-11-
Petitioners attempt to redefine their worksite to include
the lodging units in Alice Springs by a broad reading of the
treaty under which the defense facility was established.9 We
find no merit to their argument. In fact, neither the treaty
under which the defense facility was authorized nor its
amendments and extensions refers to housing units or lodging for
employees.10 There is no mention of contractors’ living quarters
and nothing in the treaty implies that contractors’ living
quarters should be considered part of the defense facility.
III. Exclusion of Living Allowances
We next address the argument of petitioners Mr. and Mrs.
Hargrove and Mr. and Mrs. Breeding that they are entitled to
exclude certain living allowances for the relevant years under
9The defense facility was authorized under a treaty between
the United States and Australia that became effective on Dec. 9,
1966. Agreement Relating to the Establishment of a Joint Defence
Space Research Facility, U.S.-Austl., Dec. 9, 1966, 17 U.S.T.
2235 (the Treaty). The Treaty has been amended and extended
since 1966. Exchange of Notes Constituting an Agreement to
Further Extend in Force the Agreement Relating to the
Establishment of a Joint Defence Facility at Pine Gap of 9
December 1966, as Amended, U.S.-Austl., Jun. 4, 1998, 2171
U.N.T.S. 89; Agreement Amending and Extending the Agreement of
Dec. 9, 1966, As Amended and Extended, Relating to the
Establishment of a Joint Defence Space Research Facility, U.S.-
Austl., Nov. 16, 1988, State Dept. No. 89-2; Agreement Amending
and Extending the Agreement of Dec. 9, 1966, U.S.-Austl., Oct.
19, 1977, 29 U.S.T. 2759.
10The treaty generally provides for establishing and
operating a facility for general defense research in the space
field in Australia. Treaty, art. 1. We note that under the
treaty, contractors’ income shall be deemed not to have been
derived in Australia for Australian tax purposes as long as it is
not exempt from and is subject to tax in the United States. Id.,
art. 9(1). If the lodging income were exempt from U.S. tax, this
provision would entitle Australia to tax it instead.
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