In a significant win for the taxpayer, the Administrative Review Tribunal (ART) has ruled that Robert Kirtlan did not engage in tax evasion, ultimately setting aside amended assessments and substantial penalties issued by the Commissioner of Taxation. 

The case, Kirtlan and Commissioner of Taxation (Taxation) [2025] ARTA 539, highlights the critical role that informed and quality tax advice can play in protecting taxpayers—particularly when it comes to shielding them from the reopening of past assessments by the ATO.

Background of the Dispute

Mr. Kirtlan, who had lived partly in Australia and partly in the U.K. during the relevant years (2006–2008), lodged his tax returns in both jurisdictions on the basis that he was not a resident in either country. As a result, a significant portion of UK-sourced income was omitted from taxation in both countries.

The Australian Taxation Office (ATO) later formed the view that Kirtlan was, in fact, an Australian resident for tax purposes during those years. However, the statutory time limit for amending past returns had expired—meaning the ATO could only issue amended assessments if it could demonstrate that fraud or evasion had occurred.

On that basis, the Commissioner issued amended assessments for the 2006, 2007, and 2008 income years, dramatically increasing Kirtlan’s reported taxable income and resulting in alleged tax shortfalls of over $1.88 million across the three years. In addition, the Commissioner imposed administrative penalties totalling approximately $1.89 million, citing tax evasion.

Kirtlan objected to both the assessments and the penalties. After the Commissioner wholly disallowed his objections in 2021, he appealed to the ART on a single ground: that the Commissioner should not have formed the opinion that he had engaged in tax evasion.

The Tribunal’s Approach

Senior Member Robert Olding, presiding over the Tribunal, emphasised that the question before the ART was not whether Kirtlan was an Australian resident, but whether he had provided a credible explanation for filing his tax returns on the assumption that he was not.

The Tribunal noted that while Kirtlan had spent a significant number of days in Australia during the relevant period—particularly in 2007 and 2008—there was also compelling evidence that, when he left Australia in 2005, he intended to live permanently in the UK.

This evidence included:

• Correspondence to third parties indicating a plan to reside indefinitely in the UK;

• A 2006 letter explicitly stating his decision to make a permanent move to the UK;

• Leasing a family-appropriate home in London;

• Enrolment of his daughter in nursery school in the UK;

• Testimony that he moved for business reasons and intended to retire in Europe.

In contrast, the Commissioner pointed to facts suggesting a continued connection to Australia—such as retention of the family home, pets, and some furniture, and Kirtlan’s frequent visits to Australia. 

However, the Tribunal found that these factors, while relevant to the broader question of residency, were not determinative in the context of assessing whether there had been tax evasion.

The Role of Quality Tax Advice

The Tribunal gave particular weight to the evidence of Kirtlan’s long-time accountant, Mr. Kathal Spence. Spence testified that in 2005, based on Kirtlan’s statements and personal knowledge of his living situation, he had advised Kirtlan that he would not be considered an Australian resident for tax purposes. He further confirmed that he had either prepared or approved the Australian tax returns on that basis.

Spence’s outlined the rationale behind this advice:

• Kirtlan had made a clear decision to move his family to the UK permanently;

• He expressed dissatisfaction with living in Perth and had a history of living overseas;

• He had articulated a long-term business plan centred in Europe, including operating an investment fund from London and eventually retiring to the south of France.

Spence also noted that Kirtlan’s acquisition of a property in Buckland Hill was for investment purposes only and that Kirtlan explicitly denied any intention to return to live in the home.

While the Commissioner criticised the affidavit for omitting some relevant factors—such as the family’s continued ties to Australia—the Tribunal found that Spence was well-informed of Kirtlan’s overall circumstances. Given the depth of their professional relationship and the frequency of their discussions, the Tribunal determined that Spence had sufficient knowledge to offer credible and reliable tax residency advice.

Olding stated:

“From that base of knowledge, which probably put Mr Spence in a superior position to many advisors in respect of their understanding of the factual context… Mr Spence provided advice to Mr Kirtlan regarding his view as to Mr Kirtlan’s tax residency status and prepared or approved tax returns for Mr Kirtlan’s signature.”

The Tribunal concluded that, while the tax returns may ultimately have been inaccurate, they were filed in reliance on considered and reasonable professional advice. Therefore, they were not “attended by evasion.”

A Clear Message: Quality Advice Matters

This case sends a strong message to both taxpayers and advisors: quality advice matters—it can be the decisive factor in preventing the ATO from reopening previously lodged tax returns.

Under the law, the ATO cannot amend a return outside the usual review period unless it can establish fraud or evasion. In this case, the taxpayer’s ability to demonstrate that his actions were based on credible, informed, and properly documented professional advice proved crucial. 

The existence of such advice not only undermined the Commissioner’s case for evasion but also protected the taxpayer from millions in additional tax and penalties.

For taxpayers, this case serves as a timely reminder that strategic advice is not merely helpful—it can be your strongest defence.