Moore v The Commissioner of Income Tax
2 of 1972
Mr. E. Grant for the appellant.
Mrs. A. Hudson-Phillips for the respondent.
Revenue Law - assessment — Chargeable income
This is an Appeal against a decision of the respondent made in the 25 th February 1972, in which the chargeable income of the appellant for the Year of Assessment 1969 was confirmed at $3,130.
The Appeal is one of several which were filed together and which counsel assures me the point in dispute is substantially the same; I therefore ordered, pursuant to Rule 22 of the Revenue Court Rules 1972, that the other appeals be stayed, pending the decision herein.
Evidence was given before me by the appellant and by Mr. Thomas Gordon.
That evidence discloses the following facts–
(1) The appellant is a citizen of and domiciled in the United States of America, but was at all material times resident in Jamaica for purposes of income tax.
(2) He is a Chemical Process Engineer and since the 9 th October 1967 has been employed by Kaisar Aluminium and Chemical Corporation, and American Corporation having its head office at Oakland in the State of California, in the United States of America (herein- after referred to as “Kaiser”).
(3) On or about the 26 th October 1968 he was sent to Jamaica by Kaiser and assigned to work at an aluminium plant situated at Nain in the parish of St. Elizabeth and owned jointly by a consortium consisting of Kaiser, and two other United States Corporations operating in Jamaica or “ALPART”.
(4) A condition of his employment in Jamaica was that he lives near the plant. This was partly due to the fact of his being “on call” on a twenty-four hour basis, and the need for him to make frequent, unscheduled visits to the plant site, in order to deal with emergencies as and when they arose. To this end he was provided with free living quarters in the nearby town of Mandeville, which is about 20 (twenty) minutes drive by car from the plant, there being no suitable living accommodation at Nain. Initially he was quartered in a two-bedroom flat in Mandeville, the rental for which was paid by Alpart; later he occupied a house, also in Mandeville, in a complex of houses owned by them and used for housing employees of his category. His occupation, of both these premises was entirely rent free, but was covered by a written agreement, a specimen of which is at Exhibit ‘3’ and under which he undertook, inter alia, not to let any rooms in the premises or take in any lodgers or paying guests. There was also a stipulation that his right reside in the premises was personal to him, was not assignable, and would terminate automatically without notice, if at any time he ceased personally to reside therein.
(5) While working in Jamaica, his salary, which was approximately US$13,000 per annum, was lodged to a personal banking account, which he kept at Oakland. However a portion of that salary, namely US$325 per month, was at his own request remitted to him in Jamaica through an external account which he opened with Barclays Bank in Mandeville. During the Year of Assessment 1969 the total sum thus remitted from Oakland to Jamaica was J$3,256.38. (See Exhibit “2”).
(6) In addition to this salary of US$13,000 p.a., already mentioned, the appellant mentioned, the appellant was also entitled to a further sum consisting of ten percent of the same as an Overseas Allowance, but there is no evidence that this was ever paid to him in Jamaica.
(7) Kaiser is the Managing Partner of Alpart, and provides technical overseas personnel for Alpart under a Technical Services Agreement. The Management is effected by means of an Executive Committee, the meetings of which are held quarterly in the United States. The Appellant is on the Kaiser payroll but is assigned to Alpart under the aforesaid Services Agreement. All employees at Nain are described as employees of Alpart, but this is merely for administrative convenience. The appellant is a Kaiser employee, instructed by a Supervisor who is also a Kaiser employee, and all Kaiser personnel at Nain are answerable to the Vice President of Kaiser, who is also the Managing Director of Alpart.
(8) Before coming to Jamaica the appellant worked for Kaiser in their establishment at Oakland for about six and then at another plant owned by them in the State of Louisiana for a further period of approximately six (6) months. Throughout that time, as well as during the period of his tour of duty at the Nain plant, his salary was payable, and was in fact paid to him, in Oakland.
(9) He had no written contract of employment with Kaiser, but on being recruited in 1967 he was given a booklet setting out the benefits to which he was entitled as an employee of Kaiser. He also executed a “Secrecy Agreement”, under which he covenanted not to reveal any or the technical operations of Kaiser to unauthorised person. His transfer to Jamaica was effected by telephone while in Louisiana, and his general understanding was that his rights as an employee of Kaiser would continue during his attachment to the Jamaican plant. It was simply regarded as an internal transfer, and he was to be allowed home leave periodically.
(10) No deductions by way of Income Tax were made under the P.A.Y.E. Regulations contained in the First Schedule to the Income Tax Law, 1954, in respect of any sums received by the appellant during the relevant period; but in his Return of Income for the Year of Assessment 1969 he returned a Statutory Income of $3,209.98, comprising the total remittance from the United States, already mentioned, of J$3,256.78, less the sum of J$46.80 paid as National Insurance Contributions to the Jamaican Government. That Return of Income was later amended by the appellant, pursuant to certain queries issued by the respondent to include a sum of $324 as representing the value of free quarters occupied by him in respect of his employment.
On these facts, a dispute eventually arose between the parties in respect of the method to be employed in assessing the grant of free quarters to the appellant. The respondent took the view that the right to occupy quarters was a taxable perquisite in the hands of the appellant, and that it should be valued for purposes of assessment, and, pursuant to Proviso (iii) to Section 5(c) of the Income Tax Law 1954, at ten percent of the total emoluments payable to the appellant in the United States. The appellant objected, contending that the value could not exceed ten percent of the total amount received by him in Jamaica during the relevant period. Issue was thus joined and the matter eventually came on appeal to this Court. However, when it was first listed for trial some — time last year, counsel for the appellant sought an amendment of his Notice and Grounds of Appeal to enable him to put in issue the wider question of whether, on the particular facts, there could be any liability at all in respect of the grant of free quarters. The application was granted, with costs to the respondent and the matter adjourned to enable an Amended Statement of Case to be filed by the Respondent consequent upon the amendment granted to the appellant. The Appeal, having in due course been relisted, was eventually argued before me on the wider basis aforementioned.
Mr, Grant, for the appellant, submitted a three-pronged argument which may be summarised thus–
(1) That the appellant's employment was not exercised or carried on in Jamaica, and was not therefore chargeable under Section 5(c) of the Income Tax Law, 1954 at all, but under Section 5(a) or 5(b), thereof, and subject to the limitations of Section 15(1), as regards foreign income;
(2) Alternatively, that if the employment was chargeable under Section 5(c), then since the grant of free quarters could not be turned to pecuniary account by the appellant, it was not an “emolument” within the meaning of the aforesaid Section 5(c); and finally,
(3) Failing (1) and (2) above, that any assessment which could be made in respect of grant of free quarters, must be limited to a value not exceeding ten percent of the total amounts received e limited to a value not exceeding ten percent of the total amounts received in Jamaica by the appellant, during the Year of Assessment 1969, and not the total emoluments payable in the United States, as contended for by the respondent.
It is common ground in this appeal that the appellant is in salaried employment and that the same is a taxable source of income. One of the most important questions that I will have to decide, however, is whether that employment is derived from a source outside of Jamaica. If it is, then it falls within Section 15 of the Law and the appellant, as a person not domiciled in Jamaica, will be entitled to the reliefs granted by that section and be taxable here only to the extent that any portion of that income is received in Jamaica. There is, however, a more important consequence of such a finding, and it is this. If the appellant's income is derived from a source outside of Jamaica, then the effect will be to dispose of this appeal in his favour without going to consider the much debated question of whether the grant of free quarters is a taxable perquisite in his hands.
I say this because, having examined Section 5 of the Law, which...
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