CASE 8/2013

Members: RG Kenny SM

RG Kenny SM [2nd]

Tribunal:
Administrative Appeals Tribunal, Brisbane

MEDIA NEUTRAL CITATION: [2013] AATA 604

Decision date: 27 August 2013

Mr R G Kenny, Senior Member

27 August 2013

BACKGROUND

1. The Commissioner of Taxation ( " the Commissioner " ) has determined that the applicant was an " Australian resident " in the


ATC 610

years 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. [1] The hearing was conducted in private in accordance with s 14ZZE of the Taxation Administration Act 1953 (Cth) ( “ TAA 1953 ” ) and s 35(2) of the Administrative Appeals Tribunal Act 1975 (Cth).

LEGISLATION

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, [2] See ss 6-5(2) and 6-10(4) of the ITAA 1997. whereas a foreign resident is assessable only on income derived from Australian sources. [3] See ss 6-5(3) and 6-10(5) of the ITAA 1997. The applicant contends that he was not an Australian resident at all material times in each of the relevant tax years.

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. [4] See below at paras [ 44 ] - [ 46 ] . Accordingly, if any one of them is met, residence is established. The Commissioner submitted that whether a person " resides in Australia " discloses the " ordinary concepts test " ; that the reference above in paragraph (i) of the ITAA 1936 constitutes the " domicile test " ; and that the remaining tests have no application in this matter. The Commissioner ' s contention is that, on the ordinary concepts test and on the domicile test, the applicant was an Australian resident in each of the relevant tax years.

EVIDENCE

The applicant

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, [5] Exhibit 5. he stated that the trip was to visit his and his wife ' s


ATC 611

family 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. [6] See outgoing passenger cards dated 8 April 2007 and 13 June 2007 for the applicant and his wife, respectively. The BCM property was on the market for about six months and was vacant until it was sold in June 2007. Their furniture and possessions remained in the vacant house. His wife ' s parents performed a caretaker role in relation to the house and stayed there on occasional weekends. On the sale of the house, furniture and other belongings were placed in storage in a nearby facility on 1 July 2007. [7] Exhibit 5, Annexe 10. The applicant also owned a BMW motor vehicle which he entrusted to his cousin to sell, on a commission basis, for him. This sale was not realised until September 2008 during which time the cousin had the use of the vehicle. [8] Exhibit 5, Annexe 8.

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 ( " UAE " ), 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: [9] Exhibit 5, pp 3-6.

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

9.


ATC 612

On 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 ( " Petrofac " ). 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 ( " SBSA " ) and the BCM property with contents and his motor vehicle. The contract does not record an Australian address for the applicant and, [10] Exhibit 5, Annexe 3-4. during his stay in the UAE, he arranged for mail redirection from the BCM property to Sharjah.

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. [11] Exhibit 5, Annexe 1. Their personal belongings remained in Australia until at least the end of 2008. The applicant did not have to pay any income tax in France. While he was in France, the directors of Delton offered him a directorship and part ownership of the company which he was to take up on travelling to the UK after he completed his work in Korea.

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 613

accommodation 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. [12] Exhibit 5, Annexe 20. They had intended to purchase a property in the UK and had started searching the internet for options even before they arrived in the UK. Also, while working in Paris, they took a two week break in the UK in September 2007 and, while there, inspected prospective houses. However, they did not purchase property in the UK apart from the apartment which they had owned for three years from 1988. The applicant purchased a car while living in the UK [13] Exhibit 2, T Document 13, p. 105. and he paid income tax while working there in 2008. [14] Exhibit 5, Annexe 18.

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. [15] Exhibit 5, Annexe 20. His wife returned to Australia to assist her father in coping with her mother ' s difficulties. The applicant believed that, but for the health of his wife ' s mother, he would have remained in the UK with Delton. The applicant worked in Bangladesh from March to December 2009 and then returned to Australia where he has since lived and worked. They purchased a house in the Gold Coast hinterland in January 2012. [16] Exhibit 5, p. 8, [ 67 ] - [ 68 ] .

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 € 5,000. [17] Exhibit 5, p. 8, [ 70 ] . The applicant agreed that he had no family or friends in those countries but did have some business associates.

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 " [18] Australian Taxation Office. advice that, as long as he was outside of Australia for 183 days in a tax year, he did not have to pay tax in Australia in that year. [19] Exhibit 5, p. 8, [ 71 ] .

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.

Other evidence

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. [20] Exhibit 2, T Document 8, pp. 50-52. The response, dated 16 July 2012, [21] Exhibit 2, T Document 9, pp. 53-54. was provided by the applicant ' s wife and, in his evidence, the applicant confirmed the correctness of the responses. They read:

  • 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?

    No.

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. [22] Exhibit 2, T Document 9, pp. 55-57.

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. [23] Exhibit 2, T Document 11, pp. 62-63. The applicant ' s contract with Delton, dated 8 April 2007, provided that Delton would meet the cost of the applicant ' s accommodation in France, Nigeria and Korea


ATC 614

as 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 " . [24] Exhibit 2, T Document 11, p. 88. The applicant identified his POO as a Gold Coast address and also listed the telephone number from that address. [25] Exhibit 2, T Document 11, p. 87. This was identified by the applicant as the address of his wife ' s niece with whom he and his wife stayed when in Australia after the sale of their house. The applicant agreed that he was not living there at that time but was required to give an address and this was his most recent one. Asked why he did not nominate the UK as his POO, the applicant said that the UK was not his domicile at that time.

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. [26] Exhibit 3. They were signed by the applicant who agreed that their contents were correct, that he was aware of the declaration on each card and that he was aware that each card was an official government document. On each occasion, he identified himself by his Australian rather than his British passport.

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:


ATC 615


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 [27] For the reason for travel in this card, “ business ” appears to be deleted with “ holiday ” substituted. That is also the case with the card of the same date in the name of the applicant ’ s wife. Korea
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.

ISSUE

25. The issue for determination is whether, in the relevant tax years, the applicant was a " resident " or 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 [28] See s 14ZZK(b)(i) of the TAA 1953; Commissioner of Taxation v Dalco (1990) 168 CLR 614 and Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 94 ATC 4844 . or that the standard of proof is on the balance of probabilities. [29] Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139 and Re Kirby and Collector of Customs (1989) 20 ALD 369 .

SUBMISSIONS

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. [30] Citing Taxation Ruling No IT 2650 Income tax: residency – permanent place of abode outside Australia , para 18 and Federal Commissioner of Taxation v Applegate (1979) 38 FLR 1 at 3. Subsequent to the hearing, Mr Harrison referred to several provisions in the ITAA 1936 in relation to this issue. [31] This was in a directions hearing. The provisions cited were ss 79A, 94(13)(a), 95AB(3), 97(1), 98(1),98(2), 98(2A), 98A(1), 99(2), 99H(1)(b), 100(1)(c), 100(1A)(c) of the ITAA 1936. The respondent replied with a submission referring to Commissioner of Taxation v Miller (1946) 73 CLR 92 at 99, 100. For the applicant, it was further submitted that, in determining that a taxpayer is resident as at 30 June of a tax year, " the Tribunal has to look at the Taxpayer ' s conduct throughout the year, and earlier so that, for example, the fact that the Taxpayer happened to be out of Australia on 30 June would be only one factor to consider in deciding the issue. " [32] Received by the Tribunal on 15 August 2013.

27. Mr Harrison also submitted that there was no basis in law for adopting a " wide " meaning for the term " resident " . [33] Citing Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at 36, 37, 42 and 43; Deputy Commissioner of Taxation v PM Developments Pty Ltd (2008) 173 FCR 247 at 253-4; and Travelex Ltd v Commissioner of Taxation (2010) 241 CLR 510 at 534. Contra Re Executors of the Estate of Subrahmanyam v Commissioner of Taxation [ 2002 ] AATA 1298 .

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 ' s parents. [34] Citing Hafza v Director-General of Social Security (1985) 6 FCR 444 at 449-50. He noted the unusual life of the applicant in that he needed a home, for the time being, in various places where he worked with no strong connection with any particular place except for his flat in the UK from 1988 to 1991, his house in Australia from 2003 until 2007 and his leased premises in the UK towards the end of the 2008 tax year. Each of those places, he submitted, was his home on those occasions but, in between them in relation to long term contacts,


ATC 616

his home was where he was for most of the time.

29. Mr Harrison submitted that it was not clear in which sense the term " resident " 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 " unsure " . 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. [35] Referring to Re Taylor v ; Ex Parte Natwest Australia Bank Ltd (1992) 37 FCR 194 at 200 on appeal to Taylor v Natwest Australia Bank Ltd (Unreported, Full Federal Court, 16 October 1992) BC9203757. This was because the applicant had in mind that he would be visiting family in Australia.

30. Mr Harrison referred to the matters raised in the respondent ' s written submission [36] See para 19 of Exhibit 4. and submitted: that no great weight should attach to the fact of the applicant ' s Australian citizenship; that the presence of family in Australia did not weigh against the applicant as they provided the moral obligation for him to return to Australia from time to time; that the applicant was not really " unemployed " during his periods of return to Australia but, rather, between jobs which were periods of relatively short duration; that, while the applicant undertook short term contracts overseas, this was the nature of his work over the years; that, while the applicant owned a house in Australia for almost all of the 2007 tax year, he did not live there for the majority of the 2007 tax year and his eventual sale of the house was in favour of Australia no longer being his pace of residence; that the keeping of household items in the unsold house was not unusual; that the placement of household items into storage in a place close by did not necessarily mean that he intended to use them in the future; that the use of his Australian house address for correspondence after it was sold was not unusual as a mail redirection order was in place; and that, while he used an Australian bank account for his transactions while overseas, this was merely a matter of inertia by the applicant.

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.

CONSIDERATION

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 [37] (1979) 38 FLR 1 at 3. ( " Applegate " ) that tax liability arises annually and that a taxpayer ' s permanent place of abode must be determined annually. [38] Federal Commissioner of Taxation v Applegate (1979) 38 FLR 1 at 3. While the annual nature of the assessment is not in dispute, other references in Applegate refer to the need to consider the position " during the relevant period " . [39] Ibid and see Northrop J at 9. As noted above, Mr Harrison referred, subsequent to the hearing, to several provisions in the ITAA 1936 on this matter. [40] These were ss 79A, 94(13)(a), 95AB(3), 97(1), 98(1),98(2), 98(2A), 98A(1), 99(2), 99H(1)(b), 100(1)(c), 100(1A)(c) of the ITAA 1936. Some of those provisions focus on the circumstances as at 30 June of a tax year, but do so specifically in relation to the purposes of those provisions. [41] See ss 95AB(3), 99H(1)(b) of the ITAA 1936 which relate to beneficiaries of a trust. Others provide for an apportionment of income to separate parts of a tax year. [42] See ss 79A, 94(13)(a), 97(1), 98(1), 98(2), 98(2A), 98A(1), 99(2), 100(1)(c), 100(1A)(c) of the ITAA 1936 As I read them, the provisions referred to by Mr Harrison do not support the proposition that, generally, the characterisation of a person ' s residence in a given tax year is to be determined as at 30 June of that tax year. [43] In this regard, I have noted the cases cited by the respondent viz: Commissioner of Taxation v Miller (1946) 73 CLR 92 at 99, 100 per Latham CJ citing Levine v Inland Revenue Commissioners (1928) AC 217 at 232. I am satisfied that the matter of residence at issue in this case should be assessed over the broader period of the tax year without particular relevance being given to the circumstances on the last day of the financial year.

34. I do not accept Mr Harrison ' s submission that there was no basis in law for adopting a " wide " meaning for the term " resident " as used in the ITAA 1936. In Applegate , [44] (1979) 38 FLR 1 at 10; citing Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99, 100. Northrop J described the word " reside " as having a " very wide meaning " and that approach has been applied by the


ATC 617

Tribunal. [45] See, for example Re Executors of the Estate of Subrahmanyam v and Federal Commissioner of Taxation (2002) 51 ATR 1173 at 1186 ( “ Subrahmanyam ” ) and Taxpayer and Commissioner of Taxation [ 2013 ] AATA 394 [ 45 ] - [ 48 ] . Mr Harrison identified the comments of Logan J in
Deputy Commissioner of Taxation v PM Developments Pty Ltd [46] (2008) 173 FCR 247 at 253-4. as representing the correct approach to take to the construction of a taxing statute. However, as I read them, His Honour was concerned that the imposition of a duty by the Crown requires " clarity of language, not inexactitude or indirect references. " [47] Ibid at 252: Referring to the judgement of Deane J in Hepples v Commissioner of Taxation (1992) 173 CLR 492 at 510-511 in which the judgements of Lord Parker of Waddington were cited from Brunton v Commissioner of Stamp Duties [ 1913 ] AC 747 at 760 and Attorney-General v Milne [ 1914 ] AC 765 at 781. I am satisfied that the terms " resident " and " resides " pose no ambiguity and should be given their ordinary meaning with regard being had to the comments, noted above, from Applegate . [48] (1979) 38 FLR 1 . Dictionary meanings of the term have been applied by the Tribunal. These include " reside " as meaning " to dwell permanently or for a considerable time; have one ' s abode for a time " [49] The Macquarie Dictionary 5th Ed. (2009). and " (d) well permanently or for a considerable time, have one ' s regular home in or at a particular place . " [50] The New Shorter Oxford English Dictionary Vol. 2 (1993). In
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. [51] (1985) 6 FCR 444 at 449. His Honour continued:

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 " . [52] Ibid. See also Subrahmanyam at 1187; Iyengar and Commissioner of Taxation [ 2011 ] AATA 856 at [ 56 ] and Taxpayer and Commissioner of Taxation [ 2013 ] AATA 394 at [ 48 ] .

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 " resides " in a particular country is a question of fact and degree and not of law. [53] Commissioner of Taxation v Miller (1946) 73 CLR 93 at 97, 101.

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 618

POO 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.

39. In Re Taylor; Ex Parte Natwest Australia Bank Limited , [54] (1992) 37 FCR 194 (Bankruptcy District of New South Wales). Lockhart J in the Supreme Court of New South Wales considered the entries on passenger cards completed by the debtor to be relevant in relation to the definition of " ordinary resident " in s 43 of the Bankruptcy Act 1966 (Cth). I am also satisfied that the applicant ' s entries on such cards in the relevant tax years are of assistance in determining his residency status under the ITAA 1936. [55] See also Re Shand and Commissioner of Taxation [ 2003 ] AATA 279 at [ 17 ] . Those entries are set out above. [56] See paras 22 and 23 (above). In each of his incoming passenger cards, the applicant described himself as a " resident returning to Australia " and relied upon his Australian passport; in each of the outgoing passenger cards, he described himself as an " Australian resident departing temporarily " and again relied upon his Australia passport. In all but one card, [57] The card dated 5 December 2007, appeared to give the reason for travel as “ holiday ” . he identified the purpose of his travel as being of a " business " or " employment " nature and the expected duration was variously stated to be between one month and one year. I have noted Mr Harrison ' s criticism of the form of the passenger cards and the absence of alternative options for stating the reason for leaving Australia. However, the responses by the applicant are clear and point strongly to a continuing residency connection with and intention to return to Australia. That is also the case with the passenger cards completed by his wife.

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, [58] See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99. and I am satisfied that he retained his Australia residency status throughout the 2008 tax year. In that regard, I note that he continued to identify himself as an Australian resident in incoming and outgoing passenger cards throughout 2008 and in 2009.

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.

43.


ATC 619

The 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. [59] See, for example, Re Shand v Federal Commissioner of Taxation [ 2003 ] AATA 279 at [ 35 ] . However, in this matter, I am satisfied that, in the relevant tax years, the applicant retained a continuity of association with Australia, together with an intention to return to Australia and an attitude that Australia remained his home. I am satisfied, on balance, that the applicant has not discharged the onus of proving that, throughout the 2007 and 2008 tax years, he was not a " resident " or a " resident of Australia " for the purposes of s 6(1) of the ITAA 1936.

Domicile test

44. The definition of " resident of Australia " in s 6(1) of the ITAA 1936 is expressed in terms of " meaning " and " including " 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. [60] See s 6(1) (definition of ‘ resident or resident of Australia ’ para (a)(i)) of the ITAA 1936 and para 3 (above). Mr Harrison submitted that use of the term " means and includes " should be taken to limit the meaning of " residence " so that the domicile test serves to exclude a taxpayer as a resident. In that regard, Mr Harrison referred to the observations of Hill J in
Tanumihardjo v Federal Commissioner of Taxation . [61] (1998) 99 ATC 5330 . His Honour did not reach a conclusion on the matter of s 6(1)(a)(ii) of the ITAA Act 1936. However, as I read that case, Hill J, who gave the judgement of the Full Federal Court, was referring specifically to the terms of s 6(1) (definition of ' resident or resident of Australia ' para (a)(ii)) of the ITAA 1936. The domicile test is set out in s 6(1) (definition of ' resident or resident of Australia ' para (a)(i)) thereof and, in relation to that provision, Hill J said:

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. [62] 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. [63] (1979) 38 FLR 1 at 12.

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.

DECISION

47. The Tribunal affirms the objection decisions under review.


Footnotes

[1] The hearing was conducted in private in accordance with s 14ZZE of the Taxation Administration Act 1953 (Cth) ( “ TAA 1953 ” ) and s 35(2) of the Administrative Appeals Tribunal Act 1975 (Cth).
[2] See ss 6-5(2) and 6-10(4) of the ITAA 1997.
[3] See ss 6-5(3) and 6-10(5) of the ITAA 1997.
[4] See below at paras [ 44 ] - [ 46 ] .
[5] Exhibit 5.
[6] See outgoing passenger cards dated 8 April 2007 and 13 June 2007 for the applicant and his wife, respectively.
[7] Exhibit 5, Annexe 10.
[8] Exhibit 5, Annexe 8.
[9] Exhibit 5, pp 3-6.
[10] Exhibit 5, Annexe 3-4.
[11] Exhibit 5, Annexe 1.
[12] Exhibit 5, Annexe 20.
[13] Exhibit 2, T Document 13, p. 105.
[14] Exhibit 5, Annexe 18.
[15] Exhibit 5, Annexe 20.
[16] Exhibit 5, p. 8, [ 67 ] - [ 68 ] .
[17] Exhibit 5, p. 8, [ 70 ] .
[18] Australian Taxation Office.
[19] Exhibit 5, p. 8, [ 71 ] .
[20] Exhibit 2, T Document 8, pp. 50-52.
[21] Exhibit 2, T Document 9, pp. 53-54.
[22] Exhibit 2, T Document 9, pp. 55-57.
[23] Exhibit 2, T Document 11, pp. 62-63.
[24] Exhibit 2, T Document 11, p. 88.
[25] Exhibit 2, T Document 11, p. 87.
[26] Exhibit 3.
[27] For the reason for travel in this card, “ business ” appears to be deleted with “ holiday ” substituted. That is also the case with the card of the same date in the name of the applicant ’ s wife.
[28] See s 14ZZK(b)(i) of the TAA 1953; Commissioner of Taxation v Dalco (1990) 168 CLR 614 and Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 94 ATC 4844 .
[29] Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139 and Re Kirby and Collector of Customs (1989) 20 ALD 369 .
[30] Citing Taxation Ruling No IT 2650 Income tax: residency – permanent place of abode outside Australia , para 18 and Federal Commissioner of Taxation v Applegate (1979) 38 FLR 1 at 3.
[31] This was in a directions hearing. The provisions cited were ss 79A, 94(13)(a), 95AB(3), 97(1), 98(1),98(2), 98(2A), 98A(1), 99(2), 99H(1)(b), 100(1)(c), 100(1A)(c) of the ITAA 1936. The respondent replied with a submission referring to Commissioner of Taxation v Miller (1946) 73 CLR 92 at 99, 100.
[32] Received by the Tribunal on 15 August 2013.
[33] Citing Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at 36, 37, 42 and 43; Deputy Commissioner of Taxation v PM Developments Pty Ltd (2008) 173 FCR 247 at 253-4; and Travelex Ltd v Commissioner of Taxation (2010) 241 CLR 510 at 534. Contra Re Executors of the Estate of Subrahmanyam v Commissioner of Taxation [ 2002 ] AATA 1298 .
[34] Citing Hafza v Director-General of Social Security (1985) 6 FCR 444 at 449-50.
[35] Referring to Re Taylor v ; Ex Parte Natwest Australia Bank Ltd (1992) 37 FCR 194 at 200 on appeal to Taylor v Natwest Australia Bank Ltd (Unreported, Full Federal Court, 16 October 1992) BC9203757.
[36] See para 19 of Exhibit 4.
[37] (1979) 38 FLR 1 at 3.
[38] Federal Commissioner of Taxation v Applegate (1979) 38 FLR 1 at 3.
[39] Ibid and see Northrop J at 9.
[40] These were ss 79A, 94(13)(a), 95AB(3), 97(1), 98(1),98(2), 98(2A), 98A(1), 99(2), 99H(1)(b), 100(1)(c), 100(1A)(c) of the ITAA 1936.
[41] See ss 95AB(3), 99H(1)(b) of the ITAA 1936 which relate to beneficiaries of a trust.
[42] See ss 79A, 94(13)(a), 97(1), 98(1), 98(2), 98(2A), 98A(1), 99(2), 100(1)(c), 100(1A)(c) of the ITAA 1936
[43] In this regard, I have noted the cases cited by the respondent viz: Commissioner of Taxation v Miller (1946) 73 CLR 92 at 99, 100 per Latham CJ citing Levine v Inland Revenue Commissioners (1928) AC 217 at 232.
[44] (1979) 38 FLR 1 at 10; citing Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99, 100.
[45] See, for example Re Executors of the Estate of Subrahmanyam v and Federal Commissioner of Taxation (2002) 51 ATR 1173 at 1186 ( “ Subrahmanyam ” ) and Taxpayer and Commissioner of Taxation [ 2013 ] AATA 394 [ 45 ] - [ 48 ] .
[46] (2008) 173 FCR 247 at 253-4.
[47] Ibid at 252: Referring to the judgement of Deane J in Hepples v Commissioner of Taxation (1992) 173 CLR 492 at 510-511 in which the judgements of Lord Parker of Waddington were cited from Brunton v Commissioner of Stamp Duties [ 1913 ] AC 747 at 760 and Attorney-General v Milne [ 1914 ] AC 765 at 781.
[48] (1979) 38 FLR 1 .
[49] The Macquarie Dictionary 5th Ed. (2009).
[50] The New Shorter Oxford English Dictionary Vol. 2 (1993).
[51] (1985) 6 FCR 444 at 449.
[52] Ibid. See also Subrahmanyam at 1187; Iyengar and Commissioner of Taxation [ 2011 ] AATA 856 at [ 56 ] and Taxpayer and Commissioner of Taxation [ 2013 ] AATA 394 at [ 48 ] .
[53] Commissioner of Taxation v Miller (1946) 73 CLR 93 at 97, 101.
[54] (1992) 37 FCR 194 (Bankruptcy District of New South Wales).
[55] See also Re Shand and Commissioner of Taxation [ 2003 ] AATA 279 at [ 17 ] .
[56] See paras 22 and 23 (above).
[57] The card dated 5 December 2007, appeared to give the reason for travel as “ holiday ” .
[58] See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99.
[59] See, for example, Re Shand v Federal Commissioner of Taxation [ 2003 ] AATA 279 at [ 35 ] .
[60] See s 6(1) (definition of ‘ resident or resident of Australia ’ para (a)(i)) of the ITAA 1936 and para 3 (above).
[61] (1998) 99 ATC 5330 . His Honour did not reach a conclusion on the matter of s 6(1)(a)(ii) of the ITAA Act 1936.
[62] Ibid at 5332.
[63] (1979) 38 FLR 1 at 12.

This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.