all relevant times an officer in the Australian Border Force ('ABF'). During the income year ended 30 June 2017, the Applicant participated in a temporary secondment to the Papua New Guinea Customs Service during which he was located in Papua New Guinea ('PNG').^[1] The terms of reference of the secondment are at Exhibit R1, T11, 56 - 58. This secondment occurred pursuant to the Strongim Gavman Program ('SGP').^[2] The management framework for the SGP is at Exhibit R1, T11, 64 - 154. The Applicant's role during this secondment was as a Customs Adviser - Trade Facilitation.

2. The SGP consisted of Australian official development assistance ('ODA') to PNG in the form of staff in Commonwealth Government Departments being seconded to counterpart PNG organisations to assist in capacity development. The SGP was facilitated by the Joint Agreement of Enhanced Cooperation between PNG and Australia done at Port Moresby on 30 June 2004 ('Enhanced Cooperation Agreement)', which was given the force of law domestically in PNG by the Enhanced Co-operation between Papua New Guinea and Australia Act 2004 (Papua New Guinea).^[3] Exhibit R1, T11, 74; On or around 1 July 2017, the SGP ceased and was replaced by another program referred to as the Institutional Partnerships Program (‘IPP)). The Applicant’s secondment thereafter continued under the auspices of the IPP.

3. On 1 August 2017, the Applicant lodged his income tax return for the income year ended 30 June 2017. This stated that his taxable income was $170,828.^[4] Exhibit R1, T3, 12. On 8 August 2017, the Commissioner of Taxation ('the Respondent') issued to the Applicant a notice of assessment of income tax for the income year ended 30 June 2017 consistent with the Applicant's income tax return.^[5] Exhibit R1, T4, 18.

4. On 31 January 2019, the Applicant lodged an amended income tax return for the income year ended 30 June 2017. This stated that his taxable income was $11. On 30 April 2019, the Respondent issued to the Applicant a notice of amended assessment of income tax for the income year ended 30 June 2017 consistent with the Applicant's amended income tax return.^[6] Exhibit R1, T5, 21; T6, 27.

5. On 4 July 2019, the Respondent issued to the Applicant a further notice of amended assessment of income tax for the income year ended 30 June 2017, which assessed the Applicant as having taxable income of $173,506.^[7] Exhibit R1, T8, 38. On 25 September 2019, the Applicant purported to object to the assessment of income tax that was the subject of the further notice of amended assessment.^[8] Exhibit R1, T9, 42-46.

6. On 10 February 2020, the Respondent disallowed the Applicant's objection ('the Reviewable Decision').^[9] Exhibit R1, T2, 8-10.

7. On 3 April 2020, the Applicant lodged with the Tribunal an application for review of the Reviewable Decision.^[10] Exhibit R1, T1, 1-7.

8. The matter was heard by the Tribunal on 27 April 2022.

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The material before the Tribunal consists of:

• T-Documents (T1-T15, pages 1-201) filed 7 May 2020 - Exhibit R1
• Respondent's Tender Bundle filed 13 October 2021 - Exhibit R2
• Affidavit of Brett Barry White dated 13 September 2021, filed on 17 September 2021 - Exhibit R3
• Statement of the Applicant filed 5 March 2021 - Exhibit A1
• Applicant's Tender Bundle filed 8 October 2021 - Exhibit A2
• Applicant's Bundle of Documents filed 26 April 2022 - Exhibit A3
• Annexures to the Applicant's Statement of Facts, Issues and Contentions reply filed 11 May 2021 - Exhibit A4

10. The Tribunal has reviewed the evidence before it and refers to all relevant materials below.

LEGISLATIVE AND POLICY FRAMWORK

Section 23AG Income Tax Assessment Act

11. Section 23AG of the Income Tax Assessment Act 1936 (Cth) ('ITAA') provides an exemption from income tax in relation to the income of individuals derived from work in a foreign country when certain conditions are met. It relevantly provides:

23AG Exemption of income earned in overseas employment

(1) Where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service are exempt from tax.

(1AA) However, those foreign earnings are not exempt from tax under this section unless the continuous period of foreign service is directly attributable to any of the following:

(a) the delivery of Australian official development assistance by the person's employer (except if that employer is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997));

(b) the activities of the person's employer in operating a public fund that:

(i) is covered by item 9.1.1 or 9.1.2 of the table in subsection 30-80(1) of the Income Tax Assessment Act 1997 (international affairs deductible gift recipients); and

(ii) meets the special conditions mentioned in that item;

(c) the activities of the person's employer, if the employer is exempt from income tax because of paragraph 50-50(1)(c) or (d) of the Income Tax Assessment Act 1997 (prescribed institutions located or pursuing objectives outside Australia);

(d) the person's deployment outside Australia as a member of a disciplined force by:

(i) the Commonwealth, a State or a Territory; or

(ii) an authority of the Commonwealth, a State or a Territory;

(e) an activity of a kind specified in the regulations.

(2) An amount of foreign earnings derived in a foreign country is not exempt from tax under this section if the amount is exempt from income tax in the foreign country only because of any of the following:

(a) a law of the foreign country giving effect to a double tax agreement within the meaning of Part X;

(b) a double tax agreement within the meaning of Part X;

(c) provisions of a law of the foreign country under which income covered by any of the following categories is generally exempt from income tax:

(i) income derived in the capacity of an employee;

(ii) income from personal services;

(iii) similar income;

(d) the law of the foreign country does not provide for the imposition of income tax on one or more of the categories of income mentioned in paragraph (c);

(e) a law of the foreign country corresponding to the International

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Organisations (Privileges and Immunities) Act 1963 or to the regulations under that Act;

(f) an international agreement to which Australia is a party and that deals with:

(i) diplomatic or consular privileges and immunities; or

(ii) privileges and immunities in relation to persons connected with international organisations;

(g) a law of the foreign country giving effect to an agreement covered by paragraph (f).

(7) In this section:

employee includes:

(a) a person employed by a government or an authority of a government or by an international organisation; or

(b) a member of a disciplined force.

foreign earnings means income consisting of earnings, salary, wages, commission, bonuses or allowances, or of amounts included in a person's assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes), but does not include any payment, consideration or amount that:

(a) is included in assessable income under Division 82 or Subdivision 83-295 or Division 301, 302, 304 or 305 of the Income Tax Assessment Act 1997; or

(b) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997; or

(c) is mentioned in paragraph 82-135(e), (f), (g), (i) or (j) of the Income Tax Assessment Act 1997; or

(d) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997.

foreign service means service in a foreign country as the holder of an office or in the capacity of an employee.

Taxation Ruling 2013/7

12. Taxation Ruling 2013/7 ('TR2013/7') relevantly provides:

What this Ruling is about

1 This Ruling sets out the Commissioner's views on the interpretation of aspects of subsection 23AG(1AA) of the Income Tax Assessment Act 1936 (ITAA 1936). This Ruling specifically considers:

• what is the 'delivery of Australian official development assistance by the person's employer' within the meaning of paragraph 23AG(1AA)(a)

• when foreign service is 'directly attributable' to the activities listed in subsection 23AG(1AA)

• what is a 'disciplined force' within the meaning of paragraph 23AG(1AA)(d)

• what is the meaning of 'deployment' within the meaning of paragraph 23AG(1AA)(d); and

• who is a 'member' of a disciplined force within the meaning of paragraph 23AG(1AA)(d)

2 This Ruling applies to Australian-resident individuals serving in a foreign country as an employee or office holder.

3 This Ruling does not consider terms in paragraphs 23AG(1AA)(b) or (c) and does not deal with the period of foreign service. Taxation Determination TD 2012/8 Income tax: what types of temporary absences from foreign service form part of a continuous period of foreign service under section 23AG of the Income Tax Assessment Act 1936? deals with breaks in foreign service.

4 All references in this Ruling are to the ITAA 1936 unless otherwise indicated.

Ruling

Delivery of Australian official development assistance by an employer.

5 'Australian official development assistance' refers to activities or programs in respect of which the funding has been (or would properly be) classified, in whole or in part, by the Australian Government as official development assistance (ODA)

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for the purposes of reporting to the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC). The Australian Government bases its classification of funding as Australian ODA solely on the directives of the OECD DAC.

6 In the context of paragraph 23AG(1AA)(a) 'delivery of Australian ODA' means the act of providing, giving or sending forth the relevant Australian ODA by the employer. The 'delivery of Australian ODA by the person's employer' is the doing of the activities which are carrying out or sending forth the Australian ODA. The term 'delivery' includes activities which are necessary for or facilitate carrying out the Australian ODA. Therefore, an employer is delivering Australian ODA for the purposes of section 23AG where they are undertaking activities necessary for or which facilitate the carrying out of Australian ODA even though the expenditure on those particular activities may not be classified as Australian ODA by the Australian Government. Delivery of Australian ODA does not necessarily require an employer to undertake all activities associated with the Australian ODA.

Directly attributable to

7 For the purposes of paragraphs 23AG(1AA)(a) to (c) an employee's foreign service is 'directly attributable to' the activities of the employer where the requisite activities of the employer are the immediate and controlling reason why the employee is engaged in that foreign service. Similarly, for the purposes of paragraph 23AG(1AA)(d), the foreign service of an employee deployed as a member of a disciplined force is 'directly attributable' to that deployment where that deployment is the immediate and controlling reason why the employee is engaged in foreign service. This condition must be satisfied throughout the continuous period of foreign service in respect of which the foreign earnings are derived before the earnings can be eligible for exemption under section 23AG.

8 Where an employee is working for more than one employer at the same time, only the foreign earnings derived from the foreign service which meets the conditions in paragraph 7 of this Ruling will be eligible for exemption under section 23AG.

Disciplined force

9 The phrase 'disciplined force' in paragraph 23AG(1AA)(d) refers to the Australian Defence Force (ADF), Australian Federal Police (AFP) and the State and Territory police forces.

Deployed

10 A person is 'deployed' within the meaning of paragraph 23AG(1AA)(d) if, and only if, they have been directed to perform duties overseas by the Commonwealth, a State or a Territory or an authority thereof in their capacity as a member of a disciplined force. This includes the member being sent overseas to undertake or participate in study or training activities in their capacity as a member of the relevant disciplined force.

Member

11 Any person subject to the strict code of conduct governing the above forces is a 'member' for the purposes of paragraph 23AG(1AA)(d). Employees of the ADF or AFP, State or Territory police forces who have undertaken the oath or affirmation required to perform operational duties are 'members'.

12 The term member includes employees referred to in paragraph 11 of this Ruling that are part of an international peacekeeping force in their capacity as an ADF, AFP or State or Territory police force member.

13 Australian Public Service (APS) and State and Territory Public Service appointees deployed alongside the disciplined force are 'members' of a 'disciplined force' where they are effectively integrated into the 'disciplined force' and are subject to the same command structure and

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the same rules of conduct as those persons described in paragraph 11 of this Ruling.

…

Example 11 - Australian Federal Police deployed overseas

49 Catherine, a resident of Australia for income tax purposes, is a member of the AFP within the meaning of the Australian Federal Police Act 1979 (AFP Act 1979) and is sent by the AFP as part of the Regional Assistance Mission to Solomon Islands (RAMSI).

50 Catherine has been 'deployed as a member of a disciplined force' for the purposes of paragraph 23AG(1AA)(d).

51 Similarly if Catherine was employed by the New South Wales Police Force and was designated as a police officer within the meaning of section 11 of the Police Act 1990 (NSW), she would also be 'deployed as a member of a disciplined force'.

Example 12 - APS employee acting in a support role to ADF

52 Doug, a resident of Australia for income tax purposes, is employed by the Department of Defence as an APS employee.

53 Doug is deployed alongside ADF personnel to play an operational support role in a foreign country.

54 Doug has signed an official ADF document which states that he is subject to defence force discipline during the course of his deployment giving Doug the status of 'defence civilian' under the Defence Force Discipline Act 1982. Therefore, for the duration of this deployment, Doug is under the command of the ADF.

55 As Doug is working under identical conditions to ADF personnel, is subject to the same code of conduct and working under the same command structure for the duration of the deployment he is considered to be a member of a disciplined force under paragraph 23AG(1AA)(d).

ISSUES FOR DETERMNATION

13. The issues for determination by the Tribunal are as follows:

1) Whether the Applicant's continuous period of foreign service was directly attributable to his deployment outside Australia as a member of a disciplined force referred to in s 23AG(1AA)(d) ITAA ('Section 23AG(1AA)(d) issue').
2) Whether s 23AG(2) ITAA prevented the Applicant from being entitled to any exemption under s 23AG to which he was otherwise entitled ('Section 23AG(2) issue').
3) If the Applicant was entitled to an exemption under s 23AG ITAA, what his taxable income and tax payable thereon was for the income year ended 30 June 2017 ('Quantification issue').

EVIDENCE BEFORE THE TRIBUNAL

Applicant's employment

14. At all relevant times the Applicant was an employee of the Australian Public Service ('APS') working in the Department of Immigration and Border Protection ('the Department') as part of the ABF under the Australian Border Force Act 2015 (Cth) ('ABF Act').^[11] Respondent’s Statement of Facts, Issues, and Contentions (Respondent’s SFIC), at [5]. He has been a sworn officer as required by section 24 of the ABF Act since 6 July 2015.^[12] Exhibit A1, 1.

15. The ABF was established on 1 July 2015 as Australia's frontline border law enforcement agency. The members of the ABF are a subset of uniformed officers that have sworn an oath and can carry firearms. The ABF is an operationally independent agency under the Home Affairs Portfolio.^[13] Exhibit R1, T14, 196.

16. The Applicant was a resident of Australia for tax purposes at all times during the year ended 30 June 2017.

Background to the Strongim Gavman Program

17. The management framework to the SGP summarises the program as follows:^[14] Exhibit R1, T11, 68

The Strongim Gavman Program (SGP) is a whole-of-government engagement program involving Australian Government agencies who provide capacity development assistance and advice to counterpart PNG Government agencies. Senior officials from the Australian public sector are placed in PNG Government agencies for two to three

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years to provide specific public service policy and strategic advice and capacity development, including administrative, leadership and management support. SGP officials can range from the Executive Level to Senior Executive Service officers. These officials work within broader aid program objectives to assist their counterpart agencies to achieve their mandated contributions to economic and sector outcomes.

18. The SGP involved staff within Commonwealth Government Departments being seconded to counterpart agencies in the PNG Government to assist personnel in those PNG Government agencies to develop skills and knowledge and to assist thems to develop policies and practices.^[15] Exhibit R3, at [6].

19. The Australian participants in the SGP were drawn from a wide variety of Commonwealth Government Departments covering a range of disciplines. Those participants included the following:

(a) Participants who worked in the PNG Office of the Public Prosecutor;^[16] Exhibit R2, 72.
(b) Participants from the then Department of Customs and Border Protection, including those who assisted in relation to customs and immigration functions, such as reducing customs clearing times;^[17] Ibid, 76, 89.
(c) Participants who were transport advisors;^[18] Ibid, 79.
(d) Participants from the Commonwealth Attorney-General's Department who assisted with law and justice;^[19] Ibid, 83.
(e) Participants from the Australian National Audit Office;^[20] Ibid, 85.
(f) Participants from the Australian Taxation Office;^[21] Ibid, 86-87.
(g) Participants from the Department of Finance;^[22] Ibid, 88.
(h) Participants from the Department of Infrastructure and Regional Development;^[23] Ibid, 91.
(i) Participants from Treasury and the Australian Office of Financial Management.^[24] Ibid, 92.

20. The APS employees who participated in the SGP were subject to a Code of Conduct. This was part of the framework to the program.^[25] Reproduced at Exhibit R1, T11, 99-102. That Code of Conduct provided for the following obligations on APS employees:

(a) An obligation to comply with local laws,^[26] Clause 6. together with an obligation to comply with the Papua New Guinean Service Code of Business Ethics and Conduct, which was applicable to the Papua New Guinean agencies to which the Australian participants were seconded;^[27] Clause 10.
(b) Obligations to be culturally sensitive;^[28] Clauses 8, 18-19.
(c) Obligations not to accept bribes, gifts or other benefits or advantages;^[29] Clauses 11-12.
(d) Obligations not to engage in any activity likely to bring the Strongim Gavman Program, Australia or Papua New Guinea into disrepute;^[30] Clauses 13-15.
(e) An obligation to take reasonable steps to ensure that family members respect local laws and customs.^[31] Clause 17.

21. The presence and discharge of functions in PNG by Australian participants in the SGP was facilitated by the Enhanced Cooperation Agreement.

22. Under Articles 5.1 and 5.2 of the Enhanced Cooperation Agreement, Australian personnel are to work in government departments and agencies of PNG and, in doing so, are to exercise the relevant powers and duties of the position or office in which they are working.

The Applicant's participation in the SGP

23. The Applicant's role when he participated in a secondment pursuant to the SGP was as a Customs Advisor in Trade Facilitation in the PNG Customs Service ('PNGCS)'.^[32] Exhibit R2, 146, 242. This role was advertised on the Department's intranet webpage. The Applicant responded to this advertisement and successfully applied for the role.^[33] Exhibit R2, 139; Exhibit R3 at [10]. It was not a requirement of the role that the Applicant be, or have been, an officer in the ABF.^[34] Exhibit R3 at [10]; Exhibit R2, 142-144. The Applicant commenced his role in PNG on 20 February 2017.^[35] Undated letter from the applicant addressed to the Tribunal served with the applicant’s Statement of Facts, Issues and Contentions (‘Applicant Letter’) at 1.

24. In his role as a Customs Advisor in Trade Facilitation, the Applicant was one of three APS employees from the Department seconded to PNGCS, with three other APS employees from the Department being seconded to the PNG Immigration and Citizenship Service Authority.^[36] Exhibit R3 at [8].

25.

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In its annual report, the PNGCS described the role of the secondees on the SGP as follows:^[37] Exhibit R2, 38.

They provide policy advices and guidance on matters affecting Customs operations including administration, where their inputs are sought.

26. The Applicant was generally based in the PNGCS office building.^[38] Exhibit R3 at [11]; Exhibit R2, 155. He normally wore business attire, however sometimes he wore an ABF uniform when training PNG personnel.^[39] Exhibit R2, 155. The Applicant did not carry a firearm.^[40] Ibid.

27. The Applicant described his role while on the secondment as follows:^[41] Applicant Letter at 2.

The focus of the role is to provide official development assistance, transfer of skills and knowledge and development of discreet [sic] initiatives to sustainably increase the capability of the PNG Customs Service.

28. In particular, the Applicant's role as a Customs Advisor in Trade Facilitation included drafting policy papers and recommendations for the PNGCS and advising it on its policies.^[42] Exhibit R3 at [12]. In doing so, the Applicant's role was as an advisor to the Assistant Commissioner of the PNGCS.^[43] Exhibit R3 at [13].

29. The Applicant explained that his role focussed on the following activities:^[44] Exhibit R2, 155.

• Improving business processes in relation to Cargo Management and Compliance.
• Supporting preparations to operationalise the Port Moresby and Lae Container X-Ray Facilities.
• Assisting PNG to meet their obligations under the World Trade Organisation's Agreement on Trade Facilitation.
• Supporting PNG Customs Modernisation Branch with support and advice on initiatives such as Trusted Trader, Customs land border functions and combatting illicit trade.
• Providing support and advice in relation to border security measures in the lead up to the APEC Summit in PNG in 2018.
• Strengthening PNG Customs Maritime capability by providing vessel training on stabi-craft vessels gifted by Australian Government. Including developing policies and training on arriving and departing international small craft.

30. In relation to the Container X-Ray Facilities ('CEF'), this included delivering training, providing mentoring, coaching and assistance, supporting internal and external stakeholder engagement, developing workload management tools, reviewing training packages and reviewing standard operating procedures and general orders.^[45] Exhibit A2, 145.

31. The Applicant engaged in capacity building initiatives to ensure the efficient administration of the postal and air cargo streams that facilitated trade while maintaining border security, including developing responses to recommendations such as the "Air Cargo Notice scheme" and the "Continuing Permissions scheme", and developing Post General Orders.^[46] Exhibit R2, 172.

32. The Applicant supported the development of the "Trusted Trader" scheme and the "Authorised Economic Operator" scheme, including through providing input into and supporting presentations on these schemes at industry seminars. He was also involved in drafting the "Trusted Trader SOPs".^[47] “Standard Operating Procedures”: Exhibit A2, 145; Exhibit R2, 173. The "Trusted Trader" scheme was a scheme designed to reduce red tape for "Trusted Traders" at the PNG border and to expedite the flow of cargo into and out of PNG.^[48] Exhibit A2, 143.

33. The Applicant supported PNGCS to promote a "clear shared understanding by stakeholders" of the purpose of the "Gateway Clearance", relating to cargo management.^[49] Exhibit R2, 175. He also supported the implementation of a "Time Release Study" capability, which provided for an objective measurement of import clearance times.^[50] Ibid. The Applicant further assisted in the implementation of automated systems for customs data.^[51] Exhibit A2, 143.

34. One or more APS employees in the Department participating in the SGP secondment supported the Chief Commissioner of the PNGCS in the development of a slide presentation for a budget bid, and in drafting the terms of reference for committees to support executive leadership and senior management.^[52] Exhibit R2, 183. It is unclear whether this is something in which the applicant was personally involved.

35. The Applicant referred to nine activities that he says "were undertaken jointly" with the Australian Federal Police ('AFP') and the Australian Defence Force ('ADF').^[53] Applicant Letter at 2-3. In subsequent correspondence, the Applicant

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clarified the extent of his involvement in these activities and the timing of these activities.^[54] Exhibi R2, 161-162.

36. Only three of those activities occurred during the 2017 income year. The Applicant's role in each of these activities was limited as follows:^[55] Respondent’s Submissions at [114].

(a) The Maritime Security Desktop Exercise - the Applicant attended this, but in an observing capacity.
(b) Joint Cross Border Patrols - the Applicant did not attend these; his role was to assist in coordinating the patrols with PNGCS officials.
(c) Delivery of Investigations Program - the Applicant did not attend this; his role was to promote attendance and assist coordination.

37. The balance of the activities only occurred in later income years. As to two of those activities - Op Green Star and the facilitation of attendance of PNGCS officers at the Australian Institute of Policing Management in Manly, NSW - the Applicant did not attend either of those activities. His role was to promote attendance and assist coordination of PNGCS staff.^[56] Ibid at [115].

38. The Applicant was involved in two more of these activities - he facilitated a training program in relation to vessels that had been given to PNGCS, and he provided capability development, advice and guidance to PNGCS for APEC 2019.^[57] Ibid at [116].

39. The remaining activity is described by the Applicant as being security classified.^[58] Respondent’s Submissions at [117].

SUBMISSIONS

Applicant

Section 23AG(1AA)(d) issue

40. Guidelines on the meaning of the phrase in s 23AG(1AA)(d) ITAA 'the person's deployment outside Australia as a member of a disciplined force…' is provided in the Explanatory Memorandum and TR 2013/7 ('TR 2013/7') which was issued on 27 November 2013. TR2013/7 includes references to caselaw and the meaning of 'disciplined force' in the Australian Oxford and Macquarie dictionaries.^[59] Applicant’s Submissions at [4].

41. Where there is uncertainty as to the meaning of a word or phrase in the law, section 15AA of the Acts Interpretation Act 1901 (Cth) ('AIA') provides that the preferred interpretation is the interpretation that would achieve the purpose or object of the Act. Extrinsic material may be used to ascertain the ordinary meaning conveyed by the text of the provision, however this must continue to take into account the context in the Act and the purpose or object underlying the Act (s 15AB(1)(a)).^[60] Ibid at [5].

42. The SGP can be described as ODA,^[61] Exhibit R2, T11, 68. which has no bearing on whether s 23AG(1AA)(d) applies. Consistent with TR2013/7 examples 11 and 12, being sent as part of an ODA or providing a support role instead of an operational role can still qualify for the full foreign service period under s 23AG(1AA)(d). Paragraph 10 of TR2013/7 also states the overseas role can be study or training related and still satisfy s 23AG(1AA)(d).^[62] Applicant’s Submissions at [8].

43. The Applicant's role as a sworn ABF officer permits him to holistically and concurrently satisfy all the words in paragraph 23AG(1AA)(d) "deployed as a member of a disciplined force". This holistic application of the phrase is consistent with TR2013/7 examples 11 and 12 as well as the AIA.^[63] Applicant’s Submissions at [10]. The Applicant's role in the SGP merely provides him with the required continuous period of foreign service outside of Australia to satisfy subsection 23AG(1).^[64] Ibid at [11].

44. Paragraph 23AG(1AA)(d) provides specific phraseology that does not name or limit the tax exemption to the pre-existing and statutory created forces that existed in 2009, being the ADF and AFP. This indicates the subsection has an intent to permit other forces post 2009 to be capable of satisfying paragraph 23AG(1AA)(d).^[65] Ibid at [12].

45. The ABF Act created the role of the ABF Commissioner and introduces provisions to enable the operation of the ABF. The specific change to the ABF and obligations imposed on a subset of the ABF, being the sworn officers, has far greater similarity to the AFP and ADF than the APS. For example:

• ABF Oath page 2 extract states "the ABF Bill gives the ABF Commissioner the ability to request that certain officers working in the ABF make an oath or affirmation, similar to that of an Australian Federal Police (AFP) officer".
• A list of law enforcement agencies in Australia, specifically sworn agencies

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includes only 6 agencies, including ABF, ADF, AFP and Royal Australian police forces.^[66] Exhibit R2, T11, 51.
• The parliamentary report into the ABF Bill provides insight at Chapter 2 as to why the ABF continues to have links to the Public Service Act - this is to prevent open-ended powers. The addition of the oath or affirmation: "would be: …critical in an environment where significant enforcement powers are being exercised and there is community expectation of the highest standards of integrity. The ABF Commissioner will have the same standing as the Chief of the Defence Force and the Australian Federal Police Commissioner. These offices have oaths or affirmations attached to them. It is therefore appropriate that the ABF Commissioner should also be required to make and subscribe an oath and that he or she should be able to request certain ABF officers to make and subscribe an oath or affirmation as well. It is anticipated that the oath or affirmation given by these officers would be similar to the kind prescribed for certain Australian Federal Police officers under section 36 of the Australian Federal Police Act 1979 (Cth)."
• The ABF Act provides at section 32 the ability to terminate an employee for serious misconduct and links to the Public Service Act. The ABF Act goes further at section 30 by preventing an employee resigning from the ABF to avoid a consequence from serious misconduct. The parliament committee (Chapter 2, 2.16) contrasts this to the Public Service Act.
• ABF Concept of Operations (Conops) 2017 paragraph 3.4 Functional command provides that the ABF operates within a matrix management construct. The last paragraph then notes "In an operation the application of C3 and the command structure will take precedence over functional command arrangements."^[67] page 24.

46. The above demonstrates multiple areas relevant to s 23AG(1AA)(d), where a sworn ABF officer, post-2015, has characteristics similar to members of the AFP and ADF. These requirements differentiate and exceed the APS or Customs Department.^[68] Applicant’s Submissions at [16].

47. The Explanatory Memorandum provided to the ABF Bill specifically refers to the ABF as a "Disciplined Force" at paragraph 1 and 5.^[69] Applicant’s submissions [17]. The Explanatory Memorandum states: The purpose of this Bill is to establish the role of the Australian Border Force Commissioner, to enable the operation of the Australian Border Force, and introduce provisions to support the management of a professional and disciplined workforce that exercises its powers and functions with the highest standards of integrity.

48. On this basis, the Applicant contends that he has met the requirements of s 23AG(1AA)(d).^[70] Applicant’s submissions [17]

Subsection 23AG(2) issue

49. Subsection 23AG(2) provides circumstances where the overall exemption in the section cannot be applied. Where the Applicant's name has been notified as required under Article 5.3, then subsection (2) would not apply to prevent the exemption under s 23AG applying.^[71] Applicant’s Submissions at [18] referring to Respondent’s SFIC at [27] and [28].

50. The Applicant provided in the letter dated 11 May 2021 a redacted copy of an internal customs memo referencing Article 5.3 with the Applicant's name clearly shown. The internal customs memo would not exist if the other notice relating to Article 5.3 did not also exist. Therefore, no further documentation should be required, or if the full internal customs memo with all names visible is required, the Applicant requests a mechanism to provide this confidentially to the Tribunal.^[72] Applicant’s Submissions at [18].

Quantification issue

51. Subsection 23AG(3) provides a formula to quantify the exempt amount under this section. The Respondent has indicated that the precise exempt amount has not yet been calculated.^[73] Applicant’s Submissions at [19], referring to [162] - [170] Respondent’s SFIC. This calculation is mechanical in nature and can easily be performed once the s 23AG(1AA)(d) question before the Tribunal is resolved.^[74] Applicant’s Submissions at [19].

Respondent

Section 23AG(1AA)(d) issue

52. The Respondent accepts that, in the income year ended 30 June 2017, the Applicant derived "foreign earnings" from a continuous period of "foreign service" (as each of those terms is defined in s 23AG(7) ITAA). The Applicant's "foreign service" was service in PNG in the capacity of an "employee" (as that term is defined in s 23AG(7) ITAA), as the Applicant was a person employed by the Government of Australia.^[75] Respondent’s SFIC at [24].

53. However, that continuous period of foreign service was not directly attributable to

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the matter referred to in s 23AG(1AA)(d) ITAA. That is so for each of the following reasons:

• The ABF was not a "disciplined force" within the meaning of that term as it is used in s 23AG(1AA)(d) ITAA.
• The SGP was not, and any part of the SGP in which the Applicant participated was not, a "disciplined force" within the meaning of that term as it is used in s 23AG(1AA)(d) ITAA.
• The presence of the Applicant in PNG pursuant to his secondment was not a "deployment" of the Applicant as a member of a disciplined force by the Commonwealth, a State or a Territory, or an authority thereof, within the meaning of that term as it is used in s 23AG(1AA)(d) ITAA.^[76] Ibid at [25].

54. The Applicant's continuous period of foreign service was not directly attributable to any of the other matters referred to in s 23AG(1AA) ITAA.^[77] Ibid at [26].

Section 23AG(2) issue

55. The Respondent does not know whether the Government of Australia notified the PNG Department of Foreign Affairs and Immigration of the Applicant's name pursuant to Art 5.3 of the Enhanced Cooperation Agreement. If the Applicant wishes to contend that his name was so notified, he has the onus of proving that fact.^[78] Ibid at [27]

56. The Respondent accepts that, if the Applicant's name was so notified, then the Applicant was a "Designated Person" as that term is defined in Art 1(a) of the Enhanced Cooperation Agreement, and so he was exempt from PNG tax on his salary pursuant to Art 14.4 of the Enhanced Cooperation Agreement. The Respondent further accepts that, if that was so, then s 23AG(2) ITAA did not prevent the Applicant from being entitled to any exemption under s 23AG to which he was otherwise entitled.^[79] Respondent’s SFIC at [28].

57. However, if the Applicant does not contend that his name was notified as described above in [55], or if the Applicant fails to discharge his onus of proving that his name was so notified, then the Respondent contends that:

• PNG was not entitled to impose tax on the Applicant's salary by reason of Art 19 of the Agreement between Australia and the Independent State of Papua New Guinea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income done at Canberra on 24 May 1989;
• by reason of that fact, the Applicant's salary was exempt from PNG income tax;
• that exemption from PNG income tax was covered by s 23AG(2)(a) or (b) ITAA;
• there was no other basis for the Applicant's salary being exempt from PNG income tax; and
• accordingly, s 23AG(2) prevented the Applicant from being entitled to any exemption under s 23AG to which he was otherwise entitled.^[80] Ibid at [29].

58. As to the matter referred to above in [57], should the Applicant wish to contend that there was some other basis in PNG domestic law for the Applicant being exempt from PNG income tax, he has the onus of proving that fact.^[81] Ibid at [30].

Quantification issue

59. If the Applicant is entitled to an exemption under s 23AG ITAA, the only part of his income that is so exempt from income tax is so much of his foreign earnings as was derived from his continuous period of foreign service that was directly attributable to the matter referred to in s 23AG(1AA)(d): ss 23AG(1), (1AA).^[82] Respondent’s SFIC at [31].

60. The Applicant has the onus of proving during what part of the income year ended 30 June 2017 he was engaged in a continuous period of foreign service that was directly attributable to the matter referred to in s 23AG(1AA)(d), and how much of his foreign earnings were derived from that foreign service.^[83] Ibid at [32].

61. Additionally, once the Applicant's taxable income has been worked out, the tax payable on that taxable income must be worked out using the method prescribed by s 23AG(3) ITAA.^[84] Ibid at [33].

CONSIDERATION AND REASONS

Burden and standard of proof

62. The Applicant has the burden of proving that the Reviewable Decision should not have been made or that it should have been made differently.^[85] Subsection 14ZZK(b)(ii) ITAA. Discharging the burden of proof

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requires the Applicant to establish the facts upon which he relies and, if it is necessary for the Applicant to establish a particular fact in order to displace the Respondent's decision, the Applicant must satisfy the Tribunal with respect to that fact.^[86] Hua-Aus Pty Ltd v Commissioner of Taxation (2010) 184 FCR 430 at [22] citing Danmark Pty Ltd v Federal Commissioner of Taxation (1944) 7 ATD 333 at 337 .

63. In
Federal Commissioner of Taxation v Dalco,^[87] [1990] HCA 3 . Brennan J stated:

the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment, though the taxpayer is limited to the grounds of his objection.^[88] At [14].

64. Similarly, in
Gauci v Federal Commissioner of Taxation,^[89] [1975] 135 CLR 81 . Mason J, as he then was, noted:

The Taxation Act does not place any onus on the Commissioner to show that assessments were correctly made, nor is there any statutory requirement that the assessments should be sustained or supported by evidence. Consequently, unless the appellant shows by evidence that the assessment is incorrect, it will prevail.^[90] At 89.

65. In
Trautwein v Federal Commissioner of Taxation,^[91] [1936] HCA 77 . Latham CJ stated that the taxpayer must, at least as a general rule, go further and show not only that the statement is wrong, but also positively show what correction should be made in order to make the assessment correct.^[92] At [2]. The Respondent is entitled to put the Applicant to proof on any or all facts relevant to the issue of an assessment being excessive or otherwise incorrect:
Sivai v Commissioner of Taxation.^[93] [2021] SCA 1253 at [72] .

66. The standard of proof is the balance of probabilities.^[94] McCormack v Commissioner of Taxation (1979) 143 CLR 284 (‘ McCormack ’) at 303. It has been described as involving a weighing up of the arguments of each party so that if a taxpayer succeeds in 'weighing down the scales ever so slightly in [its] favour' then it will have discharged the burden.^[95] Commissioner of Taxation v Cassaniti (2018) 266 FCR 385 at 409, [88] per Steward J. The taxpayer can discharge the burden in any one of several ways. For example, it can do so by direct evidence and/or by drawing inferences from the evidence,^[96] McCormack at 323 per Murphy J and at 303 per Gibbs J. but not from conjecture.^[97] Rawson Finances Pty Ltd v Federal Commissioner of Taxation (2013) 93 ATR 775 at [88] per Jagot J. While evidence from a taxpayer is not prima facie unacceptable, uncorroborated, self-serving statements are to be tested closely and received with the greatest caution.^[98] McCormack at 302 per Gibbs J; Imperial Bottleshops Pty Ltd and Egerton v Federal Commissioner of Taxation (1991) 22 ATR 148 at 155 . Importantly, there is no onus on the Respondent to show that an assessment or, in this case, an objection decision, is correct.^[99] McCormack at 303-304 citing Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 . Therefore, the Applicant cannot succeed merely by identifying errors or flaws in the Respondent's decision.

Section 23AG(1AA)(d) issue

67. Based on the evidence before it, the Tribunal is satisfied that the Applicant's secondment to PNG from 20 February 2017 was "foreign service" as defined, and the Applicant therefore met the requirements of s 23AG(1) ITAA such that the "foreign earnings" derived by the Applicant from his work in PNG were exempt from tax. However, the exemption provided by s 23AG(1) is subject to an exception provided by s 23AG(1AA), such that if the Applicant's foreign service is not attributable to one of categories listed in paragraphs (a) to (d), his foreign earnings will not be exempt from tax.

68. The text of subsection (1AA) has changed over time in a manner that is relevant to the Applicant's circumstances. As originally enacted, subsection (1AA) provided:

However, those foreign earnings are not exempt from tax under this section unless the continuous period of foreign service is directly attributable to any of the following:

a) the delivery of Australian official development assistance by the person's employer;

b) the activities of the person's employer in operating a public fund covered by item 9.1.1 or 9.1.2 of the table in subsection 30-80(1) of the Income Tax Assessment Act 1997 (international affairs deductible gift recipients);

c) the activities of the person's employer, if the employer is exempt from income tax because of paragraph 50-50(c) or (d) of the Income Tax Assessment Act 1997 (prescribed institutions located or pursuing objectives outside Australia);

d) the person's deployment outside Australia as a member of a disciplined force by:

(i) the Commonwealth, a State or a Territory; or

(ii) an authority of the Commonwealth, a State or a Territory;

e) an activity of a kind specified in the regulations.

69.

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Subsection (1AA) therefore provided a limitation on the exemption in subsection (1) whereby it only applied if the taxpayer's foreign earnings were directly attributable to one of the matters described in paragraphs (a) to (e).

70. As originally enacted, subsection (1AA) did not prevent the exemption in s 23AG from applying when the taxpayer was in a foreign country because his or her employer was delivering Australian ODA. Employees of the APS who participated in the delivery of such programs were expressly able to rely on paragraph (a), and therefore on the s 23AG exemption.

71. The Explanatory Memorandum to the Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009 (Cth) ('2009 EM') relevantly stated in relation to paragraph (a):

1.19 Australian official development assistance (ODA) is assistance delivered through the Australian Government's overseas aid program, as administered by the Department of Foreign Affairs and Trade and/or the Australian Agency for International Development (AusAID). Australian ODA aims to reduce poverty and achieve sustainable development in developing countries, in line with Australia's national interest.
1.20 In addition to providing Australian ODA directly, AusAID also competitively contracts aid work to Australian and international entities. Thus, in practice, individuals n involved in the delivery of Australian ODA can include both Australian Public Service (APS) employees and non-APS employees. […]
Example 1.2
Robert is an APS employee employed by the Commonwealth Department of Climate Change. He is posted to Tokelau for 150 continuous days, to work on a project aimed at minimising the impacts of rising sea levels in Tokelau.
Robert is not an AusAID employee but the project is classified as Australian ODA by AusAID. Robert's foreign service is directly attributable to the delivery of Australian ODA by his employer and his foreign earnings are therefore eligible for exemption pursuant to section 23AG, subject to the conditions contained in subsection 23AG(2).

72. As outlined above, the SGP in which the Applicant participated was Australian ODA.^[100] see Exhibit R1, T11, 68. Therefore, had the original form of subsection (1AA) been in force during the income year in which the Applicant participated in the SGP, subsection (1AA) would not have prevented him from relying on the s 23AG exemption.

73. However, paragraph (a) was amended, with the underlined words being inserted by the amendment:^[101] There were also intervening amendments made to pars. (b) and (c) by the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012 (Cth) and Tax Laws Amendment (2013 Measures No. 2) Act 2013 (Cth) respectively, but neither of those are relevant to this review.

the delivery of Australian official development assistance by the person's employer ( except if that employer is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997))

74. That amendment had effect for the 2017 income year and later income years.^[102] Tax and Superannuation Laws Amendment (2015 Measures No. 4) Act 2015 (Cth) Sch 2 item 2.

75. The Explanatory Memorandum to the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015 (Cth) relevantly stated:

2.2 The provisions exempting these employees from payment of income tax were originally introduced to provide relief from double taxation (in both Australia and the source country). However, the provisions no longer serve this purpose and may be perceived as providing an exemption from income tax for certain subsets of the Australian population, with Australians working overseas often able to avoid income tax in both jurisdictions.
2.3 As a general rule, Australian resident individuals are taxed on their worldwide income through the Australian personal income tax system.
Context of amendments
2.4 These amendments ensure that all employees of an Australian government agency are treated equally in that they will now all be subject to income tax on overseas income they have earned in the delivery of ODA.

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Summary of new law
2.5 As a result of these amendments, employees of an Australian government agency who work overseas for not less than 91 continuous days in the delivery of ODA, will no longer be able to claim an income tax exemption on the income they earn while overseas.

76. Parliament's purpose in amending subsection (1AA) was to withdraw the exemption for employees of an Australian Government agency to ensure that all employees of such agencies were treated equally by not being given tax advantages to which others were not entitled.

77. As outlined above, the Applicant commenced his foreign service during the 2017 income year in respect of which the exemption for Australian ODA was withdrawn for taxpayers in his position. The Applicant argues that the exemption is nevertheless available to him by virtue of paragraph (d) of subsection (1AA), the text of which has not changed from that extracted above at [11]. He contends that, by his secondment pursuant to the SGP, he was deployed outside Australia as a member of a 'disciplined force'. The Respondent contends that the Applicant's argument requires a construction of paragraph (d) that is contrary to the text, context and purpose of that provision.

The meaning of "disciplined force" in s23AG(1AA)(d) ITAA

78. The Respondent contends, and the Tribunal finds for the reasons that follow, that the Parliament intended to use the phrase "disciplined force" in paragraph (d) consistently with its established meaning in the authorities, as outlined below. It makes this finding having regard to the extrinsic material relevant to the enactment of subsection (1AA).

79. The modern approach to statutory interpretation is to construe the words of a statute to give effect to Parliament's intention, which requires regard to be had to the context in which the text appears, including having regard to extrinsic materials to identify the "mischief" to be addressed by the statute.^[103] CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 ; see also R v A2 (2019) 269 CLR 507 at [32], [37], [148], [163] ; Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 381 ALR 601 at [13], [34]-[39], [106] . It is appropriate to have recourse to the purpose of a statutory provision, including as indicated by the extrinsic material, in determining which of various alternative meanings of a word or expression in the provision is the intended meaning.^[104] Acts Interpretation Act 1901 (Cth) s 15AA; FCT v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39] .

80. In relation to paragraph (1AA)(d), the 2009 EM provided:

1.31 A person's foreign earnings will be eligible for exemption if the foreign service is directly attributable to that person's deployment outside Australia as a member of a disciplined force by an Australian government, or an authority thereof. A disciplined force is intended to refer to a defence force, including a peacekeeping force, and a police force .
1.32 In a defence force context, the exemption would apply to a person's deployment outside Australia as part of a non-warlike operation. In a police force context, the exemption would apply to Australian Federal Police employees deployed on an International Deployment Group mission who are subject to Commanders Orders to achieve operational policing outcomes.
(Emphasis added).

81. In referring to a defence force and a police force, the 2009 EM makes clear that, by the phrase "disciplined force", Parliament "intended to refer to" forces of this character. The 2009 EM confirms that Parliament intended to use the word "disciplined force" in the sense established by the authorities, which recognises the distinguishing characteristics of a disciplined force that are uniquely present in the defence force and the police forces. The Tribunal finds that s 23AG(1AA)(d) should be construed so as to give effect to that intention.

The meaning of "disciplined force" in the authorities

82. The phrase "disciplined force" has an established meaning in the authorities, and it is one that is peculiarly adapted to the defence force and police forces, but not to organisations comprising APS employees. As outlined below, the key factor identified in the authorities that distinguishes military and police forces as 'disciplined forces' is that each member of that force is under a legal obligation to comply with any lawful directions of any superior officer in the hierarchy, sometimes with it being an offence to fail to comply with such a direction.

83.

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In the context of a police force Gummow and Hayne JJ in
New South Wales v Fahy^[105] (2007) 232 CLR 486 at 495 [21] . identified that the relevant New South Wales police statute had the evident purpose of creating "an hierarchical and disciplined force" and that chief among the provisions of that statute giving effect to that purpose was a provision making it an offence for a police officer to neglect or refuse either to obey any lawful order or to carry out any lawful duty as a police officer. In
Police Service Board v Morris,^[106] (1985) 156 CLR 397 at 408- 409 . Wilson and Dawson JJ identified obedience to any lawful order as key to the character of a police force as a disciplined force. Brennan J made similar observations,^[107] at 411-412. noting that the key factor distinguishing the operation of a police force as a disciplined force is that subordinate officers were answerable to superior officers. This distinguishing feature of a disciplined force is recognised in s 40 of the Australian Federal Police Act 1979 (Cth) ('AFP Act') which prohibits an AFP officer from disobeying or failing to carry out a lawful direction, instruction or order of a superior officer.^[108] Such an obligation has been present since the formation of the predecessor Commonwealth Police. Regulation 16 of the Commonwealth Police Regulations 1960 (Cth) required a member promptly to obey all lawful instructions, and reg 13(h) made contravention of that requirement a disciplinary offence. When the Australian Federal Police was formed, that obligation was carried into the initial Australian Federal Police (Discipline) Regulations 1979 (Cth) in regs 5 and 18(1)(a).

84. In the context of the defence forces, in
Haskins v Commonwealth,^[109] (2011) 244 CLR 22 at 44 [54], 47-48 [67] . French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ identified that a defining characteristic of the defence force is that each service is a disciplined force organised hierarchically, and that obedience to lawful command was at the heart of a disciplined and effective defence force. It was for that reason that the Court found that no tortious liability for false imprisonment arose against a member of the defence force acting in obedience of orders against another member of that service. This distinguishing feature is recognised in section 27 of the Defence Force Discipline Act 1982 (Cth) which makes it an offence for a member of the defence force to disobey a lawful command of a superior officer.

85. The authorities therefore recognise that the key factor that distinguishes military and police forces as 'disciplined forces' is that each member of that force is under a legal obligation to comply with any lawful directions of any superior officer in the hierarchy. The issue for determination is whether the ABF is a 'disciplined force' in the sense recognised in the authorities.

The Australian Border Force

The legal character of the Australian Border Force

86. Subsection 4(1) of the ABF Act relevantly provides:

"Australian Border Force" means that part of the Department known as the Australian Border Force.

Note: Immigration and Border Protection workers may perform work for the Australian Border Force. The Australian Border Force Commissioner has the control of the operations of the Australian Border Force.

87. The ABF Act did not create the ABF, in the sense of bringing into existence a new legal person, entity, Department, agency or other instrumentality. The definition of "Australian Border Force" provides a label for that part of the Department.

88. Subsection 9(1) of the ABF Act creates the office of the Australian Border Force Commissioner and s 10 confers powers on the ABF Commissioner.^[110] This contrast is also seen in s 3 of the ABF Act, which identifies that there “is” an Australian Border Force, whereas there “is to be” an Australian Border Force Commissioner.

The employment status of ABF officers

89. Section 24 of the ABF Act provides:

24 Oaths or affirmations by Immigration and Border Protection workers

(1) The Australian Border Force Commissioner may request the following persons to make and subscribe an oath or affirmation in accordance with the form prescribed by the rules for the purposes of this subsection:

(a) a person who is covered by paragraph (a) of the definition of Immigration and Border Protection worker in subsection 4(1) and who is in the Australian Border Force

90. The definition of "Immigration and Border Protection worker" in s 4(1) of the ABF Act includes:

(a) an APS employee in the Department

91. It follows that "Immigration and Border Protection workers'" who are employees employed pursuant to the Public Service Act 1999 (Cth) ('PS Act') may be requested by the ABF Commissioner to be sworn officers of the ABF.^[111] see s 22 of the PS Act.

92.

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The PS Act deals with "APS employees", which relevantly refers to persons engaged under s 22 of that Act.^[112] see definition in s 7 PS Act. Section 29 of the PS Act sets out exhaustively the grounds for termination of an ongoing APS employee. The decision to terminate an APS employee is made by the Agency Head.^[113] Section 15 PS Act.

93. By contrast, in the case of the defence force, members serve at the pleasure of the Crown and so may be terminated with or without cause.^[114] C v Cth (2015) 234 FCR 81 at 85 [23] (per Tracey, Buchanan and Katzmann JJ). Officers of the AFP are engaged pursuant to Pt III Div 2 of the AFP Act,^[115] Indeed, s 40F(1)(b) of the AFP Act permits officers of the AFP to be seconded to the APS, which is only consistent with them not being part of the Australian Public Service apart from such a secondment. and they are not subject to the PS Act. The AFP Commissioner may terminate an officer under s 28 of the AFP Act.^[116] That provision provides the AFP Commissioner with a wide-ranging discretion and is preserved so as to operate in parallel with a detailed disciplinary regime: Eaton v Overland [2001] FCA 1834 at [169]-[172] ; see s 40TR(2) of the AFP Act.

94. It follows that ABF officers are APS employees who are assigned to undertake the work of the ABF. Their employment is regulated by the PS Act and they can only be terminated by the Agency Head on the grounds set out in the Act. This distinguishes ABF officers from members of the defence and police forces who are not APS employees, and whose employment is not subject to the terms of the PS Act.

ABF officers' obligation to comply with lawful direction of a superior officer

95. The ABF Act does not impose on officers of the ABF an obligation to comply with any lawful direction of a superior officer, nor is any such obligation imposed on them by any other law.

96. Like all APS employees, ABF officers are subject to the APS Code of Conduct in s 13 of the PS Act. This includes, in subsection (5), the following:

An APS employee must comply with any lawful and reasonable direction given by someone in the employee's Agency who has authority to give the direction.

97. This obligation is distinguished from that of members of a 'disciplined force', being the obligation to obey all lawful directions of a superior officer, for the following reasons.

98. First, the content of the obligation is of a different character - it is an obligation to comply with a lawful and reasonable direction, and it is limited to a direction by someone in the agency with authority to give that direction. In
ARJ17 v Minister for Immigration and Border Protection,^[117] (2018) 257 FCR 1 at 25-26 [123]-[124] . Rangiah J considered the obligation under s 13(5) of the PS Act as it applies to officers of the ABF. His Honour contrasted this obligation with the obligations under s 27 of the Defence Force Discipline Act and s 40 of the AFP Act. He concluded that, while these two provisions created a "chain of command" under which officers are required to obey the commands of superior officers, s 13(5) of the PS Act as it applies to the ABF created no such chain of command. His Honour stated:^[118] At [124].

In contrast, the requirement under s 13(5) of the Public Service Act, is only for APS employees to comply with any "reasonable direction" given by someone in the employee's Agency who has authority to give the direction. In at least this way, the position of APS employees is distinguished from the position of members of the armed services and other disciplined forces. There is no chain of command comparable to that considered in CPCF v MIBP.

99. Secondly, the nature of the obligation under s 13(5) of the PS Act is informed by the sanctions applicable for non-compliance and the method by which those sanctions are imposed. Sanctions for a breach of the APS Code of Conduct may only be imposed by the Agency Head,^[119] The “Agency Head” is the Secretary of the Department, not the Australian Border Force Commissioner: PS Act s 7. and only after following written procedures established by the Agency Head for determining whether the relevant APS employee breached the Code.^[120] PS Act s 15(1), (3). That requires that a procedure must be undertaken whenever it is to be determined that a breach of the Code occurred. The person deciding whether there was a breach must be, and appear to be, independent and unbiased, and he or she may be from outside the Department (and hence from outside the Australian Border Force): Exhibit R2, 6. Once a breach has been found, a similar procedure is invoked for determining the sanction to be imposed for that breach: Exhibit R2, 11. These procedures must have due regard for procedural fairness: Exhibit R2, 11. Under s 15(1), (3) of the Public Service Act , it is the Agency Head who imposes the sanctions and who determines those procedures. The procedures applicable to APS employees in the then Department of Immigration and Border Protection are reproduced in Exhibit R2 at 3–12.4. Accordingly, the ultimate responsibility for determining whether there has been a failure of an ABF officer to comply with a reasonable direction and for determining any sanction that should attach to that lies with the Secretary of the Department, not the ABF Commissioner or any other officer within the ABF. That the ultimate source of ABF internal discipline lies outside the ABF is contrary to the nature of a hierarchical and disciplined force as recognised in the authorities.

100. Thirdly, s 26 of the ABF Act permits the ABF Commissioner to give written directions to APS employees in the ABF in connection with the administration and control of the operations of the ABF, such as in relation to essential qualifications for ABF officers. However, those directions are subject to any inconsistent directions of the Secretary.^[121] s 55(6) ABF Act. It is

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inconsistent with the concept of a hierarchical and disciplined force that officers within the organisation may be required to act contrary to the directions of a superior officer to follow inconsistent directions of a civilian external to that organisation.

101. For the reasons stated above, the Tribunal finds that the ABF is not a "disciplined force" as the obligations of ABF officers are not the same as those of members of a "disciplined force'" who are obliged to obey all lawful directions of a superior officer.

102. Accordingly, the Tribunal finds that the reference to "disciplined force" in s 23AG(1AA)(d) ITAA does not include the ABF.

"Member" of a disciplined force

103. Another factor that supports a finding as to the meaning of the phrase "disciplined force" in s 23AG(1AA)(d) is that it uses the term "member" in relation to the disciplined force, rather than the word "employee". The use of the word "member" in both s 23AG(1AA)(d) and the definition in subsection (7) recognises that defence force and police force members are not employees, apart from statute.^[122] Statute apart, a police officer is not an employee but an independent office holder: NSW Commissioner of Police v Cottle [2022] HCA 7 at [9] . Similarly, defence force members are not employees: C v Cth at 86 [24]. A member of a disciplined force is included in the definition of “employee” in subsection (7) as otherwise such a member would not be an employee within the ordinary meaning of that term. This indicates that Parliament intended that the defence force and police forces would be within the concept of "disciplined force", but that organisations comprising APS employees, including the ABF, would not.

104. For the above reasons, the Tribunal finds that the meaning of "disciplined force" in s 23AG(1AA)(d) is a force in which each member is under a legal obligation to comply with any lawful directions of any superior officer in the hierarchy. As APS employees, ABF officers are not subject to the legal obligation to comply with all lawful directions of their superior officers. Accordingly, the Tribunal finds that in his employment as an ABF officer the Applicant was not a member of a "disciplined force".

105. Accordingly, as the Applicant was not a member of a "disciplined force'" at the relevant time, he did not satisfy the requirements of s 23AG(1AA)(d) and therefore his foreign earnings earned during his foreign service in the 2017 income year were not exempt from tax.

Strongim Gavman Program

106. The Tribunal has considered whether the SGP, and the Applicant's participation in it, supports his contention that he was deployed as a member of a "disciplined force" during his foreign service in PNG.

107. The evidence before the Tribunal in relation to the activities in which participants in the SGP were involved during their secondment do not meet the key requirements of a "disciplined force" as that term is recognised in the authorities outlined in [82] - [85] above. Participants in the SGP, including the Applicant, were not subject to an obligation to obey a lawful direction of a superior officer, and therefore they were not members of a "disciplined force". Furthermore, the nature of the work performed by the Applicant as a participant in the SGP as a Customs Advisor in Trade Facilitation at PNGCS is not one which is in any manner akin to the military and policing context to which s 23AG(1AA)(d) is directed.

'Deployment outside Australia'

108. The Tribunal further notes that the Applicant did not receive anything resembling a deployment order. The evidence before the Tribunal includes documents provided to the Applicant nominating a start and end date for his secondment,^[123] see Exhibit R2, 140. but no deployment order or anything of a similar nature was tendered in evidence. Accordingly, Tribunal finds that the Applicant was not subject to a "deployment outside Australia' within the meaning of s 23AG(1AA)(d) during his secondment to the PNGCS.

109. Therefore, even if, contrary to the Tribunal's findings, the Applicant was a member of a "disciplined force", his foreign service in PNG was not directly attributable to a "deployment outside Australia" as a member of a disciplined force, and accordingly he does not qualify for the tax exemption in s 23AG(1).

CONCLUSION

110. Having found that the Applicant does not satisfy the requirements of s 23AG(1AA)(d) for reason that he was not deployed outside Australia as a member of a disciplined force during his participation in the SGP program in PNG, the Tribunal finds that his foreign earnings during the 2017 income year are not tax exempt.

111.

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As the Applicant's foreign earnings are not exempt from tax under s 23AG(1) it is unnecessary for the Tribunal to consider whether he is disqualified from claiming the exemption by s 23AG(2). Nor is it necessary for the Tribunal to quantify an exempt amount under the section.

DECISION

112. The Reviewable Decision dated 10 February 2020 is affirmed.

Footnotes

^[1] The terms of reference of the secondment are at Exhibit R1, T11, 56 - 58.
^[2] The management framework for the SGP is at Exhibit R1, T11, 64 - 154.
^[3] Exhibit R1, T11, 74; On or around 1 July 2017, the SGP ceased and was replaced by another program referred to as the Institutional Partnerships Program (‘IPP)). The Applicant’s secondment thereafter continued under the auspices of the IPP.
^[4] Exhibit R1, T3, 12.
^[5] Exhibit R1, T4, 18.
^[6] Exhibit R1, T5, 21; T6, 27.
^[7] Exhibit R1, T8, 38.
^[8] Exhibit R1, T9, 42-46.
^[9] Exhibit R1, T2, 8-10.
^[10] Exhibit R1, T1, 1-7.
^[11] Respondent’s Statement of Facts, Issues, and Contentions (Respondent’s SFIC), at [5].
^[12] Exhibit A1, 1.
^[13] Exhibit R1, T14, 196.
^[14] Exhibit R1, T11, 68
^[15] Exhibit R3, at [6].
^[16] Exhibit R2, 72.
^[17] Ibid, 76, 89.
^[18] Ibid, 79.
^[19] Ibid, 83.
^[20] Ibid, 85.
^[21] Ibid, 86-87.
^[22] Ibid, 88.
^[23] Ibid, 91.
^[24] Ibid, 92.
^[25] Reproduced at Exhibit R1, T11, 99-102.
^[26] Clause 6.
^[27] Clause 10.
^[28] Clauses 8, 18-19.
^[29] Clauses 11-12.
^[30] Clauses 13-15.
^[31] Clause 17.
^[32] Exhibit R2, 146, 242.
^[33] Exhibit R2, 139; Exhibit R3 at [10].
^[34] Exhibit R3 at [10]; Exhibit R2, 142-144.
^[35] Undated letter from the applicant addressed to the Tribunal served with the applicant’s Statement of Facts, Issues and Contentions (‘Applicant Letter’) at 1.
^[36] Exhibit R3 at [8].
^[37] Exhibit R2, 38.
^[38] Exhibit R3 at [11]; Exhibit R2, 155.
^[39] Exhibit R2, 155.
^[40] Ibid.
^[41] Applicant Letter at 2.
^[42] Exhibit R3 at [12].
^[43] Exhibit R3 at [13].
^[44] Exhibit R2, 155.
^[45] Exhibit A2, 145.
^[46] Exhibit R2, 172.
^[47] “Standard Operating Procedures”: Exhibit A2, 145; Exhibit R2, 173.
^[48] Exhibit A2, 143.
^[49] Exhibit R2, 175.
^[50] Ibid.
^[51] Exhibit A2, 143.
^[52] Exhibit R2, 183. It is unclear whether this is something in which the applicant was personally involved.
^[53] Applicant Letter at 2-3.
^[54] Exhibi R2, 161-162.
^[55] Respondent’s Submissions at [114].
^[56] Ibid at [115].
^[57] Ibid at [116].
^[58] Respondent’s Submissions at [117].
^[59] Applicant’s Submissions at [4].
^[60] Ibid at [5].
^[61] Exhibit R2, T11, 68.
^[62] Applicant’s Submissions at [8].
^[63] Applicant’s Submissions at [10].
^[64] Ibid at [11].
^[65] Ibid at [12].
^[66] Exhibit R2, T11, 51.
^[67] page 24.
^[68] Applicant’s Submissions at [16].
^[69] Applicant’s submissions [17]. The Explanatory Memorandum states: The purpose of this Bill is to establish the role of the Australian Border Force Commissioner, to enable the operation of the Australian Border Force, and introduce provisions to support the management of a professional and disciplined workforce that exercises its powers and functions with the highest standards of integrity.
^[70] Applicant’s submissions [17]
^[71] Applicant’s Submissions at [18] referring to Respondent’s SFIC at [27] and [28].
^[72] Applicant’s Submissions at [18].
^[73] Applicant’s Submissions at [19], referring to [162] - [170] Respondent’s SFIC.
^[74] Applicant’s Submissions at [19].
^[75] Respondent’s SFIC at [24].
^[76] Ibid at [25].
^[77] Ibid at [26].
^[78] Ibid at [27]
^[79] Respondent’s SFIC at [28].
^[80] Ibid at [29].
^[81] Ibid at [30].
^[82] Respondent’s SFIC at [31].
^[83] Ibid at [32].
^[84] Ibid at [33].
^[85] Subsection 14ZZK(b)(ii) ITAA.
^[86] Hua-Aus Pty Ltd v Commissioner of Taxation (2010) 184 FCR 430 at [22] citing Danmark Pty Ltd v Federal Commissioner of Taxation (1944) 7 ATD 333 at 337 .
^[87] [1990] HCA 3 .
^[88] At [14].
^[89] [1975] 135 CLR 81 .
^[90] At 89.
^[91] [1936] HCA 77 .
^[92] At [2].
^[93] [2021] SCA 1253 at [72] .
^[94] McCormack v Commissioner of Taxation (1979) 143 CLR 284 (‘ McCormack ’) at 303.
^[95] Commissioner of Taxation v Cassaniti (2018) 266 FCR 385 at 409, [88] per Steward J.
^[96] McCormack at 323 per Murphy J and at 303 per Gibbs J.
^[97] Rawson Finances Pty Ltd v Federal Commissioner of Taxation (2013) 93 ATR 775 at [88] per Jagot J.
^[98] McCormack at 302 per Gibbs J; Imperial Bottleshops Pty Ltd and Egerton v Federal Commissioner of Taxation (1991) 22 ATR 148 at 155 .
^[99] McCormack at 303-304 citing Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 .
^[100] see Exhibit R1, T11, 68.
^[101] There were also intervening amendments made to pars. (b) and (c) by the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012 (Cth) and Tax Laws Amendment (2013 Measures No. 2) Act 2013 (Cth) respectively, but neither of those are relevant to this review.
^[102] Tax and Superannuation Laws Amendment (2015 Measures No. 4) Act 2015 (Cth) Sch 2 item 2.
^[103] CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 ; see also R v A2 (2019) 269 CLR 507 at [32], [37], [148], [163] ; Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 381 ALR 601 at [13], [34]-[39], [106] .
^[104] Acts Interpretation Act 1901 (Cth) s 15AA; FCT v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39] .
^[105] (2007) 232 CLR 486 at 495 [21] .
^[106] (1985) 156 CLR 397 at 408- 409 .
^[107] at 411-412.
^[108] Such an obligation has been present since the formation of the predecessor Commonwealth Police. Regulation 16 of the Commonwealth Police Regulations 1960 (Cth) required a member promptly to obey all lawful instructions, and reg 13(h) made contravention of that requirement a disciplinary offence. When the Australian Federal Police was formed, that obligation was carried into the initial Australian Federal Police (Discipline) Regulations 1979 (Cth) in regs 5 and 18(1)(a).
^[109] (2011) 244 CLR 22 at 44 [54], 47-48 [67] .
^[110] This contrast is also seen in s 3 of the ABF Act, which identifies that there “is” an Australian Border Force, whereas there “is to be” an Australian Border Force Commissioner.
^[111] see s 22 of the PS Act.
^[112] see definition in s 7 PS Act.
^[113] Section 15 PS Act.
^[114] C v Cth (2015) 234 FCR 81 at 85 [23] (per Tracey, Buchanan and Katzmann JJ).
^[115] Indeed, s 40F(1)(b) of the AFP Act permits officers of the AFP to be seconded to the APS, which is only consistent with them not being part of the Australian Public Service apart from such a secondment.
^[116] That provision provides the AFP Commissioner with a wide-ranging discretion and is preserved so as to operate in parallel with a detailed disciplinary regime: Eaton v Overland [2001] FCA 1834 at [169]-[172] ; see s 40TR(2) of the AFP Act.
^[117] (2018) 257 FCR 1 at 25-26 [123]-[124] .
^[118] At [124].
^[119] The “Agency Head” is the Secretary of the Department, not the Australian Border Force Commissioner: PS Act s 7.
^[120] PS Act s 15(1), (3). That requires that a procedure must be undertaken whenever it is to be determined that a breach of the Code occurred. The person deciding whether there was a breach must be, and appear to be, independent and unbiased, and he or she may be from outside the Department (and hence from outside the Australian Border Force): Exhibit R2, 6. Once a breach has been found, a similar procedure is invoked for determining the sanction to be imposed for that breach: Exhibit R2, 11. These procedures must have due regard for procedural fairness: Exhibit R2, 11. Under s 15(1), (3) of the Public Service Act , it is the Agency Head who imposes the sanctions and who determines those procedures. The procedures applicable to APS employees in the then Department of Immigration and Border Protection are reproduced in Exhibit R2 at 3–12.4.
^[121] s 55(6) ABF Act.
^[122] Statute apart, a police officer is not an employee but an independent office holder: NSW Commissioner of Police v Cottle [2022] HCA 7 at [9] . Similarly, defence force members are not employees: C v Cth at 86 [24]. A member of a disciplined force is included in the definition of “employee” in subsection (7) as otherwise such a member would not be an employee within the ordinary meaning of that term.
^[123] see Exhibit R2, 140.

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