Lecturer: Brendan Pigott
Dipak Prasad Chaulagain
Student ID: 211895
FCT vs Applegate
This is the case where Applegate fight with federal court asking he don’t want pay a taxes when he was not in Australia most of time in that year saying he was not in Australia for whole year so he cant pay taxes. On 8/11/71 he surrendered a lease on his flat, went to Villa for an indefinite term with his wife to set up a law firm there, a branch office. He organized a house in Villa, entered into a lease for 12 months with an option to renew for 12months. He came back to Australia in December 1971 when his wife had a baby then went back to again. He had been sent to Villa for a long period, but not permanently. He didn’t leave any assets in Australia before, although he retained his membership in a hospital benefits fund. In July 1973 he became ill and, in the light of medical advice, decided against remaining indefinitely in the New Hebrides. At his request, he was replaced and returned with his family to Sydney. But for the illness he would have remained in the New Hebrides. During the period he was there he returned to Australia for short periods, twice on vacation and once in connation with the birth of a child.
Issue: Tax must pay on an annual basis; residency must be determined on an annual basis. Was he a resident for the financial year ending 30/6/72? It’s very hard to say he is resident for tax purpose because he has another resident for where he is staying temporally. It seems realistic as well but rules are rules and nobody can go beyond it. The taxation office ask him to pay taxes and he declined and then case gone to court where both parties give the reasons why they wand want taxes and why Applegate don’t want to pay taxes. The taxpayer's permanent place of abode was outside Australia and so he was a non-resident during the part of the year in question. The income then earned by him from sources outside Australia was therefore not assessable. The Supreme Court of New South Wales (Sheppard J.) held that in the income year ending 30th June 1972, the taxpayer was not, after November 1971, a resident in Australia. The commissioner appealed. The court held after hearing judge give decision saying, according to the Income Tax Assessment Act 1936, Applegate’s permanent place resident on that year was outside Australia and so he was a non-resident during the part of the year in question. That’s why whatever he earned from sources outside Australia was therefore not assessable for tax. Appeal from a decision of the Supreme Court of New South Wales (Sheppard J.) allowing an appeal by the taxpayer against the decision of the Taxation Board of Review No. 1 confirming the taxpayer's assessment to income tax for the year ending 30th June, 1972. The material facts are set out in the judgments of Northrop and Fisher JJ and Solicitor for the appellant: Alan R. Neaves (Commonwealth Crown Solicitor) and Solicitors for the respondent: Sly & Russell. J.R.P. LEWISOHN. And the honorable curt came to decision on 27 June and following judgment were delivered. Northrop and Fisher JJ said I have had the opportunity to read and I do not propose to deal with the facts in any detail. It seems clear that the respondent, Mr. Applegate, left Australia to take up his position in Vila and that in the absence of some unforeseen circumstances he was likely to remain there until he had completed his assignment, which would probably take several years Mr. Applegate left Australia Sydney on 8th November, 1971 and part from two brief periods, he remained in Vila for the balance of the relevant tax year. According to the Income Tax Assessment Act 1936 says resident for tax purpose and in this case Mr. Applegate during the relevant period had "his permanent place of abode" outside Australia. Resident or resident of Australia' means - a person, other than a company, who resides in Australia...