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Taxpayer deemed to be a tax resident

January 2012

An Australian taxpayer has lost his appeal against the ATO regarding his residency status and tax liability after being employed overseas for nearly three years whilst maintaining a base in Australia.

The Tribunal has affirmed the Tax Commissioner's decision that the taxpayer was a resident of Australia for tax purposes despite being employed overseas for 2 years and 7 months. This resulted in the taxpayer's foreign employment income being assessable in Australia.

In 2007, the taxpayer moved to Dubai and later Doha to work as a site engineering manager under contract for a period of 2 years plus an option to extent this for a further 6 to 12 month period.

During this time, the taxpayer maintained a residence in Perth where his family resided for the entire period. The taxpayer held that he was a non-resident for tax purposes and did not include any of his foreign employment income in his tax return for the relevant period.

The Commissioner amended the taxpayer's assessment and upon appeal, the Tribunal upheld the Commissioner's decision that the taxpayer continued to reside in Australia under ordinary concepts. The Tribunal found that the taxpayer maintained a 'continuity of association' with Australia while working overseas and had not established a permanent place of abode.

In reaching this decision the Tribunal noted that the taxpayer had not severed ties with Australia. The taxpayer's family remained in Australia and a substantial amount of the income earned overseas was used to pay off the family home in Australia.

Also, there was nothing to suggest that the taxpayer had any enduring relationship with or ties to Dubai (e.g., the lease or purchase of property on his own account, the purchase of a car etc).

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Last updated January 2012. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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