Ramaciotti v Federal Commissioner of Taxation [1920] HCA 70; (1920) 29 CLR 49 (11 November 1920)

HIGH COURT OF AUSTRALIA

Ramaciotti Appellant; and The Federal Commissioner of Taxation Respondent.

H C of A

11 November 1920

Knox C.J., Isaacs and Rich JJ.

Leverrier K.C. (with him Delohery), for the appellant.

Bavin (with him Braddon), for the respondent.

Knox C.J.

This is a special case raising a question as to the interpretation of sec. 13 of the Income Tax Assessment Act 1915-1916. The appellant, General Ramaciotti, as stated in the case, was an officer in the Australian Military Forces at the time of the outbreak of the War, and was then in England. He returned to Australia, and subsequently was mobilized for duty as Assistant Quartermaster-General on the District Headquarters Staff, 2nd Military District, which position he held until 1st November 1915. On that date he was appointed District Commandant of the 2nd Military District and held that office until 16th February 1917, and he was subsequently appointed Inspector-General of Administration, which position he held until 1920. It appears, therefore, that during the year of assessment, the financial year 1916-1917, the appellant was, at different times, Commandant of the 2nd Military District and Inspector-General of Administration. He has been assessed to income tax for that year without the allowance of any exemption under sec. 13 of the Income Tax Assessment Act 1915-1916, and it is against that assessment that he appeals. Sec. 13 provides that "this Act shall not apply to any person who is on active service during the present war with the military or naval forces of the Commonwealth ... so far as regards income derived from personal exertion and earned prior to the commencement of this Act or during the present state of war." The whole question is whether the appellant, occupying the position with the military forces which he did occupy, was within the meaning of sec. 13 a person who was on active service. The first consideration is that in an Act of the Commonwealth Parliament, the Defence Act, which deals with the whole subject of the Military Forces of the Commonwealth, and which was in force at the time the Income Tax Assessment Act 1915-1916 was passed, the term "active service" was defined as meaning "service in or with a force which is engaged in operations against the enemy and includes any naval or military service in time of war." I think it is reasonable to suppose that the Parliament in framing the exemption in sec. 13 of the Income Tax Assessment Act and in fixing active service as the criterion of exemption had in mind that definition, and intended that "active service" should correspond with "active service" as defined in the Defence Act. The phrase is one of art in a sense; and when we find in another Act which for this purpose is in pari materiâ a definition of that phrase, I see no reason for not giving to it in the section now under consideration the same meaning as it bears in the other Act. It is suggested that the phrase "active service" in the Income Tax Assessment Act 1915 imports either service in the face of the enemy or service in connection with a force which is under orders to encounter, or is in some stage preparatory to encountering, the armed forces of the enemy. I do not see where the line is to be drawn if considerations of that kind are to be gone into. The appellant, it is admitted here, while he was Commandant of the 2nd Military District had charge of all troops and reinforcements then being trained in New South Wales for service abroad. According to Mr. Bavin's contention, most if not all of those men who were being trained would come within the exemption, but the man who was in charge of their training would not. That seems to be putting a strained construction upon the words used by the Legislature. It also appears from the case that the appellant was mobilized; and the verb "to mobilize". is defined in the Oxford Dictionary as meaning "to prepare (an army) for active service." That imports, therefore, that when the appellant was mobilized a step was taken connecting him with the active operations of the War, and he was subsequently placed by the authorities in command of the 2nd Military District. It is quite true that there was no fighting in Australia and that the armed forces of the enemy were never in Australia, but there was no reason why either of those events might not have happened, and at any time the armed forces in the Commonwealth in the 2nd Military District, there being a state of war existing, might have had to repel an invasion or deal with any armed force which had come into existence in Australia.

There is another circumstance which is also relevant. When the Parliament amended sec. 13 in later Act, it expressly confined the exemption to active service outside Australia. That may not be conclusive, but it seems to afford some ground for supposing that the phrase "active service" in the Income Tax Assessment Act 1915 was not confined to active service outside Australia. When Parliament meant to limit active service to active service outside Australia, it said so.

For these reasons I think that the appellant comes within the exemption in sec. 13, and that the question asked by the special case should be answered in the negative.

Isaacs J.

I agree with what the Chief Justice has said, and I have nothing to add except that on the view put by Mr. Bavin I doubt whether Lord Kitchener would have been considered to be on active service.

Rich J.

I agree.

Question answered in the negative. Costs of special case costs in the appeal.

Solicitors for the appellant, A. G. de L. Arnold & Co.

Solicitor for the respondent, Gordon H. Castle, Crown Solicitor for the Commonwealth.