The Commissioner has lodged an application for special leave to appeal to the High Court against the Full Federal Court decision in FCT v Jayasinghe [2016] FCAFC 79.

The Full Federal Court had by majority dismissed the Commissioner’s appeal from an AAT decision which had found that a taxpayer was exempt from his earnings as the “holder of an office in” the UN which was an ‘international organisation’ under the International Organisations (Privileges and Immunities) Act 1963 (the 1963 Act).

The Commissioner lost at both the first instance in the AAT and then again on appeal in the Full Federal Court, but in that Court only a majority found for the taxpayer. Chief Justice Alsop dissented on the construction of the relevant documents. This might have given the Commissioner hope that leave might be given and an appeal might succeed in the High Court.

Some sense of the majority’s reasoning can be taken from the quoted portions of their reasons below.

[Austlii report of Full Federal Court Case] [LTN 210, 31/10/16]

Extract from the majority decision (Pagone and Davies JJ – dissent Alsop CJ)

The 1963 Act was enacted in part to give effect to the UN Convention, which by s 17(b) in Article V, provided that officials of the United Nations were to be exempt from taxation on the salaries and emoluments paid to them by the United Nations. Section 20 in Article V provided that the privileges and immunities were granted to officials in the interests of the United Nations and not for the personal benefit of the individuals themselves, but the article did not define, or confine, the meaning to be given to the word “official”. Chapter XV of the United Nations Charter (which entered into force for Australia on 1 November 1945) provided for the establishment of a secretariat and the appointment by the Secretary-General of staff, but those who might be considered to be officials of the United Nations were not confined to the Secretary-General or other high officials. On 7 December 1946 the General Assembly adopted a resolution that the categories of officials to which the privileges and immunities referred to in Articles 5 and 7 of the Convention on the privileges and immunities of the United Nations was to extend to “all members of staff of the United Nations, with the exception of those who are recruited locally and are assigned to hourly rates”.

  1. The content of the words “office in” found in the 1963 Act do not have a narrow or confined meaning. They are intended to apply to facilitate fulfilment of the purpose of furthering the functions of the United Nations. Furthermore, as the High Court stated in Macoun at [54] the privilege of exemption from taxation whilst an officer of a specialised agency is designed to ensure that the international organisation secures the services of an officer who remains independent by reason of not having to submit to the taxation jurisdiction of a Convention State. As the authorities recognise, the word “office” is capable of a variety of meanings depending in the context on which the word is used: Sykes v Cleary [1992] HCA 60; (1992) 176 CLR 77, 96-7; Grealy v Commissioner of Taxation [1989] FCA 28; (1989) 24 FCR 405, 411-2. The oft cited authority on the meaning of “office” is Great Western Railway Co v Bater [1920] 3 KB 266. In that case Rowlett J said at 274 that an office was something “which was a subsisting, permanent, substantive position, which had an existence independent of the person who filled it, and which went on and was filled in succession by successive holders…”: see also Edwards v Clinch [1982] AC 845, 860, 864. “”The role of project manager occupied by the taxpayer was an “office” within the meaning of “office” ascribed by Rowlett J in Bater. The Tribunal found at [44]:

This evidence indicates that the position of Project Manager for the Project was for a substantial period, which took many months. The evidence also indicates that after the Applicant left the positon of Project Manager, another person was appointed to act in the position. The position was to this extent independent of the identity of the individual incumbent. It existed before his service and continued after his service.

On those findings, the taxpayer’s position as Project Manager was “an office in an international organisation”, namely, the UN, within the meaning of the statutory text in s 6 of the 1963 Act and reg 10(1) of the 1986 Regulations.