The Commissioner of Taxation has forwarded me the following memorandum for advice:

I have recently perused your opinion No. 156 of 1924⁽¹⁾ dealing with the position of the Emergency Fleet Corporation of U.S.A., inter alia as regards its liability to income tax, and have instructed my Deputy Commissioners accordingly to assess and collect tax upon income derived in Australia by ships owned or chartered by that Corporation.

There arises from that opinion a question as to the liability of income derived in Australia by ships owned and controlled by foreign governments.

In the past I have acted upon the verbal advice of Mr. M. M. Bray (once of your Department), the Crown Solicitor and Assistant Crown Solicitor to the effect that a foreign government is not a person within the meaning of the Act, and therefore cannot be required to render a return of income or pay tax, and that even if tax were assessed in such a case and were not paid, it would not be possible to sue the foreign government for its recovery.

From the opinion of the Solicitor-General of New Zealand referred to by you it would appear that he considers that a foreign government is not exempt from the revenue laws of New Zealand but that any tax assessed could not be recovered on refusal to pay.

I should be glad of your opinion as to the liability to Commonwealth Income Tax of income derived in Australia by ships owned by a foreign government and whether, if there is any such liability, payment of tax could be enforced by legal proceedings against the government or its agents in Australia.

The question upon which advice is sought is stated in general terms and is not accompanied by the facts of any case upon which it has arisen.

The Income Tax Assessment Act contains no exemption in favour of the income derived in Australia by ships owned by a foreign government. Such income is liable to assessment in the usual way.

I am of opinion, however, that the payment of the tax could not be enforced by legal proceedings against the foreign government or its agent in Australia.

[Vol. 21, p. 398]

(1) Opinion No. 1354.