TLAW301 Taxation Law

Case analysis

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Table of Contents
1. Introduction........................................................................................................................... 3

2. Background of the case........................................................................................................4

3. Issues................................................................................................................................... 6

4. Rules.................................................................................................................................... 7

5. Analysis................................................................................................................................ 8

6. Conclusion.......................................................................................................................... 11

7. Summary of the report........................................................................................................12

8. References......................................................................................................................... 13

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 1. Introduction
The case study analysis is based on IRAC method on the case of Federal Commissioner of
Taxation v. Efstathakis. The case covers the analytical review of the incident and provides some
basic conclusion on the case analysis. Moreover, the report also compares the Australian
taxation requirements in the case.

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 2. Background of the case
In this case, Greece is the respondent's country of citizenship. Just before she left for Greece in
August 1968, she applied for a position as the Greek press attache at the Australian
ambassador's personal secretary-typist. Several members of the Greek Ministry of Foreign
Affairs serve in the press and communication division of the office. From 1968 until her
appointment to the Greek Press and Information Service in 1977, she worked as a private
sector employee in Australia, having been assured that she would obtain the position informally
in Greece and having been granted a visa to travel to Australia with the assistance of the
Australian government.

After graduating from the University of Sydney in 1969, she was employed as an assistant typist
for the Greek Press and Information Service in Sydney by a Greek government decision that
was announced in the Greek press on December 13th of that year. Because she began working
for the Greek government on December 23, 1969, she was granted a unique identification card
as well as a "service passport," which permitted her to travel freely around the nation. Her
position necessitated her participation in the Greek Government Superannuation Plan, which
she did reluctantly. According to her evidence, since she was a state employee, she was
recognized as having a residence in Greece from the date of her appointment, regardless of
where she may be called upon to serve in the future. As part of her testimony in court, she
acknowledged that she was liable to taxes in Greece on all sources of income (including her
official salary) and said that she was ready and able to transfer to any location where her nation
had diplomatic representation. The amount of her salary was put into her bank account after
deductions for taxes and superannuation were taken into consideration.

She married a Greek man who had immigrated to Australia from Egypt in 1965 with his dad and
mother, with the intention of establishing a permanent residence in Australia. The granting of
Australian citizenship in November 1970 solidified his desire to live in Australia permanently,
and he applied for it the following year. The appellant met the man who would become her
husband in late 1968. In 1972, they became the parents of a daughter, and in 1974, they
purchased the house in which they now reside. They have a mortgage for 25 years. With the
exception of a couple of brief vacations to Greece, the appellant has lived in Australia
uninterrupted since August 1968, when he first arrived. In order to comply with the Migration
Act, she described herself as a resident departing temporarily on her outgoing passenger cards
in 1974 and 1975, and she put "settlement in Australia" on her incoming passenger cards in

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1968, when she first came in Australia, in order to avoid being deported. Mr. Katoulis, the first
press attache, arrived in January 1970, and the Consul General undertook the function of press
attache until Mr. Katoulis was appointed. The Commissioner determined that the respondent's
assessable income for the last six months of the year ending June 30, 1970, was $1,657 based
on the information he knew at the time concerning the Greek government's tax rate on personal
exertion income. The respondent was later charged tax on this income in the amount of
$252.07. It is without doubt whether or not the respondent was subjected to taxation in this
case, and the accuracy of the assessment is beyond dispute.

In this case, Greece is the respondent's country of citizenship. Just before she left for Greece in
August 1968, she applied for a position as the Greek press attache at the Australian
ambassador's personal secretary-typist. Several members of the Greek Ministry of Foreign
Affairs serve in the press and communication division of the office. From 1968 until her
appointment to the Greek Press and Information Service in 1977, she worked as a private
sector employee in Australia, having been assured that she would obtain the position informally
in Greece and having been granted a visa to travel to Australia with the assistance of the
Australian government.

After graduating from the University of Sydney in 1969, she was employed as an assistant typist
for the Greek Press and Information Service in Sydney by a Greek government decision that
was announced in the Greek press on December 13th of that year. Because she began working
for the Greek government on December 23, 1969, she was granted a unique identification card
as well as a "service passport," which permitted her to travel freely around the nation. Her
position necessitated her participation in the Greek Government Superannuation Plan, which
she did reluctantly. According to her evidence, since she was a state employee, she was
recognized as having a residence in Greece from the date of her appointment, regardless of
where she may be called upon to serve in the future. As part of her testimony in court, she
acknowledged that she was liable to taxes in Greece on all sources of income (including her
official salary) and said that she was ready and able to transfer to any location where her nation
had diplomatic representation. The amount of her salary was put into her bank account after
deductions for taxes and superannuation were taken into consideration.

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 3. Issues
She married a Greek man who had immigrated to Australia from Egypt in 1965 with his dad and
mother, with the intention of establishing a permanent residence in Australia. The granting of
Australian citizenship in November 1970 solidified his desire to live in Australia permanently,
and he applied for it the following year. The appellant met the man who would become her
husband in late 1968. In 1972, they became the parents of a daughter, and in 1974, they
purchased the house in which they now reside. They have a mortgage for 25 years. With the
exception of a couple of brief vacations to Greece, the appellant has lived in Australia
uninterrupted since August 1968, when he first arrived. In order to comply with the Migration
Act, she described herself as a resident departing temporarily on her outgoing passenger cards
in 1974 and 1975, and she put "settlement in Australia" on her incoming passenger cards in
1968, when she first came in Australia, in order to avoid being deported. Mr. Katoulis, the first
press attache, arrived in January 1970, and the Consul General undertook the function of press
attache until Mr. Katoulis was appointed. The Commissioner determined that the respondent's
assessable income for the last six months of the year ending June 30, 1970, was $1,657 based
on the information he knew at the time concerning the Greek government's tax rate on personal
exertion income. The respondent was later charged tax on this income in the amount of
$252.07. It is without doubt whether or not the respondent was subjected to taxation in this
case, and the accuracy of the assessment is beyond dispute.

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 4. Rules
The respondent sought and was granted an exemption in each of the four areas listed below:

Those who are not Australian citizens nor ordinarily residents of Australia are free from paying
tax under Act 23AA of the Income Tax Assessment Act 1936, as provided in subsection (6) of
the section. This includes consular agents, their workers, and their families.

If a foreign government official or a member of his or her staff is "not an Australian citizen and is
not habitually resident in Australia," some income earned by them may be excluded from
taxation under Section 23 of the Act.

Because of the implementation of Article 37 of the Vienna Convention on Diplomatic Relations

in Australia, income earned by foreign diplomats is free from Australian income tax under the
Diplomatic Privileges and Immunities Act 1967. People who are "not citizens or permanent
residents" of Australia, on the other hand, are free from paying the tax.

Under the Income Tax Assessment Act of Australia, it is possible to find an exemption for
income derived from sources outside of Australia that is not tax-exempt in their home countries.
For example, Section 23 of the Act provides an exemption for income derived from sources
outside of Australia that is not tax-exempt in their home countries (q). Even the Commissioner
acknowledges that the income in question is liable to taxation.

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 5. Analysis
It was contested whether the respondent was an administrative or technical member of a foreign
mission in Australia, as defined by the Vienna Convention on Diplomatic Relations. Evidence
was offered in the form of five certificates. According to a document published on July 21, 1970,
by the Consul General of Greece, the responder was a "permanent member of the staff of this
Consul General" and that Greece was responsible for her remuneration. On July 6th 1972, she
received a second certificate signed by the Greek Ambassador and certifying that she had
worked as a member of the Greek Press and Information Service.

Despite the Board members' willingness to have the matter clarified and their thoughts on the
necessity of obtaining further information, a paper signed by the Ambassador on July 30 was
provided after the Board of Review had heard the evidence but before the Board of Review
reached a resolution.

The respondent is exempt from the Australian Citizenship Act under sections 23AAA and 23(a)
(ii) because she is not a member of the immediate family of an Australian citizen or a person
who is usually resident in Australia, and because she is not ordinarily resident in Australia, as
stipulated by the Act. Upon learning that the word "ordinary home" was being used in numerous
English Income Tax Acts, Viscount Cave L.C. made the following observation on it.

For the reasons stated above, I find the respondent's assertion that she was only in Australia
throughout the relevant time because of the demands of her employment to be completely
irrelevant. It was originally said that they had been in Australia since August 1968, and they
have remained here ever since. Having lived in Australia since 1965, he was awarded
Australian citizenship at the end of 1970 when he married her in July 1969, which occurred at
the end of 1970. She and her husband have lived in Sydney from the day of their marriage and
have created a marital establishment.

Consequently, I conclude the respondent was a regular resident of Australia under both
sections and was also a family member of an Australian resident under section 23AAA as a
consequence of these circumstances. However, while Mr. O'Neill did not see it necessary to get
into the specifics of each section's application, I concur with Mr. Fairleigh Q.C.'s reasons for
finding that respondent was not entitled to an exemption under any section in principle.

Article 37 of the Vienna Convention provides that a respondent must be a member of the
administrative and technical staff at a foreign mission in Australia at the time of the relevant

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event and must not have been a permanent resident of Australia at the time of the relevant
event in order to be eligible for exemption from the Convention (previous).

Despite the Board's reservations, the respondent's certificate from the Ambassador dated July
30, 1973, clearly indicated that he was a member of the administrative and technical staff,
despite the Board's reservations. Foreign diplomatic and consular services in Australia have
been warned by the Australian government since 1967 not to extend diplomatic privileges and
immunities granted to Australian officials or staff stationed outside of Canberra under the 1967
Act indefinitely to officers or staff of diplomatic missions stationed outside of Canberra. There
was no evidence that the Greek Embassy had done so, and the Greek government denied that
it had done so.

To determine whether or not the respondent was a permanent resident of Australia during the
tax year under review, acts and events occurring after the relevant period are admissible, just as
they are when determining whether or not a domicile question arises. The information I've
supplied helped me determine whether or not the response was a typical "Australian" resident,
and I used that knowledge to answer the question.

After hearing all that has been mentioned, I'd want to know whether the respondent is exempt
from paying tax since she obtained her income during the relevant period from sources outside
than Australia throughout that time period. Despite the fact that the source of income or where it
is derived from is a "hard practical matter of fact," according to Barwick CJ, the judge who
delivered the judgment in F.C. of T v Mitchum (1965) 113 C.L.R. 401, the court concluded that
the location of a taxpayer's place of employment was not as important as it had been in F.C. of
T v French (1957) 98 C.L.R 398.

The Board of Review heard testimony from a Greek consular official and her husband, who had
lived in Australia since 1968 and were witnesses in the case. Fourteen certificates were offered
as evidence in support of their argument that she was not entitled to an exception from Section
23AAA of the Australian Citizenship Act, according to their claims. Even though the Board of
Review received testimony indicating that the Greek Embassy had provided privileges and
immunities to workers stationed outside of Canberra, it was unable to identify any proof that
they had done so in accordance with Article 37 of the Vienna Convention (previous). The
reasons given by Mr Fairleigh Q.C. for finding that respondent was not entitled to an exception
under Article 37 of the Vienna Convention were detailed in his report. Since 1967, the Australian
government has issued a warning to all foreign diplomatic and consular missions in Australia,

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stating that diplomatic privileges and immunities provided to Australian officials or personnel
stationed outside Canberra would be terminated if they did not return to Canberra.

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 6. Conclusion
Because the Board of Review decided that the income was not derived from an Australian
source, even if it was estimated for the time period during which Mitchum was employed in
Australia, it did not err in law in Mitchum's case.

For practical purposes, how did the responder make their money? As demonstrated by the
official Gazette of that Government and her oath to office, she was an employee of that
Government, and the money that the respondent presented to tax came from Greece. She
sought for and was accepted into her job by the Greek Government. Though she worked in
Australia, I agree with the Board of Review that her income was obtained from an outside
source under Sec. 23 because I believe the bulk of their reasoning (q).

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 7. Summary of the report
A Greek consular official and her husband, who had lived in Australia since 1968, spoke before
the Board of Review. According to the Australian Citizenship Act, section 23AAA, five
certificates were submitted as proof that she was not excluded from the law. It was alleged that
the Greek Embassy had provided benefits to employees stationed outside of Canberra,
however the review board found no proof that this had occurred in accordance with Vienna
Convention Article 37. (previous). Fairleigh QC's reasons for thinking that the respondent was
not entitled to an exemption under Article 37 of the Vienna Convention. Diplomatic immunity
afforded to Australian officials and personnel stationed outside Canberra has been a long-
standing warning from the Australian government.

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 8. References
Australian Citizenship Act 2007, 23AAA and 23(a)(ii)

Efstathakis v FCT (1979) 9 ATR 867

F.C. of T v French (1957) 98 C.L.R 398.

F.C. of T v Mitchum (1965) 113 C.L.R. 401

In re Grove (1888) 40 Ch.D. 216

Income Tax Assessment Act 1936, Act 23AA

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