CASE 8/2013Judges: RG Kenny SM
RG Kenny SM [2nd]
Administrative Appeals Tribunal, Brisbane
MEDIA NEUTRAL CITATION:
 AATA 604
Mr R G Kenny, Senior Member
27 August 2013
1. The Commissioner of Taxation ( " the Commissioner " ) has determined that the applicant was an " Australian resident " in the
ATC 610years ending 30 June 2007 and 30 June 2008 ( " the relevant tax years " ) in accordance with the provisions of the Income Tax Assessment Act 1997 (Cth) ( " ITAA 1997 " ) and the Income Tax Assessment Act 1936 (Cth) ( " ITAA 1936 " ). On 2 June 2011, the Commissioner issued notices of assessment in which the applicant ' s income was identified as $ 116,744 and $ 168,635, respectively, for the relevant tax years. In an application dated 20 February 2012, the applicant objected to those assessments. The Commissioner disallowed the objection in relation to the 2007 tax year but allowed, in part, the objection to the 2008 tax year on the basis that part of the applicant ' s foreign income earned in the United Kingdom ( " UK " ) in May and June 2008 was exempt under s 23AG of the ITAA 1936. Accordingly, an amended assessment for the 2008 tax year was issued on 7 December 2012 on the basis of the applicant ' s income of $ 161,282. The applicant seeks review of the Commissioner ' s objection decisions which were based upon the applicant being a resident of Australia in the relevant tax years. 
2. The issue for determination is the residency status of the applicant in the relevant tax years, during which he spent much of his time in employment outside of Australia. An Australian resident is assessable on income derived from all sources, whether in or out of Australia,
3. An " Australian resident " means a person who is a resident of Australia for the purposes of the ITAA 1936. A " resident of Australia " is defined in s 6(1) of the ITAA 1936 to mean:
- (a) a person, other than a company, who resides in Australia and includes a person:
- (i) whose domicile is in Australia, unless the Commissioner is satisfied that the person ' s permanent place of abode is outside Australia;
- (ii) who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that the person ' s usual place of abode is outside Australia and that the person does not intend to take up residence in Australia; or
- (iii) who is:
- (A) a member of the superannuation scheme established by deed under the Superannuation Act 1990; or
- (B) an eligible employee for the purposes of the Superannuation Act 1976; or
- (C) the spouse, or a child under 16, of a person covered by sub-subparagraph (A) or (B);
4. Those bases for determining residence are expressed as alternatives.
5. The applicant was born in the UK in the 1950s and migrated with his parents to Australia in the 1960s. He was married in the 1970s and, until 1985, he was employed in various capacities in Australia. In that year, he became an Australian citizen and did so because he intended to travel abroad and wanted to ensure a smooth transition back to Australia when he returned. He and his wife each hold British and Australian passports. Their immediate family in Australia included the applicant ' s parents, sister and several cousins as well as his wife ' s parents, nieces and nephews.
6. In 1985, the applicant left Australia with his wife to work overseas. His motivation for this was for them to enjoy travel, to broaden their experiences and for him to obtain more remunerative work than that which was available in Australia. In his affidavit,
ATC 611family in the UK. They returned to Australia in 1987 for several months during which time the applicant was employed in Australia. He returned to the UK with his wife in 1987 and said that their intention was to reside permanently in the UK. They purchased a flat in London in 1988. Until 1997, the applicant gained work with Overseas Technical Service ( " OTS " ), Ipedex Limited and Delton Personnel International Limited ( " Delton " ). With those companies at those times, he was based in London but was required to work variously in Thailand, Malaysia, Pakistan, China, Indonesia and Nigeria. During that period, he would return to Australia at times for months at a time and also would take rotational breaks in the UK. They sold their London flat in 1991 because it had increased in value which allowed them to make a profit on the sale.
7. In 1997, they returned to Australia because the applicant
s father was in ill health. They remained in Australia until 2006 during which time the applicant was self-employed. In 2003, they purchased and resided in a house (
the BCM property
) on the Gold Coast, which was sold in June 2007. The applicant travelled to France for work in April 2007 and his wife joined him there in June 2007.
8. The applicant is a mechanical engineer, a competency assurance engineer and a workplace trainer and assessor. From April 2006 and in the relevant tax years, he worked in those various capacities in Oman, the United Arab Emirates (
), France, Korea and the UK. The applicant said that, in May 2006, he formed the intention to live in the UK. The periods in and absences from Australia in the relevant tax years are not in dispute and may be summarised:
|2007 tax year||Location||Duration|
|1 July - 4 July 2006||Oman||3 days|
|4 July - 20 July 2006||Australia||17 days|
|20 July 2006 - 10 March 2007||UAE||233 days|
|10 March - 8 April 2007||Australia||30 days|
|8 April - 30 June 2007||France||84 days|
|2008 tax year||Location||Duration|
|1 July - 23 September 2007||France||84 days|
|23 September - 1 November 2007||Korea||39 days|
|1 November - 5 December 2007||Australia||35 days|
|5 December 2007 - 14 January 2008||Korea||40 days|
|14 January - 8 February 2008||Australia||26 days|
|8 February - 22 February 2008||Korea||14 days|
|22 February - 7 April 2008||Australia||46 days|
|7 April - 24 April 2008||UAE||17 days|
|24 April - 3 May 2008||Australia||10 days|
|3 May - 30 June 2008||UK||58 days|
ATC 612On those figures, the applicant was in Australia for 47 days in the 2007 tax year and for 117 days in the 2008 tax year.
10. In Oman, the applicant was contracted to Ipedex LLC from 4 April 2006 and for the first three days of the 2007 tax year. His wife remained in Australia during that time. The company provided him with accommodation and a motor vehicle. On return to Australia, the applicant was unemployed until he commenced work in the UAE from 20 July 2006 with Petrofac International Limited (
). His contract was for one year which was renewable for further periods of two years by agreement of both parties. He was based in Sharjah and periodically renewed his 60 day visa by travelling to and from Oman on a weekend. He was accompanied by his wife in the UAE and, while there, his mother lived at the BCM property and the applicant continued to pay the mortgage. In Sharjah, they lived in a furnished three bedroom villa leased by Petrofac and the applicant leased a car with invoices paid by Petrofac insofar as its use related to business purposes. The applicant did not have to pay any income tax in the UAE. He did not complete the contract with Petrofac and, on leaving Sharjah, he was invoiced for depreciation of the furniture in the villa in which he and his wife stayed and was required to reimburse Petrofac for all electricity, water and phone costs which, initially, had been met by Petrofac. At that time, his connections to Australia were his and his wife
s immediate families, his bank account with the Savings Bank of South Australia (
) and the BCM property with contents and his motor vehicle. The contract does not record an Australian address for the applicant and,
11. On return to Australia on 10 March 2007, the applicant was unemployed until 8 April 2007 when he contracted to work for Delton. He was based in France from 8 April 2007 until 23 September 2007 where he worked in Paris and where his wife joined him in June 2007. They lived in a self-contained hotel apartment paid for by Delton who also supplied a car for business purposes. During that time, the BCM property was sold in June 2007.
12. The applicant was based in Korea from 23 September 2007 to 22 February 2008 before returning to Australia. In Korea, he lived with his wife in fully furnished accommodation which was organised and paid for by Delton. Whilst in Korea, he worked six weeks on/six weeks off duty. In the " off " periods, his accommodation was occupied by another Delton employee and he and his wife returned to Australia where they visited the applicant ' s mother-in-law who was suffering from Alzheimer ' s disease. He returned to Australia for the six week periods from 1 November until 5 December 2007 and from 14 January to 8 February 2008. There, they stayed in rental accommodation. The applicant did not have to pay any income tax in Korea. On completing his work in Korea in February 2008, he and his wife returned to Australia and stayed with the applicant ' s niece at the Gold Coast until 7 April 2008. The Applicant was unemployed during that time.
13. The applicant then worked for Delton in the UAE until 24 April 2008. In the UAE, he was based in Abu Dhabi and his accommodation was paid for by Delton. His wife remained in Australia during that period. The applicant returned to Australia from 24 April 2008 until 3 May 2008 to support his wife who had placed her mother into a home. He was unemployed during this period.
14. On 3 May 2008, the applicant and his wife went to the UK where he worked for Delton and remained until after the 2008 tax year. The applicant said that they had the intention of making the UK their permanent home at that stage. He also said that he and his wife had always intended to retire in Australia so the intent was to be permanently in the UK in the sense of a long term stay there. He took up his directorship with Delton which he expected to be a long term arrangement. On their arrival in the UK in May 2008, Delton provided them with three weeks
ATC 613accommodation and they then leased a two bedroom apartment in May 2008 in Lancashire in which they installed household furniture. The lease was extended until January 2009. 
15. In October 2008, the health of the applicant
s mother-in-law deteriorated to a point where she was admitted to a care facility.
16. In the relevant tax years, the applicant maintained a bank account with the SASB into which his salary was paid when he worked in Oman, the UAE, France, and Korea, and from which, by direct debit, mortgage payments were made. For a short time, he had maintained a temporary account in Oman. In August 2008, he and his wife established a joint bank account in the UK which remains current with a balance of
17. In his affidavit, the applicant declared that, in July 2006 and in July 2007, he sought and obtained from
various accounting firms in South Australia and Queensland, and the ATO
The applicant ' s wife
18. The applicant ' s wife gave evidence in relation to the sale of the BCM property in June 2007. She said that it was on the market for about six months before it was sold and that its contents remained there until then, at which time they were placed in storage in a facility nearby.
19. A letter from the Commissioner, dated 4 July 2012, requested information from the applicant on a range of matters in the form of questions relating to the year ended 30 June 2007 and 30 June 2008.
- 4. What is the purpose of your visit overseas?
Please refer to the following table for answer to Question 4.
- 5. What are your intentions in regard to residency? Do you intend to reside overseas permanently?
Both Peter and I reside in Australia permanently.
- 7. What was the purpose of the visits to Australia since first leaving Australia?
When Peter has worked overseas, we returned to see our family members.
- 8. Do you have a permanent place to live overseas?
No. Please refer to the table answering Question 4.
- 9. Dou [ sic ] you have any assets overseas, for example investments, property or bank accounts?
That response also advised that the applicant returned to Australia on 1 October 2009 and that the wife returned on 29 March 2009. The table referred to in Questions 4 and 8 of that document listed the places in which the applicant had worked from 2005 to 2009, the times when he was there and whether his wife accompanied him.
20. A copy of the contractual agreement, signed by the applicant on 9 July 2006, between him and Petrofac listed his residence as the BCM property.
ATC 614as well as the cost of a car for business purposes. Additionally, it provided for the cost of air fares from the nearest airport from the applicant ' s " Point of Origin ( " POO " ) " to a " Worksite " airport " for each approved rotational leave and on contract completion " . 
21. In evidence were copies of the applicant
s Australian immigration incoming passenger cards for July 2006 to October 2009 and Australian immigration outgoing passenger cards for April 2006 to August 2009.
22. The incoming cards contained a series of questions and spaces in which responses were to be given. In summary, they read:
|Date||Intended address in Australia||Do you intend to live in Australia for the next 12 months||Resident returning to Australia||Country where you spent most time abroad|
|4/7/2006||the BCM property||no||yes||Oman|
|10/3/2007||the BCM property||yes||yes||UAE|
|1/11/2007||a Gold Coast property||yes||yes||France/Korea|
|14/1/2008||a Gold Coast property||yes||yes||Korea|
|21/2/2008||a Gold Coast property||yes||yes||Korea|
|24/4/2008||the BCM property||yes||yes||UAE|
|13/4/2009||the BCM property||yes||yes||UK|
|11/6/2009||a Gold Coast property||no||yes||Bangladesh|
|6/8/2009||a Gold Coast property||yes||yes||Bangladesh|
|1/10/2009||a Gold Coast property||yes||yes||Bangladesh|
23. The applicant ' s outgoing passenger cards required a choice from the following options: D - Visitor or temporary entrant departing; E - Australian resident departing temporarily; or F - Australian resident departing permanently. As indicated below, in each case, the applicant selected option E . In his evidence, he said that this was to indicate that he would be returning to Australia from time to time to visit relatives. In summary, the cards read:
|Date||E. Australian resident departing temporarily||Intended length of stay overseas/reason for travel||Country where you will spend most time abroad|
|3 April 2006||yes||1 year/employment||Oman|
|20 July 2006||yes||1 year/business||UAE|
|8 April 2007||yes||4 months/business||France|
|5 December 2007||yes||2 months/business
|8 February 2008||yes||2 months/business||Korea|
|7 April 2008||yes||1 month/business||UAE|
|3 May 2008||yes||1 year/business||UK|
|16 May 2009||yes||1 month/business||Bangladesh|
|7 July 2009||yes||30 days/business||Bangladesh|
|29 August 2009||yes||1 month/business||Bangladesh|
24. Also in evidence were copies of the Australian immigration incoming and outgoing passenger cards of the applicant ' s wife from July 2006 to November 2009. In each of the incoming cards, she declared that she was a resident returning to Australia. In all but the card dated 5 October 2008, she declared that she intended to live in Australia for the next 12 months. In her outgoing passenger cards, she declared that she was an " Australian resident departing temporarily " with intended periods overseas varying from 1 month to 1 year.
25. The issue for determination is whether, in the relevant tax years, the applicant was a
resident of Australia
as defined in s 6(1) of the ITAA 1936 and, therefore, for the purposes of the ITAA 1997. It is not in dispute that the applicant bears the onus of proof in this matter
The applicant ' s case
26. For the applicant, Mr Harrison submitted that residency for a given tax year is to be determined on the basis of the circumstances prevailing as at 30 June of that tax year, having regard to events both before and after that date in so far as they are probative of the position as at 30 June.
27. Mr Harrison also submitted that there was no basis in law for adopting a
meaning for the term
28. As to residence in Australia, Mr Harrison submitted that the applicant did not reside in Australia at the relevant times and that the issue did not turn on whether there was a continuity of contact with Australia but whether he regarded Australia as remaining his home. In that regard, he submitted that the reason for the applicant
s return to Australia from time to time was to visit with his and his wife
ATC 616his home was where he was for most of the time.
29. Mr Harrison submitted that it was not clear in which sense the term
is used in the immigration passenger cards. He submitted that any interpretation in the mind of the applicant should not necessarily be used for the term as it appears in tax legislation. He was also critical of the card in that the options given do not exhaust all possibilities, noting that as a reason for departing Australia there was no option of
. He submitted that some weight may attach to the card entries in the absence of other evidence but that this was not the case with applicant.
30. Mr Harrison referred to the matters raised in the respondent
s written submission
31. In relation to the 2008 year, Mr Harrison submitted: that, although the applicant spent more time in Australia than in 2007, this did not mean he was permanently there; that, while the applicant owned a car in Australia it was for sale on commission by his cousin; that the return to Australia during the off-work rotation arrangement in Korea was to meet his moral obligations to visit family; and that the return to Australia was sensible because of the provision of free air fares.
32. Mr Harrison also made submissions on the issue of the applicant ' s domicile in Australia and whether he had established a permanent place of abode outside Australia in the relevant tax years.
Residence: ordinary concepts
33. Mr Harrison cited no specific authority for the proposition that a person
s residence for the whole of a tax year was to be determined as at 30 June of the year. He noted the comment by Franki J in
Federal Commissioner of Taxation v Applegate 
34. I do not accept Mr Harrison
s submission that there was no basis in law for adopting a
meaning for the term
as used in the ITAA 1936. In
ATC 617Tribunal. 
Deputy Commissioner of Taxation v PM Developments Pty Ltd 
Hafza v Director-General of Social Security , Wilcox J referred to residence as including two elements: physical presence in a particular place and the intention to treat the place as home; at least for the time being, though not necessarily forever. 
Once a person has established a home in a particular place ... .a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place ... . together with an intention to return to that place and an attitude that the place remains " home " . 
Ibid. See also Subrahmanyamat 1187; at [ 56 ] and Iyengar and Commissioner of Taxation [ 2011 ] AATA 856 at [ 48 ] . Taxpayer and Commissioner of Taxation [ 2013 ] AATA 394
35. That analysis reflects the elements noted above and I am satisfied that it is relevant in this matter. In so determining, I also note that the question whether an individual
in a particular country is a question of fact and degree and not of law.
36. The respondent has identified the following factors as demonstrating that, in the relevant tax years, the applicant retained a continuity of association with Australia, an intention to return to Australia and an attitude that Australia remained his ' home ' : his citizenship; his family connections to Australia; his returns to Australia when he was unemployed; the duration of his stays in Australia; his entries on immigration departure and arrival cards; his employment in places overseas on short term contracts; his ownership of a house in Australia; his relatives ' use of and his storage of personal items in the house until it was sold; his storage of personal items in Australia; his continuation of mortgage payments until it was sold; his use of his Australian address for notices in relation to his contract for overseas work; the absence of a permanent home overseas; his reliance on an Australian bank account while overseas; his ownership of a vehicle in Australia; the absence of permanent work overseas before May 2008; and his return to Australia permanently in 2009.
37. The applicant became an Australian citizen in 1985. That, alone, does not make him a resident of Australia in the relevant tax years. However, his reason for seeking Australian citizenship is relevant to that issue. He did so in the context of travelling overseas and to enable him to return more easily to Australia in the future. Even in 1985, he was contemplating a return to Australia. Also, by the commencement of the relevant tax years, he had been an Australia citizen for more than 20 years. In all of his official departure and arrival documentation, he identified himself as Australian by declaring his Australia passport even though he was also a British citizen.
38. The applicant had strong family connections in Australia during the relevant tax years in the case of his and his wife ' s relatives. His evidence was that he had no friends or family in places he was contracted to work, except for the UK where he was employed for the final weeks of the 2008 tax year. Clearly, he felt an obligation to return to Australia when health problems emerged with family members. The applicant ' s evidence was that his return to Australia in 1997 was due to his father ' s illness. However, he stayed in Australia on that occasion until 2006 and, in that period, he was employed in Australia and purchased the BCM property which he retained for almost all of the 2007 tax year. His returns to Australia cannot be explained merely on the basis of moral obligation as it was not due to health concerns alone which were responsible for them. In particular, he foreshadowed in advance such returns when entering into the contractual arrangement with Delton in April 2007. He did so by nominating a Gold Coast address as his
ATC 618POO to which he was provided with return air fares from time to time including, significantly, when he completed his contract. He exercised that contractual right by returning to Australia during rotational breaks in Korea and at the end of his contract there. In the relevant tax years, he was in Australia for 47 and 117 days, respectively; his wife was in Australia for approximately 115 and 130 days, respectively. In 2008, he was present in Australia for a longer period than in any other country.
Re Taylor; Ex Parte Natwest Australia Bank Limited
40. The applicant ' s evidence was that, in May 2006, he formed the intention to live in the UK. At that time, he was based in Oman and his wife was in Australia. When his work in Oman was completed, he returned to Australia until he travelled to Sharjah with his wife to take up a position in the UAE which continued until March 2007. Again, he returned to Australia for 30 days before travelling to France in April 2007 where his wife joined him in June 2007. They did not live in the UK during the 2007 tax year. The passenger cards, the returns to Australia and the absence from the UK are not consistent with a stated intention to live permanently in the UK at that time. I have noted that, at the end of the 2007 tax year, the applicant believed that he had not been a resident of Australia for tax purposes. This was based on incorrect advice that his absence from Australia for more than 183 days removed his residency status in Australia.
41. Only after travelling to the UK in May 2008 did the applicant seek to rent or lease premises on his own behalf. Prior to this in overseas working situations, these were arranged or provided for him. In the UK, he lived in leased premises with his wife. That may support his contention that he was resident of the UK at that time. However, it is well established that a person may have residence in more than one country at a particular time,
42. Those matters demonstrate that the applicant retained a continuity of association with Australia as well as an attitude that Australia continued to be his home in the relevant tax years. Those conclusions are supported by his ownership of a house in Australia until June 2007 as well as a vehicle until 2008 and his storage of personal items in the house and then in a commercial facility in Australia until after the 2008 tax year. His attitude that Australia was his home and his continuing connection to Australia is also supported by his reliance on his Australian address for notices in relation to his contracts for overseas work even, at times, after it had been sold. He also continued to rely on an Australian bank account for disbursements and for his receipt of income payments when overseas. While inertia, as submitted on his behalf, may be part of the reason for the use of an Australia bank account, his reliance thereon demonstrates confidence in and a continuing connection with the Australian arrangement.
ATC 619The Tribunal has, in the past, recognised the difficulties posed by questions of residence as well as those relating to domicile and permanent place of abode. 
44. The definition of
resident of Australia
in s 6(1) of the ITAA 1936 is expressed in terms of
the alternatives stated therein. Referred to in that provision is a person domiciled in Australia, unless he has a permanent place of abode outside Australia.
Tanumihardjo v Federal Commissioner of Taxation . 
The inclusory words of the definition clearly in paragraph one extend the ordinary meaning of the word resident to persons domiciled in Australia but subject to the exclusion if the Commissioner is satisfied that the person has a permanent place of abode outside Australia. 
Ibid at 5332.
45. The view that the domicile test extends the ordinary concept test of residence was also expressed by Northrop J in Applegate where His Honour said:
Paragraphs (a)(i) and (ii) of the definition are complementary provisions enlarging the group of persons who do not reside in Australia but become liable to pay income tax in Australia. 
at 12. (1979) 38 FLR 1
46. Accordingly, I am satisfied that the domicile test extends the concept of residence for the purposes of the ITAA 1936 so that a person who is not a resident in Australia under the ordinary concepts test may nonetheless be a resident in accordance with the domicile test. I have determined that the applicant was resident in Australia for the relevant tax years and, therefore, it is not necessary to consider the matter further under the extended residence test relating to domicile.
47. The Tribunal affirms the objection decisions under review.