In brief - Permanent place of abode cannot be established if a person moves between foreign countries

My previous article Tax residency of Australian expats considers the decision in Harding v Commissioner of Taxation [2019] FCAFC 29. One of the findings there was that a person could not establish a permanent place of abode if they moved between foreign countries during an income year.

The Administrative Appeals Tribunal has recently applied that principle in Handsley and Commissioner of Taxation [2019] AATA 917 to conclude that Handsley had not established a permanent place of abode outside Australia in the 2013 income year. 

The facts were:

  • Handsley was born in Australia, was an Australian citizen and held an Australian passport
  • He lived in Australia until shortly after 30 June 2012
  • Handsley separated from his wife in July 2011 and in late 2011 commenced a relationship with his new partner who was a Philippine national
  • In the 2012 income year, Handsley made plans to live with his new partner in the Philippines and he visited her regularly
  • In June 2012, Handsley accepted a voluntary redundancy of his Australian job
  • His evidence was that he intended to leave Australia permanently in July 2012 to commence a life predominantly in the Philippines. This plan did not eventuate in the 2013 income year because of Handley's work commitments
  • On 10 July 2012, Handsley travelled overseas to commence work in various countries and was provided short-term accommodation by his employer
  • During the 2013 income year, Handsley:
    • was in Australia for 50 days to visit family and to finalise his divorce settlement
    • continued to work in various countries
    • visited the Philippines to see his new partner for a total of 21 days
    • spent 192 days with his new partner in various countries outside the Philippines
    • had not applied for a long-term visa or residency status anywhere outside Australia
  • The longest time that Handsley spent in any one place during the 2013 income year was 45 days in Malaysia
  • After 30 June 2013, Handsley treated Malaysia as his base and spent at least 320 days outside Australia in each of the next three income years
  • Handsley's connections with Australia were:
    • superannuation and bank accounts
    • children and parents
    • commitments to pay school fees and family allowance payments
    • use of his parents' address as his contact address
    • an AFL supporter membership
  • Each time Handsley left or entered Australia he indicated that he was a resident on his passenger cards.

The Tribunal held that although Handsley had done enough to establish that he did not reside in Australia in the 2013 income year, he did not do enough to establish a permanent place of abode outside Australia as his living arrangements were in a state of transition moving between countries.

A notable aspect of the Tribunal's decision was that it gave little weight to the way Handsley completed his passenger cards. The Tribunal's reasons were that the cards relate to immigration and entry entitlement status as opposed to tax status and do not have an option which records that a person may be a citizen but not a tax resident. This is a sensible approach.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2019.

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