The recent Federal Court decision of Harding v FCT [2018] FCA 837 illustrates the difficulties of an Australian expatriate arguing they were resident of a foreign country, and thereby not an Australian tax resident. In this case, the taxpayer had lived and worked in Bahrain from 2009 to 2015 but his wife and children continued to live in the family home in Australia (to allay disruption to his son’s education) and his living arrangements (living in a series of fully furnished apartments) were only intended to be temporary or transitory until he was joined by his wife and son and permanent accommodation could be acquired. However, the marriage did not survive the arrangements put in place and they separated in about October 2011 and divorced in March 2014.

The decision in this case shows the importance and difficulties of proving a taxpayer’s subjective intention in determining residency. Living, working and residing overseas, even for an extended period, may not be enough where the taxpayer is concluded to only have a ‘place to live’ rather than a ‘permanent place of abode’ and intention to make the other country their home.

To discuss this article, or for any further information regarding questions of establishing residency for Australian taxation purposes please contact:

Sam Campbell
Associate | Business Law
Sladen Legal
M +61 423 515 454 | T +61 3 9611 0135
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
scampbell@sladen.com.au

Neil Brydges
Special Counsel | Accredited specialist in Tax Law
Sladen Legal
M +61 407 821 157 | T +61 3 9611 0176
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: nbrydges@sladen.com.au