The taxpayer has appealed to the Full Federal Court against the decision of Derrington J in Harding v FCT [2018] FCA 837. The taxpayer had been unsuccessful in arguing that he had a permanent place of abode outside of Australia for the relevant income tax year.

In June 2009, the taxpayer left Australia to work in Saudi Arabia as an aircraft engineer pursuant to an initial 12-months contract which was extended over time. The Commissioner audited the taxpayer and issued an amended assessment for the 2011 year to include the foreign source income from Saudi Arabia on the basis that the taxpayer was an Australian resident under s 6(1) of the ITAA 1936. The Federal Court held that the taxpayer did not establish a permanent place of abode overseas in the sense required under the “domicile” test, even though the taxpayer was able to demonstrate that he did not intend to return to live in Australia.

Under the definition of ‘resident’, a person who is not actually resident, but still has an Australian ‘domicile’ (the place where you intend to live the rest of your days) is also deemed to be a resident, unless they have a ‘permanent place of abode’ overseas. It seems Mr Harding had trouble establishing that anything in his meandering ex-pat life was permanent, but should never have conceded he had an Australian ‘domicile’ as he never intended to return to Australia to live.

FJM 16.7.18

[LTN 134, 16/7/18; Related TT Article; Tax Month – July 2018]


Comprehension questions (answers available)

  1. Did the Commissioner assess the taxpayer on his Saudi Arabian income, as a resident?
  2. Did the taxpayer fail to establish that he was NOT a resident, because he could not establish he had a ‘permanent’ place of abode outside Australia?
  3. Did this test assume that he had an Australian ‘domicile’?
  4. Was this a correct assumption?



About the author