Arjunan and Commissioner of Taxation (Taxation)

[2020] AATA 4024

Arjunan and Commissioner of Taxation (Taxation) [2020] AATA 4024 (13 October 2020)

Division:TAXATION AND COMMERCIAL DIVISION

File Number:          2019/3061

Re:Kannapiran Arjunan

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Member D Mitchell

Date:13 October 2020

Place:Brisbane

The Tribunal affirms the decision under review.

.........[SGD]...............................................................

Member D Mitchell

CATCHWORDS

TAXATION – residency of tax payer – taxpayer worked overseas for 7 months – whether Australian resident according to the Ordinary Concepts Test – whether Australian resident according to the Domicile Test – whether Australian resident according to the 183-Day Test – decision under review affirmed

LEGISLATION

Domicile Act 1982 (Cth)

Income Tax Assessment Act 1936 (Cth)
Income Tax Assessment Act 1997 (Cth)
Superannuation Act 1990 (Cth)
Superannuation Act 1976 (Cth)

Taxation Administration Act 1953 (Cth)

CASES

Billington v Secretary, Dept of Families, Housing, Community Services and Indigenous Affairs [2013] FCA 480

Comcare Australia (Defence) v O’Dea (1998) 87 FCR 451
Commissioner of Taxation v Executors of the Estate of Subrahmanyam (2001) 116 FCR 180
Commissioner of Taxation v Miller (1946) 73 CLR 93
Engineering Manager and Commissioner of Taxation [2014] AATA 969, 2014 ATC 1-071
Federal Commissioner of Taxation v Applegate (1979) 27 ALR 114
Fremlin v Fremlin (1913) 16 CLR 212
Gregory v Deputy Federal Commissioner of Taxation (W.A.) (1937) 57 CLR 774
Hafza v Director-General of Social Security (1985); 6 FCR 444
Handsley v Commissioner of Taxation [2019] AATA 917
Harding v Commissioner of Taxation [2018] FCA 837
Harding v Commissioner of Taxation [2019] FCAFC 29
Levene v Inland Revenue Commissioners [1928] AC 217
Stockton v Commissioner of Taxation [2019] FCA 1679

Udny v Udny (1869) L.R. 1 H.L. (Sc.) 441

REASONS FOR DECISION

Member D Mitchell

13 October 2020

INTRODUCTION

1. Dr Kannapiran Arjunan (the Applicant) is seeking review of an objection decision of the Commissioner of Taxation (the Respondent) dated 9 May 2019.[1]

   [1]    Exhibit 1, T Documents, T2, pages 13-16, Reasons for Decision; T18, page 72, Notice of Objection Decision.

2. The reviewable objection decision disallowed the Applicant’s objection to a Notice of Amended Assessment for the income year ended 30 June 2016 (the 2016 year). The reviewable decision was made on the basis that the Respondent considered that the Applicant was an Australian resident for taxation purposes during the 2016 year.

   THE LAW

3. The relevant law in this matter includes the Income Tax Assessment Act 1936 (Cth) (ITAA 1936), the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) and the Taxation Administration Act 1953 (Cth) (TAA 1953).

4. Where a taxpayer is dissatisfied with an assessment, they may object against it in accordance with the requirements set out in Part IVC of the TAA 1953.

5. The Respondent must decide whether to allow, wholly or in part; or disallow, the taxpayer’s objection.[2]

   [2] Section 14ZY of the TAA 1953.

6. A taxpayer dissatisfied with the Respondent’s objection decision may apply to the Tribunal for a review of the decision or appeal to the Federal Court against it.[3]

   [3] Section 14ZZ of the TAA 1953.

7. Section 14ZZK(b)(i) of the TAA 1953 provides that on application for review of a reviewable objection decision, the Applicant has the burden of proving that the assessment is excessive or otherwise incorrect and what the assessment should have been.

8. A person’s assessable income is established by the operation of sections 6-5 and 6-10 of the ITAA 1997. Effectively, during an income year an Australian resident is generally assessed on ordinary and statutory income derived from all sources, whether in or out of Australia,[4] while a foreign resident is generally assessed only on ordinary and statutory income derived from Australian sources.[5]

   [4]     Sections 6-5(2) and 6-10(4) of the ITAA 1997.

   [5]     Sections 6-5(3) and 6-10(5) of the ITAA 1997.

9. Section 995-1 of the ITAA 1997 defines Australian resident to mean a person who is a resident of Australia for the purposes of the ITAA 1936.

10. Section 6(1) of the ITAA 1936 defines resident or resident of Australia to mean:

    (a)a person other than a company, who resides in Australia and includes a person:

    (i)whose domicile is in Australia, unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia;

    (ii)who has actually been in Australia continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and that person does not intend to take up residence in Australia; or

    (iii)who is:

    (A)a member of the superannuation scheme established by deed under           the Superannuation Act 1990 (Cth); or

    (B)an eligible employee for the purposes of the Superannuation Act      1976 (Cth); or

    (C)the spouse, or a child under 16, of a person covered by sub-paragraph        (A) or (B); and

    (b)a company which is incorporated in Australia or which, not being incorporated in Australia, carries on business in Australia, and has either its central management and control in Australia, or its voting power controlled by shareholders who are resident so Australia.

11. It is not in contention that the Applicant was not a member of a Commonwealth superannuation scheme and as such section 6(1)(a)(iii) of the ITAA 1936 does not apply.

12. The residency tests that arise as a result of the definition set out in section 6 of the ITAA 1936 have been considered in a number of Court and Tribunal decisions which provide principles to be taken into consideration in making such determinations.

    The Ordinary Concepts Test

13. The Ordinary Concepts Test for the purposes of section 6(1)(a) of the ITAA 1936 considers whether the person resided in Australia.

14. In order to be taken to have resided in Australia, the Courts have held that “the nature, duration and quality of physical presence [of a person] in a particular place as well as [their] intention” must be had regard to.[6]

    [6]     Stockton v Commissioner of Taxation [2019] FCA 1679, at [23] per Logan J; see also Harding   v           Commissioner of Taxation [2019] FCAFC 29 at [60] which referred to Hafza v Director-General of Social     Security (1985) FCR 444 where Wilcox J considered that residence involved the question of a person’s physical presence in addition to a person’s intention to treat a particular place as their home.

15. The Respondent provided a useful summary of the well-known authorities on the ordinary meaning of the word “reside”.[7] The Tribunal notes:

    [7]     Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, pages 10-     11, paragraphs 42-48.

    ·In Levene v Inland Revenue Commissioners [1928] AC 217 at [222] his Lordship Viscount Cave LC said:

    ... the word "reside" is a familiar English word and is defined in the Oxford English Dictionary as meaning "to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place." ... In most cases there is no difficulty in determining where a man has his settled or usual abode, and if that is ascertained he is not the less resident there because from time to time he leaves it for the purpose of business or pleasure.

    ·In Hafza v Director-General of Social Security (1985) 6 FCR 444, it was established that residence involves physical presence in a particular place and an intention to treat that place as home for the time being, but not necessarily forever. Wilcox J said at 449-450:

    Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place - even involuntarily: see Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248 and Keil v Keil [1947] VR 383 - a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place - Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149 - together with an intention to return to that place and an attitude that that place remains "home": see Norman v Norman (No 3) (1969) 16 FLR 231 at 236. It is important to observe firstly, that a person may simultaneously be a resident in more than one place - see the facts of Lysaght (supra) and the reference by Williams J to "a home or homes" - and, secondly, that the application of the general concept of residence to any particular case must depend upon the wording, and underlying purposes, of the particular statute in relation to which the question arises. But, where the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

    ·While intention is relevant in determining residency (being “the intention of remaining in a place permanently or indefinitely”),[8] it alone is neither sufficient nor decisive.[9]

    ·The objective manifestation of a person’s intention is often a more accurate indicator of their state of mind at a particular time in the past than is an assertion about that alleged prior intent.[10] Evidence of a person’s contemporaneous statements of their intention at a particular time in the past should be approached with care.[11]

    ·Financial connections with Australia are relevant though their retention may be consistent with having abandoned residency in Australia, particularly where those financial connections are the remnants of prior residency in Australia or connected with ongoing financial responsibilities in Australia.[12]

    ·Events occurring both before and after the period under examination may be considered as throwing light on and disclosing the significance of habits and conduct within the period under examination.[13]

    ·Determination of where a person resides is a question of fact and degree.[14]

    [8]     Comcare Australia (Defence) v O’Dea (1998) 87 FCR 451 at 455.

    [9]     Harding v Commissioner of Taxation [2018] FCA 837 at [49].

    [10]    Harding v Commissioner of Taxation [2018] FCA 837 at [43]and [45].

    [11]    Harding v Commissioner of Taxation [2018] FCA 837 [44].

    [12]    See Harding v Commissioner of Taxation [2018] FCA 837 at [84] and [85] per Derrington J; endorsed on appeal in Harding v Commissioner of Taxation [2019] FCAFC 29 at [63] per Davies and Steward JJ.

    [13]    Gregory v Deputy Federal Commissioner of Taxation (W.A.) (1937) 57 CLR 774 at 777-778 per Dixon J; see also Handsley v Commissioner of Taxation [2019] AATA 917 at [8] for a summary of the relevant principles.

    [14]    Commissioner of Taxation v Miller (1946) 73 CLR 93 at 101 per Rich J.

    Domicile Test

16. The Domicile Test set out in section 6(1)(a)(i) of the ITAA 1936 has two parts firstly whether the person is domiciled in Australia and if so whether the Respondent (or Tribunal standing in his shoes), is satisfied that the person’s permanent place of abode is outside Australia.

17. A person’s domicile is determined by common law rules as modified by the Domicile Act 1982 (Cth). Every person has a domicile of origin that arises at birth. This domicile of origin cannot be lost or displaced and can only be replaced by a domicile of choice. Unless a new domicile is inferred by the law from the combination of actions and intentions as to residence, a person’s pre-existing domicile survives.[15]

    [15]    Billington v Secretary, Dept of Families, Housing, Community Services and Indigenous Affairs [2013] FCA 480 at [42] per Logan J.

18. Section 10 of the Domicile Act 1982 (Cth) deals with intention for domicile of choice and provides that:

    The intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his or her home indefinitely in that country.

19. In Fremlin v Fremlin (1913) 16 CLR 212 at 233, Barton J referring to what Lord Westbury said in Udny v Udny (1869) L.R. 1 H.L. (Sc.) 441 at 458 provided that a domicile of choice is:

    ... a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. This is a description of the circumstances which create or constitute a domicil, and not a definition of the term. There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation.

20. The meaning of permanent place of abode in section 6 of the ITAA 1936 was considered in the case of Federal Commissioner of Taxation v Applegate (1979) 27 ALR 114. In that case, the issue was whether the taxpayer, a lawyer, whose domicile was Australia, had a permanent place of abode in the New Hebrides. Mr Applegate had given up his home in Sydney and had moved to the New Hebrides to set up a branch of his law firm. He intended to live there indefinitely, but not permanently, intending ultimately to return to Australia at some time in the future. Mr Applegate returned to Australia sooner than expected due to illness.[16] Fisher J said at 128:

    To my mind the proper construction to place upon the phrase "permanent place of abode" is that it is the taxpayer's fixed and habitual place of abode. It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there his usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place.

    It follows then that in my opinion the intention of the taxpayer as far as returning to Australia is concerned is just one of the factors for consideration. But it is a factor which I consider has less significance than the taxpayer's intention in relation to his place of abode outside Australia. Intention to return to Australia is a crucial feature in considering whether the taxpayer has retained an Australian domicile. Intention to make his home for the time being in his place of abode outside Australia is an important element in characterizing that place of abode as his "permanent" place of abode.

    [16]    Summary as provided by the Respondent: see Exhibit 8, Respondent’s Outline of Argument, handed      up at Hearing on 11 December 2019, page 13, paragraph 55.

21. “Permanent place of abode” for the purposes of the definition of resident or resident of Australia in section 6(1) of the ITAA 1936 is to be read as something less than a permanent place of above in which the taxpayer intends to live forever or for the rest of their life.[17] Rather the term ‘permanent’ is contrasted with ‘temporary’ or ‘transitory’.[18]

    [17]    Federal Commissioner of Taxation v Applegate (1979) 27 ALR 114 at 117 per Franki J.

    [18]    Federal Commissioner of Taxation v Applegate (1979) 27 ALR 114 at 123 per Northrop J.

22. In Harding v Commissioner of Taxation [2019] FCAFC 29, Davies and Steward JJ at [36] after considering the history of the definition of resident or resident of Australia for the purpose of the section 6(1)(a)(i) of the ITAA 1936 concluded that:

    (a)the para (a)(i) aspect of the definition is directed to:

    (i)include in the Australian tax system Australian domiciled people wherever they live; and

    (ii)to exclude form the Australian tax system people still identifying as Australians, by reason of their Australian domicile, but who had definitely abandoned their residence in Australia by way of taking up a permanent place of abode outside Australia;

    (emphasis added)

    (b)a permanent place of abode is not a specific house or dwelling; and

    (c)a series of temporary places of abode in a town or region within a country can be accepted as a permanent place of abode; but

    (d)a series of temporary places of abode in multiple countries does not satisfy the test.

    183-Day Test

23. The section 6(1)(a)(ii) of the ITAA 1936 requirements are known as the 183-Day Test and provides that a person will be a resident of Australia if they have spent at least half the year in Australia unless the Respondent (or the Tribunal standing in his shoes) is satisfied that the person’s usual place of abode is outside Australia and that the person does not intend to take up residence in Australia.

24. In Harding v Commissioner of Taxation [2019] FCAFC 29, Davies and Steward JJ at [39] said:

    … is, initially, concerned with a person who is physically present in Australia for most of a given year of income. The exception to it probably applies to a person who is physically present in Australia for the required number of days but who would not be considered to be an Australian [resident] because he or she is only a temporary visitor of this country for a period of time. That period might even extend to a term of years.

25. As a result of the decision of Logan J in Stockton v Commissioner of Taxation [2019] FCA 1679, the usual place of abode exception looks to whether a person’s usual place of abode is outside Australia in circumstances where they have spent most of the year living in Australia and therefore not in that place of abode outside Australia. Consideration of the surrounding years must be taken into account in determining what was the taxpayer’s usual place of abode.

26. Where a person has more than one usual place of abode, consideration and comparison is required between them to determine which one is the usual place of abode. In the Commissioner of Taxation v Executors of the Estate of Subrahmanyam (2001) 116 FCR 180 at 197-198, Emmett J concluded that in undertaking such a comparison “the nature and quality of the use” of each place of abode is examined to determine “which is the usual one, as distinct from the other or others which, while they may be places of abode, are not properly characterised as the usual place of abode.”

    ISSUES

27. The issue before the Tribunal is whether the Applicant’s Amended Notice of Assessment for the 2016 year is excessive or otherwise incorrect. In order to decide this issue, the Tribunal must determine whether the Applicant was an Australian resident for taxation purposes during the 2016 year.

28. To determine whether the Applicant was an Australian resident for taxation purposes during the 2016 year the Tribunal must consider whether according to the:

    (a)“Ordinary Concepts Test” the Applicant can demonstrate that he was not a resident of Australia according to ordinary concepts;

    (b)“Domicile Test” the Applicant can demonstrate that his domicile was outside of Australia or his permanent place of abode was outside Australia; and

    (c)“183-Day Test” the Applicant can demonstrate that he was present in Australia for less than 183 days or that his usual place of abode was outside Australia and he did not intend to take up residence in Australia.

    FACTS

29. The facts in this matter are not contentious, rather it is the application of those facts to the law where the disagreement arises.

30. The Applicant was born in India in 1950. Immigrated to Australia in November 1994.  Became an Australian Citizen in December 1999.[19]

    [19]    Exhibit 2, Supplementary T Documents, ST8, pages 180-184, Movement Records.

31. Together with his wife, the Applicant owns a family home in Brisbane, where he resides when living in Australia. This property was not offered for sale or rent during the 2016 year.

1. The Applicant owns two investment properties which were rented during the 2016 year.[20]

   [20]    Exhibit 1, T Documents, T31-T34, pages 128-140, Rent Schedule.

2. The Applicant was employed by the Queensland Government and was on leave without pay for the period he was working in Kuwait. The Applicant worked in his role with the Queensland Government during 2015, 2016 and 2017.[21]

   [21]    Exhibit 1, T Documents, T27, page 122, Payment Summary Statement 2015; T28, page 123, Payment     Summary Statement 2016; T29, page 124, Payment Summary Statement 2017.

3. In October 2015 the Applicant turned 65, was married and had no dependent children.

4. On 17 August 2015, the Applicant sought a private ruling from the Respondent in relation to his residency status if he worked overseas in 1 city for 8 months only or if he worked overseas in 1 city for more than 8 months to 2 years.[22]

   [22]    Exhibit 2, Supplementary T Documents, ST1, page 145, Application for private ruling on residency.

5. A private ruling was issued dated 4 September 2015,[23] which provide that the Applicant was a resident of Australia for taxation purposes for the year ended 30 June 2016 based on the following relevant facts and circumstances:[24]

   [23]    Exhibit 2, Supplementary T Documents, ST2, pages 146-154, Private ruling issued to the Applicant        dated 4 September 2015.

   [24]    Exhibit 2, Supplementary T Documents, ST2, page 147, Private ruling issued to the Applicant dated 4      September 2015.

   ·The Applicant was born in India.

   ·The Applicant is a citizen of India and Australia.

   ·The Applicant had accepted a work contract for 7 months in the Middle East.

   ·The Applicant would have an employer sponsored visa for the Middle East which will allow him to be in the Middle East for the duration of his work contract.

   ·The Applicant would commence his work contract in the Middle East on 14 September 2015.

   ·The Applicant’s spouse would accompany him to the Middle East.

   ·The Applicant will live in employer provided accommodation in the Middle East.

   ·The accommodation will be fully furnished and for the use of the Applicant and his spouse only.

   ·The Applicant would rent out his home in Australia for the duration of his contract in the Middle East.

   ·The Applicant would take his personal items to the Middle East.

   ·The Applicant would take leave without pay from his job in Australia for the duration of the contract.

   ·The Applicant and his spouse are not eligible to contribute to the relevant Commonwealth super funds.

6. The Applicant disagreed with the private ruling.[25] As a result, the private ruling was withdrawn and a new private ruling taking into account further information provided by the Applicant was issued dated 14 October 2015.[26] The 14 October 2015 private ruling made the same overall finding that the Applicant was a resident of Australia for taxation purposes for the year ended 30 June 2016. The relevant facts and circumstances were materially the same as the previous private ruling other than:[27]

   ·The Applicant had accepted an employment contract to work in Kuwait. The contract is for seven months.

   ·The Applicant stated that it may be extended for two to three years. The contract does not mention an extension. The Applicant also stated that it is standard commercial practice of international employment agreements to avoid commitments to extending a contract. The Applicant understood that his contact was likely to be extended for two to three years and he intended to accept an extension if one was offered.

   ·The Applicant commenced his employment in Kuwait on 14 September 2015.

   ·The Applicant’s employer would pay him an accommodation allowance. The Applicant would either rent accommodation by himself or else his employer would find him accommodation.

   ·The Applicant would rent out his home in Australia for the duration of his contract in Kuwait.

   [25]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, Attachments,    page 3, Email dated 30 September 2015.

   [26]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, Attachments,    pages 9-13, Private Ruling dated 14 October 2015.

   [27]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, Attachments,    page 10, Private Ruling dated 14 October 2015.

7. Both private rulings determined that the Applicant was not residing in Australia according to ordinary concepts for the period he was working in Kuwait but that he had not met the domicile and permanent place of abode test as the Respondent was not satisfied that he had a permanent place of abode outside of Australia.[28]

   [28]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, Attachments,    pages 4-8, Private Ruling dated 4 September 2015 and pages 9-13, Private Ruling dated 14 October           2015.

8. The Applicant entered into an employment contract for the supply of consultant services on 13 August 2015, accepting a contract position as an industrial economist located in Kuwait for the period of September 2015 to March 2016, with the possibility of a 2 week extension.[29]

   [29]    Exhibit 1, T Documents, T5, pages 25-28, Contract for the Supply of consultant services with Maxwell      Stamp PLC.

9. As part of the employment contract the Applicant was provided with accommodation. The employment contract specified that the “Consultant shall be required to reside in hotels or apartments specified by the Company”.[30]

   [30]    Exhibit 1, T Documents, T5, page 26, Contract for the Supply of consultant services with Maxwell           Stamp PLC.

10. The Applicant entered Kuwait on an employer sponsored visa.

11. The Applicant left Australia on 15 September 2015 to commence his role in Kuwait.[31]

    [31]    Exhibit 1, T Documents, T23, page 113, Passenger Movement Records.

12. The Applicant returned to Australia for the period between 4 and 11 December 2015 to attend his son’s wedding.[32] During this period the Applicant also returned to his family home in Brisbane, staying overnight in the home.[33]

    [32]    Exhibit 1, T Documents, T23, page 113, Passenger Movement Records; Exhibit 3, Applicant’s Statement of         Facts, Issues and Contentions, dated 2 October 2019, page 1, paragraph 2.1.b.

    [33]    Transcript, page 25.

13. The Applicant returned to Australia on 21 March 2016 at the conclusion of his employment contract.[34]

    [34]    Exhibit 1, T Documents, T23, page 113, Passenger Movement Records.

14. During the 2016 year the Applicant’s movement records shows that he was in Australia for a total of 187 days, as follows:[35]

    [35]    Exhibit 1, T Documents, T23, pages 113-117, Passenger Movement Records.

Date Arrived in Australia relevant to the year ended 30 June 2016	Date left Australia relevant to the year ended 30 June 2016	No. of days in Australia in the financial year ended 30 June 2016
1 July 2015	15 September 2015	77 days
4 December 2015	11 December 2015	8 days
21 March 2016	30 June 2016	102 days
Total	187 days

1. In the years around the 2016 year, the Applicant spent the following time in Australia:[36]

   [36]    Exhibit 1, T Documents, T25, page 119, Days in/out.

Financial Year	Days the Applicant was in Australia
2019	335 days
2018	237 days
2017	325 days
2016	187 days
2015	353 days
2014	345 days
2013	365 days

1. The Applicant had previously worked overseas commencing in 2003. He had obtained a private ruling from the Respondent in relation to the relevant income tax years which provided that he would not be considered an Australian resident for taxation purposes and would not be required to include the income he earned overseas in his Australian income tax return. It is noted that the employment to which that private ruling related was a fixed term 2 year contract with the option to extend for a further 2-3 years, the Applicant was to be accompanied by his wife, had no dependent children, planned to lease a residence overseas and intended to either sell or rent his Brisbane home.[37]

   [37]    Exhibit 7, Private Ruling dated 12 November 2003.

2. The Applicant lodged his 2016 year income tax return on 2 October 2016 providing that he was an Australian citizen, claiming the private health insurance rebate, however did not include the income he earned while in Kuwait.[38] A Notice of Assessment was issued on 7 October 2016.[39]

   [38]    Exhibit 2, Supplementary T Documents, ST3, pages 155-159, Income tax return lodged by the   Applicant           for the year ended 30 June 2016.

   [39]    Exhibit 2, Supplementary T Documents, ST4, pages 160-161, Notice of Assessment for the year ended   30 June 2016.

3. On 6 December 2018 the Applicant objected to the Notice of Assessment on the basis that he contended he was not an Australian resident during the 2016 year.[40]

   [40]    Exhibit 1, T Documents, T18, page 72, Notice of objection decision; T2, pages 13-16, Reasons for Decision.

4. The evidence before the Tribunal showed that the Applicant had cooperated with the Respondent’s review of his taxation affairs and the determination of the amount of the income he earnt while in Kuwait.

5. On 9 May 2019, the Respondent decided not to allow the Applicant’s objection finding that he was an Australian resident for taxation purposes during the 2016 year and was as such liable to pay income tax in relation to the income he earnt in Kuwait.[41]

   [41]    Exhibit 1, T Documents, T18, page 72, Notice of objection decision; T2, pages 13-16, Reasons for         Decision.

6. On 15 May 2019, the Respondent amended the Applicant’s 2016 income tax return on the basis that it considered the Applicant was an Australian resident for the 2016 income tax year and as such was required to include all sources of income in his tax return, whether derived in Australia or overseas.[42] The Notice of Amended Assessment included income tax on the $104,622 that the Applicant earned from his employment in Kuwait but had not previously included in his income tax return. This resulted in an increased in the Applicant’s income tax liability of $40,089.90 and a shortfall interest charge of $5086.06. The Respondent did not impose a penalty.

   [42]    Exhibit 2, Supplementary T Documents, ST7, pages 176-179, Notice of Amended Assessment for the      year ended 30 June 2016.

7. It is noted that the Applicant did not raise any dispute in relation to the quantum of the income the Respondent says he derived overseas during the 2016 year, the dispute goes solely to whether or not such income was assessable.

8. The Applicant sought review of that objection decision by this Tribunal by application dated 2 June 2019.[43]

   APPLICANT’S EVIDENCE AND CONTENTIONS

   [43]    Exhibit 1, T Documents, T1, page 1-12, Application for Review of Decision.

   Pre-hearing submissions

9. In his application to the Tribunal for review of the objection decision, the Applicant provided the following background:[44]

   Back-ground: Quoted form my objection Letter to ATO dated 8.12.2018: “As a preparation for my retirement (Aged over 65), I have planned to live and work permanently in Middle East as a Consulting Economist. I therefore left Australia and lived and worked there and my wife lived with me there. There was a mistake in my visa status. I applied for visa as a consultant and not on “sponsored visa”. Again, visa is always subject to the policy and situations in the host country. My intention was to live and work in Middle East as a Consultant for long periods. Unfortunately, due to health reasons, I returned back in 2016 (after more than 183 days).

   [44]    Exhibit 1, T Documents, T1, page 9, Application for Review of Decision.

   183 Day Test

10. The Applicant contended that the 183 Day Test does not apply to him. The Applicant contended that this test only relates to those people entering Australia and he was leaving Australia.[45] The Applicant contended that when he returned to Australia in December 2015 to attend his son’s wedding he was a “visitor” and he indicated that on his migration arrival card. The Applicant contended that his constructive residence was not Australia as his place of abode was Kuwait when he visited Sydney as a visitor and accordingly, during the financial year 2016, he spent 189 days outside of Australia.[46]

    [45]    Applicant’s Outline of Arguments and Reply to the Respondent’s Outline of Arguments, dated 17           December 2019.

    [46]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 1,           paragraph 2.1.b.

11. The Applicant contended that he travelled from Sydney to Brisbane as a visitor to meet friends and to:[47]

    … check the frequent false security alarm (as reported by neighbours) and other minor problems at our home in [Brisbane] and not to live there. We flew back to Kuwait and continued to remain as a resident of Kuwait.

    [47]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 2,           paragraph 2.1.c.

    Resides Test

12. The Applicant sought to rely on the private rulings and objection decision which provided that he was not residing in Australia according to ordinary concepts for the period he was living and working in Kuwait. The Applicant submitted that the private rulings were binding on the Respondent and that they cannot now be departed from. He contended that he was therefore a resident of Kuwait according to the Ordinary Concepts Test.[48]

    [48]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 2,           paragraph 2.2.

    Domicile Test

13. After making reference to a number of previous Court and Tribunal decisions and Respondent rulings and guidance material in relation to the Domicile Test, the Applicant contended that neither the term of his stay in Kuwait or that he resided in fully furnished accommodation supplied by his employer changed the fact that during his stay in Kuwait the apartment was his place of abode and as such he was a non-resident for the purposes of the Domicile Test.[49]

    [49]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, pages 5-6,      paragraph 57.1.

14. The Applicant contended that he did not live in his family home for the entire period of the 2016 year. The Applicant submitted that he moved his personal affects to Kuwait and resided in his Kuwait home with his wife, between 14 September 2015 and 21 March 2016 and when he travelled to Australia in December 2015 he travelled as a visitor. The Applicant provided:[50]

    Here I quote from a Report by ATO ’62. In most cases, the Commissioner accepts that a visit to Australia of less than six months is not sufficient time to be regarded as residing here.’ I was not resident during my visit to Sydney-Brisbane for 8 days and for the entire 189 days stay in Kuwait.

    [50]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 6-7,       paragraph 57.2.

15. The Applicant submitted that in essence, a person’s place of abode is that person’s dwelling place or the physical surrounding in which a person lives and the statute does not discuss visa status and as such the Respondent’s argument that his limited visa made it impossible to establish a home in Kuwait which could be considered his permanent place of abode must be rejected.[51]

    [51]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 7-8,       paragraph 57.3.

16. The Applicant contended that his employment was not for a fixed time providing:[52]

    The ATO assumed that my contract is for a fixed period. In fact, the profession of a consultant involves undertaking consultancy works for many projects each for a fixed period and that’s the nature of consultancy employment. The first contract relates to one project for a fixed period. Had my health condition not deteriorated, I would have undertaken many long-term consultancy projects in Kuwait as a consultant. ….. KISR Kuwait indicated in their email dated 2.12.2015 “Yes we will consider you as a potential candidate for a position in Techno Economics Division. Please send me your C.V. and you can work in KISR till the age of 75.”… Had my health condition permitted, I would have lived and worked in Kuwait up until I reach 75 years of age. Kuwait heavily depends on expatriate consultant and in 2016, Kuwait’s consultancy industry grew by 3.7% to $183 million. My long-term plan was to make use of the potential consultancy opportunities in Kuwait.

    [52]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 7-8,       paragraph 57.3.

    Medical Treatment 

17. The Applicant contended that he did not seek medical treatment in Kuwait as his entire medical history was with his GP and specialist in Australia and he preferred to travel back to Australia for treatment. The Applicant contended that the Australian Government encourages medical tourism by non-citizens and non-residents as part of economic policy. He referred to a medical certificate he submitted from his GP.[53]

    [53]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 2,           paragraph 2.4.

18. In a letter dated 22 May 2019, Dr W Anura Tennakoon provided:[54]

    [The Applicant] had worsening Hypertension and COPD in 2016 while in overseas.

    He returned to Australia end of March 2016 for optimization of his medical conditions. It is under control since then with medication.

    [54]    Exhibit 1, T Documents, T24, page 118, Letter from Doctor W Anura Tennakoon.

19. The Applicant submitted that his private health insurer told him that he would not be covered while working overseas, however they automatically deducted the annual payment and claimed the rebate.[55]

    [55]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 3,           paragraph 2.7.

    Retirement from Queensland Government Job

20. The Applicant submitted that his intention was to retire from his Queensland Government job after he turned 65 and to continue to live in Kuwait and work there as a consultant, however he could not continue with his long-term plan due to his deteriorating health and therefore he returned to Australia. The Applicant submitted that the Queensland Government encourages employees to work beyond 65 years of age and he made use of that opportunity and started back at his job when his health improved.[56]

    [56]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 3,           paragraph 2.6.

21. The Applicant submitted that the fact that he held an employer visa and returned to his old job in Australia should not affect his non-resident status as his case is no different to the Engineering Manager and Commissioner of Taxation [2014] AATA 969, 2014 ATC 1-071 case.[57]

    [57]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 3,           paragraph 2.10

22. The Applicant submitted that neither he nor his employer contributed to any superannuation fund during his residence in Kuwait.[58]

    [58]    Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, dated 2 October 2019, page 3,           paragraph 2.11.

    Applicant Evidence at Hearing

23. At Hearing, the Applicant appeared in person and gave evidence under affirmation. In addition to the evidence the Applicant provided by way of written submissions, at Hearing the Applicant:[59]

    [59]    Transcript, pages 12-24.

    ·Said, his intention was to do a lot of consultancy in Kuwait for a number of years and he moved his personal effects and was living there. Suddenly his chronic obstructive airway disease, worsened and he felt sick and had to come back to Australia because his whole medical record for 30 years is with his GP. So he immediately rushed back to Australia and the doctor said it is better for him to stay in Australia for a while to see how it goes and referred him to a respiratory physician to test his lungs and said his lung is having a problem. That is the reason he returned and never went back to Kuwait.

    ·Said, he made it clear that he was only a visitor when he returned to Australia for his son’s wedding.

    ·Said, when he returned for the wedding there was a problem with his home and at that time it was jointly owned with his wife. His wife did not want to sell their home and he wanted to rent it at least but they were in dispute at the time. There had been a false alarm at his house, a neighbour had complained to him, so he went from Sydney to Brisbane to check it and switch it off. Then they flew back to Kuwait.

    ·Confirmed that he applied for a private ruling before he went to Kuwait and that he raised issues with the initial private ruling and was expecting a different outcome from the revised private ruling. He had a previous determination that he was a non-resident for 2003, 2004, 2005 and 2006.

    ·Said his intentions were to stay in Kuwait for around 10 years doing consultancy work and decide at the end whether he would return to Australia or not. He may have visited his children in Australia during that period.

    ·Said he was unsure whether at the end of his time away whether he would have resettled in Australia as he has a son in USA and family in India, his wife’s preference was to go to India and his preference was to be with his son in San Francisco.

    ·Said that he wanted to sell his home in Brisbane when he went to Kuwait, however his wife said to him: “Okay, wait for some time I will tell you the decision.”[60] That is the reason that they were “dilly-dallying” between selling or renting it and then time ran out and they returned to Australia.

    [60]    Transcript, page 19.

    ·When asked what personal effects he and his wife took to Kuwait, said that his accommodation in Kuwait was furnished so they only took Indian kitchen items, grinder, blender, pressure cooker, cooking items, some of his books, bed sheets and pillow covers.

    ·Confirmed that they could carry everything that they took with them on the plane in suitcases and that they did not have any possessions shipped over to Kuwait.

    ·When asked if his hypertension and COPD were long standing conditions that he had issues with prior to going to Kuwait, said[61]:

    [61]    Transcript, page 20.

    No, hypertension no. I was under treatment for – I have a (indistinct) 2003-2002/2003 in December. That is asymptomatic hypertension but it is cholesterol but I take medication, they did the surgery and – but the heart surgeon said it is always better to be on the cautious side. …… So I was taking it [medication for hypertension and cholesterol] for a long time, during the month of February I think, and the COPD, initially there was diagnosed by own doctor, Mr McEwen who is now sick ….. in 2015 only ….. He said “You can travel with the two spray”. I always carry with me that two spray and there is nothing to affect you with health if this is the thing….

    ·When asked what the treatment for COPD was, said gentle walk exercise plus one spray – one inhaler, which has now been changed to a steroid based one because it is worsening.

    ·Confirmed that when he returned from Kuwait he continued with his Queensland Government job and was working part-time.

    ·Confirmed that he had taken a leave of absence or leave without pay because he was going to wait until he turned 65 to retire. When asked why he did not then retire when he turned 65, said he consulted HR before he left and they said he had two options, he could retire or take two years without pay and he took that option from 14 September 2015.

    ·When asked whether taking the option of two years leave without pay he was effectively keeping it as a safety net, so that if his job in Kuwait did not work out he had a job to come back to, said[62]:

    It was not running like that, because myself there is a lot of contract and consulting experience in Middle East, I work in Department of Economics and I have a lot of connections there and that is the reason I got confident that I can settle there but sometimes your planning is a little bit fussy because I was thinking but retire …. I may be getting the – you know, the long service leave so that is one of the reason.

    ·Said that he had stayed at his home in Brisbane when he went there prior to flying back to Kuwait. He flew back to Kuwait from Brisbane.

    ·When asked if he could get his treatment for hypertension and COPD in Kuwait, said he could for hypertension but the they did not have the brand of medicine he needed for his COPD at that time.

    [62]    Transcript, page 22.

1. On cross-examination, the Applicant:[63]

   [63]    Transcript, pages 24-35.

   ·Confirmed the commencement and completion dates in the contract, as well as the renewal option and that he signed the contract on 19 August 2015.

   ·Confirmed that in Kuwait he was placed into a fully furnished apartment and that is where he and his wife lived for the duration of their stay.

   ·Said he was given the choice of the apartment or if he did not like it he could choose his owe apartment.

   ·When asked about what personal items were left in his Brisbane house, said that it was the furniture all of which was put into one room and locked.

   ·When asked if when he went to stay in his home in December 2015 if there was a bed for him and his wife to sleep in, said that there was a bed there and because they had only said that they will have to sell or rent the house, they left some items there except what they needed and took with them.

   ·Confirmed that in his Brisbane home at that time there was a washing machine, refrigerator, dining room table, “everything was there”.[64]

   ·Said that it was the bed that was put into one room and the other things were left in the house. When asked: “So essentially when you came back to Brisbane there was a fully formed furnished house for you to spend the night in?”, said “Yes. Yes.”[65]

   ·Said that he owned a family car with his wife and that it was left at his home, if they had of sold the house they would have sold everything.

   ·Said he only took 5 or 6 books with him to Kuwait as he has everything else he needs on the computer.

   ·Said he could not recall when he booked his ticket from Sydney to Brisbane for December 2015.

   ·Said he had received the complaint about the faulty alarm in his Brisbane home whilst in Kuwait.

   ·Said that he was diagnosed with COPD before he departed Australia for Kuwait in 2015, that in August 2015 he went for a medical check-up because he was having some breathing trouble.

   ·When asked when did the complications with his health begin to arise in Kuwait, said that it was in the month of February or March, it was the period when after the little bit of trouble, it become too much. Last year he went to India and was bedridden that time because of the pollution. 

   ·When asked if he had enough medication with him in Kuwait to deal with his symptoms, said except the one spray the physician had given to him, it was not available in Kuwait so he got it from Australia that time. He obtained his medication in Australia and had it sent to him in Kuwait.

   [64]    Transcript, page 26.

   [65]    Transcript, page 26.

2. In closing submissions,[66] the Applicant referred back to his written material and the evidence he had earlier given to the Tribunal. The Applicant contended that the important test is the Domicile Test as he said his view was based on previous advice from the Respondent and as such the other tests should not be applied. The Applicant contended that permanent does not have the meaning of everlasting or forever but is used in the sense of being contrasted to temporary or transitory – your place of abode is your residence, where you live with your family and sleep at night.

   [66]    Transcript, pages 52-57 and 59-60.

   Post-hearing submissions

3. In written submissions provided after the Hearing the Applicant reiterated his contentions as to why he was not an Australian resident for taxation purposes for the 2016 year, providing that the 183 Day Test does not apply to him, he was outside of Australia so he did not reside in Australia, he had three decisions agreeing with this contention and that his place of abode was Kuwait.[67] The Applicant summarised his contentions regarding the Domicile Test as follows:[68]

   [67]    Applicant’s Outline of Arguments and Reply to the Respondent’s Outline of Arguments, dated 17           December 2019, pages 1-4.

   [68]    Applicant’s Outline of Arguments and Reply to the Respondent’s Outline of Arguments, dated 17           December 2019, pages 1-2.

   1.3 Domicile Test: According to the fact sheet of ATO, based on the act and       common law:

   §“If not in Australia, the domicile test is not satisfied” and therefore a non-resident.

   §Permanent place of abode has been defined through case law that it does not have the meaning of everlasting or forever, but it is used in the sense of being contrasted to temporary or transitory.

   §Place of abode is your residence, where you live with your family and sleep at night.

   1.4 In my case, me and my wife (no dependent child) left Australia and lived and slept in an apartment in Kuwait. Also we were planning to sell our residence and to liquidate the home loan ….. but no agreement was reached with joint owner (my wife). Additional arguments and case laws are discussed in the SFIC submitted.

   1.5 I appeal against the ATO’s decisions with evidence of factual mistakes in the ATO rulings/statements and evidence from the relevant legal cases, rulings by the ATO, AAT and Courts in Australia that supports my “non-residency status” in terms of “domicile test”.

   1.6  The ATO raised issues: 

   1. employer sponsored visa and apartment, returning back to my previous employment;  

   2.  duration of my stay in Kuwait (181 to 189 days); 

   The ATO approved the non-residency statuses of many Ex-patriate Australians who were all on employer sponsored visa and were on overseas assignment on transfer or secondment and likely to return or returned to their job in Australia ( law/view/document? Docid=ITR/IT2650/ NAT/ ATO/00001, referenced to: Case S19 85 ATC 225; 28 CTBR (NS) Case 29; Case R92 84 ATC 615; Case 145 27 CTBR(NS) 1131; and Case T28 86 ATC 276; 29 CTBR (NS) Case 31) and “The Engineering Manager and Commissioner of Taxation ([2014] AATA 969, 2014 ATC 1-071). On the same basis and in accordance with ATO’s Taxpayers Charter, these factors need not affect my non-resident status and my case is not any different from other non-residents considered by the ATO. In the case of the Dempsey v FCT [2014] AATA 335. The AAT noted that lists like these are useful but that "they are no substitute for the text of the statute". The respondent’s argument is not based on statue and therefore must be rejected.

   1.7 Regarding duration of my stay in Kuwait, some of the relevant rulings and cases are discussed:  

   -The ATO ruling (IT2650): “The word "permanent" in subparagraph (a)(i) of the definition of "resident" does not have the meaning of everlasting or forever but is used in the sense of being contrasted with temporary or transitory (Applegate 79 ATC at p.4314; 9 ATR at p.907)”. The respondent contention that “limited term” is therefore not valid. 

   -The ATO’s example in the case of one Simon5 relates to duration of stay for resident4. Simon and his family were in Australia for only four months, they are considered Australian residents on the basis that they were residing here for the duration of their stay. This is despite the fact that Simon owned a family home overseas during that period. The same principle is applicable to me also like Simon because I resided in Kuwait as an expatriate for 189 days or more than 6 months and therefore, I was a resident of Kuwait and not Australia. 

   -The AAT decision (“The Engineering Manager and Commissioner of Taxation ([2014] AATA 969, 2014 ATC 1-071)”: the AAT relied on Sheahan J in Commissioner of Taxation v Jenkins to find that a stay outside of Australia by a person for a fixed period is not prevented from being 'permanent' in the relevant sense simply because the stay is for a fixed period. The AAT found that Mr M's permanent place of abode was outside Australia even though he intended to return to Australia in the future (and in fact did return in April 2011). It found that Mr M had established his fixed and habitual place of abode in Oman close to his work. The AAT considered that Mr M's intention to treat Oman as his home for the time being was an important aspect of that finding. 

   Finally, I refer to the ATOs report that discussed the period of physical presence in Australia, states that: ‘61. Time is not necessarily determinative of residency, but it is an important factor when considering whether an individual resides here’. Given these cases and rulings discussed, my stay in employer provided apartment during my stay in Kuwait was my place of abode and therefore I am a non-resident under domicile test.

   RESPONDENT’S CONTENTIONS

   Closing Submissions provided at Hearing

4. The Respondent handed up an outline of arguments[69] at the Hearing of which as amended with reference to the evidence provided at Hearing by the Applicant, formed his closing submissions.[70]

   [69]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, pages 1-     20.

   [70]    Transcript, pages 40-52 and 57-59.

5. The Respondent contended that the onus rests with the Applicant in this matter to prove that the Notice of Amended Assessment was excessive or otherwise incorrect. While acknowledging the Applicant’s frustration that the Respondent’s position may not have been entirely consistent in respect of residency according to the Ordinary Concepts Test, the Respondent submitted that, that does not change the fact that at the bottom of every letter that was sent to the Applicant there are words to the effect that “we regard you as an Australian resident for that period that you are away.” The Respondent is bound to apply the law and as such must run its case before the Tribunal according to law.

6. The Respondent contends that the Applicant was a resident of Australia under the Ordinary Concepts, Domicile and 183-Day Tests.

   Ordinary Concepts Test

7. The Respondent submitted that the Applicant never ceased to be an Australian resident at any time during the financial year ended 30 June 2016 considering the followings objective facts:[71]

   [71]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, pages 15-     16, paragraph 63 and Transcript, pages 41-47.

   ·The Applicant emigrated to Australia in 1994, has been an Australian citizen since 15 December 1999 and has lived and worked in Australia since that time, save for his sojourn to Kuwait.

   ·The Applicant held an Australian passport and had an Australian domicile of choice.

   ·During the income year in question, the Applicant worked in Kuwait pursuant to a contract which: (i) was for a limited seven-month period; (ii) could be terminated on notice; and (iii) could be extended by only two weeks.

   ·The Applicant entered Kuwait on an employer-sponsored visa, which limited his entitlement to be in Kuwait to the duration of his employment.

   ·The Applicant maintained his Australian home in Brisbane, where he lived before and after his contract in Kuwait, he returned to during his return trip to Australia in December 2015.

   ·The Applicant’s furniture was largely in place in his Brisbane home while he was working in Kuwait.

   ·The Applicant spent 187 days of the 2016 financial year in Australia.

   ·The Applicant’s visit to Australia during which he attended his son's wedding is properly regarded as a return visit to his home country, noting he visited his Brisbane home.

   ·Throughout the financial year ended 30 June 2016 the Applicant maintained his assets in Australia, being his family home and several investment properties.

   ·There is no evidence that the Applicant ever attempted to sever other financial ties with Australia by shutting down his Australia bank accounts and he kept his financial affairs substantially located in Australia.

   ·There is no evidence that the Applicant acquired or maintained any significant assets overseas.

   ·The Applicant did not attempt to sell or rent out his Australian home in Brisbane while he was in Kuwait, his home was not left in a state to rent out as items were left in situ.

   ·There is no evidence that the Applicant or his wife divested themselves of their assets located in Australia before departing for Kuwait.

   ·There is no evidence that the Applicant took many of his personal belongings with him to Kuwait.

   ·The Applicant’s living arrangements in Kuwait were fully-furnished temporary accommodation provided by his employer for him and his wife for the duration of his seven-month contract.

   ·The Applicant made no statement or evinced any intention to settle permanently in Kuwait specifically (rather his statements were to the effect that he intended to work in the Middle East).

   ·The Applicant made no arrangements to obtain a new visa in the Middle East and made no binding arrangements for further work in the Middle East.

   ·The Applicant stated that his preference was to seek medical treatment in Australia rather than in the Middle East.

   ·When the Applicant’s health condition allegedly worsened, Australia was the country in which he chose to seek treatment and settle.

8. The Respondent asked that the Tribunal consider that the evidence provided at Hearing by the Applicant in relation to his medical conditions was untested save for that of cross-examination. Further the Respondent contended that the medical certificate provided by Dr Tennakoon dated 22 May 2019, is not contemporaneous and lacks detail and should be considered as hearsay. Further the Respondent contended that the Applicant’s explanation for why he did not seek treatment for his conditions in Kuwait is unsatisfactory as they would treat his symptoms not his medical history.

9. The Respondent contended that when the Applicant’s medical conditions worsened he chose to seek treatment in Australia, he came home, so he had not abandoned at any time Australia being his home.

10. The Respondent contended that the email chain tendered by the Applicant in support of further employment opportunities in Kuwait does not provide evidence of a deliberate or genuine attempt to maintain residence. The email address is problematic, the email of 2 December 2015 is vague and the email of 30 December 2015 takes the story no further. There is no evidence of any other attempts to secure further work.

11. The Respondent contended that in not retiring from his position with the Queensland Government but rather taking leave without pay and subsequently returning to that role, indicates an intention not to sever ties with Australia.

12. The Respondent contended that the evidence, objectively viewed, leads to the conclusion that, when the Applicant flew to Kuwait in September 2015:[72]

    (a)the Applicant only intended his absence from Australia to be a temporary one because he maintained a continuity of association or connection with this country during his temporary seven-month employment in Kuwait;

    (b)although the Applicant may have had a physical presence in a Kuwait during the financial year ended 30 June 2016, he had no intention to treat that place as his home - instead he had an intention to return to and continue to treat his [Brisbane] house as his "home";

    (c)neither Australia nor the Applicant's home at [Brisbane] ever ceased being his ["permanent or usual abode"]; and

    (d)as such, the Applicant did not cease to be an Australian resident in the financial year ended 30 June 2016 under ordinary concepts of residency simply because he was physically absent for that seven-month period.

    [72]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 17,      paragraph 64.

13. The Respondent contended that the comments of Wilcox J in Hafza v Director-General of Social Security (1985) 6 FCR 444 at 449-450 as reproduced at paragraph 15 above sums up the Applicant’s circumstances. The Respondent contended that the Applicant may have been physically absent from Australia during the period of his time in Kuwait, but he always held an intention and the objective facts demonstrate that he always had the attitude that Australia remained his home, in particular his house in Brisbane always remained his home. The Respondent submitted that it is important to recognise that a person can simultaneously be a resident in more than one place and the Respondent does not submit that the Applicant was a resident in Kuwait as well, that is a matter of Kuwaiti national law of which the Tribunal does not need to concern itself.[73]

    [73]    Transcript page 46.

    Domicile Test

14. The Respondent contended that the Applicant is a resident of Australia under the Domicile Test contained in section 6(1)(a)(i) of the ITAA 1936 by reason of his emigration to Australia, his Australian citizenship, his long-standing presence in Australia and his financial and familial ties. The Respondent contended that it is clear that the Applicant adopted Australia as a domicile of choice either at the time of his emigration here or at another time thereafter.[74]

    [74]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 17,      paragraphs 65-66.

15. The Respondent contended that there is no objective evidence to support the proposition that the Applicant in the words of section 10 of the Domicile Act 1982 (Cth), had an intention to make Kuwait or any other country in the Middle East his home indefinitely. On the contrary, he only obtained a limited term visa and on cessation of his contract in Kuwait he returned to live in Australia exclusively.[75]

    [75]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 17,      paragraphs 67-68.

16. The Respondent contended that the Applicant has not demonstrated that his permanent place of abode was outside Australia during the 2016 year because:[76]

    (a)the Applicant spent the majority of the year living in Australia in his long-term family home, which he owns and where he lived before, during and after the financial year ended 30 June 2016;

    (b)the Applicant lived in accommodation in Kuwait provided by his employer for the limited term of his employment contract there. His time spent in Kuwait was approximately 6 months in total and he made no arrangements to extend his stay in that country; and

    (c)the Applicant's limited visa to Kuwait made it impossible for him to establish a home in Kuwait which could be characterised as his permanent place of abode.

    [76]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 18,      paragraph 69.

17. The Respondent contended that the Applicant and his wife did not have a long enough duration of presence in Kuwait and did not set down permanent roots, by virtue of living in employer-sponsored accommodation, that was pre-furnished, by virtue of having taken a very small number of their accoutrements with them and further that the Applicant had given no evidence of any ties at all to Kuwait other than his employment. The Respondent submitted that the links the Applicant had made with Kuwait were insufficient to have the Tribunal regard that place of abode as being, in any way, his permanent place of abode.[77]

    [77]    Transcript, page 48.

18. Therefore, the Respondent submitted that it cannot be said that the Applicant definitely abandoned his residence in Australia and commenced living in Kuwait in a permanent way.[78]

    [78]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 18,      paragraph 70.

19. The Respondent contended that the Applicant’s permanent place of abode was not outside Australia during the 2016 year and he was a resident under the Domicile Test for that year.[79]

    [79]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 18,      paragraph 71.

    183-Day Test

20. The Respondent contended that the Applicant was an Australian resident for the whole of the 2016 year when considering the 183-Day Test as his movement records show that he was in Australia for a total of 187 days and for the reasons contended in relation to the Ordinary Concepts Test as set out in paragraph 76 above his usual place of abode was within Australia.[80]

    [80]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 18,      paragraph 72.

1. The Respondent submitted that:[81]

   …. The Applicant’s usual place of abode before, during and after the financial year ended 30 June 2016 was Australia and more precisely his home in [Brisbane]. It was where he lived for the majority of the financial year ended 30 June 2016, and for the surrounding years.  It was where he usually lived when not working in Kuwait. His short term living in Kuwait in temporary, limited-term accommodation could not be considered his usual place of abode by comparison. It is therefore respectfully submitted that the Tribunal cannot be satisfied that the Applicant’s usual place of abode was outside Australia.

   [81]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 19,      paragraph 74.

2. The Respondent submitted that the Applicant’s contention that he returned to Australia in December 2015 as a visitor and as such those days should not be counted as days in Australia is an incorrect interpretation of the test. The test simply is, has the person been in Australia for 183 days or more, the only way to escape the test is to show that a person’s usual place of abode is outside of Australia.[82]

   [82]    Transcript, page 51.

   Reliance on Private Ruling

3. The Respondent contended that the private ruling dated 4 September 2015 included a typographical error in stating the Applicant was not residing in Australia, however went on to make it clear that it was determined that he was regarded as an Australian resident to both Ordinary Concepts and under the Domicile Test.[83]

   [83]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, pages 19-     20, paragraphs 76-80.

4. The Respondent further contended that the Applicant had not relied on the private ruling because he did not wait for it to be sent to him before he signed his employment contact.[84]

   [84]    Exhibit 8, Respondent’s Outline of Argument, handed up at Hearing on 11 December 2019, page 20,      paragraphs 81-83.

5. The Respondent contended that the objection decision should be affirmed.

   Post-hearing submissions

6. In written supplementary submissions date 20 January 2020,[85] filed by the Respondent after the Hearing in response to the Applicant’s Outline of Arguments and Reply to the Respondent’s Outline of Arguments of the Applicant[86] the Respondent relied upon their previous written and oral submissions.

   [85]    Respondent’s Supplementary Submissions dated 20 January 2020, pages 1-5.

   [86]    Applicant’s Outline of Argument and Reply to the Respondent’s Outline of Arguments dated 17 December          2019, pages 1-3.

7. The Respondent noted that the Applicant did not call his wife to give evidence.[87] Further the Respondent provided that the fact that the Respondent may have regarded some other taxpayers, whose circumstances differed from those of the Applicant, as being non-residents during periods in which they lived and worked overseas is not determinative of the Applicant’s residency status.[88]

   [87]    Respondent’s Supplementary Submissions dated 20 January 2020, page 2, paragraph 9.

   [88]    Respondent’s Supplementary Submissions dated 20 January 2020, page 3, paragraph 11.

8. In response to paragraph 1.7 of the Applicant’s Supplementary Submissions (set out at paragraph 72 above), the Commissioner provided:[89]

   [89]    Respondent’s Supplementary Submissions dated 20 January 2020, pages 3-5, paragraph 12.

   (a)The example referring to “Simon” in that paragraph is inapplicable to the Applicant’s circumstances because that example refers to a foreign resident residing in Australia temporarily, whereas the Applicant is an Australian resident who resided temporarily in Kuwait.

   (a)The Applicant’s assertion that he was a resident of Kuwait, which the Commissioner does not in any event concede, is irrelevant because the issue is whether he was a resident of Australia during the income year in question.

   (b)The circumstances of the taxpayer in The Engineering Manager and Commissioner of Taxation [2014] AATA 969 and the Applicant’s circumstances are very different, such that the decision in that case cannot be used as a guide to the outcome in the present proceeding, for the following reasons:

   (i)The taxpayer in that case lived and worked overseas from 2004 to April 2011, which is much longer than the Applicant’s 7 month period of overseas employment.

   (ii)Very few of the taxpayer’s personal belongings in that case were kept at the family home, and the taxpayer’s favourite personal belongings including squash gear, a laptop, a guitar and most of his clothing went with him overseas (The Engineering Manager at [14] and [16]), whereas there is no evidence of similar personal possessions travelling with the Applicant to Kuwait.

   (iii)Although the taxpayer in that case continued to own a home in Perth as joint tenant with his wife while he worked overseas, that home was retained to house his wife and their four children, who remained in Australia while he worked overseas (The Engineering Manager at [14] and [17]).

   (iv)Unlike the Applicant, the taxpayer in The Engineering Manager lived in a house of his own choosing, and the taxpayer needed to buy some furniture as the house was only partly furnished (The Engineering Manager at [25]). That rented house was exclusively his and he lived alone at all times, and when he took an absence from work he locked the house and took the keys with him (The Engineering Manager at [28]).

   (v)The taxpayer in The Engineering Manager used his leave to return to his family in Perth because he wanted to see his children. He did not regard Oman as a secure place for a holiday with four school-aged children, so he returned to see them in Perth in order to keep them safe (The Engineering Manager at [37]).

   (vi)The taxpayer in The Engineering Manager had marital issues which were part of his decision to work overseas, and a distinguishing factor of that case was that those marital issues were the basis for him preferring his career over his familial relationships, such that he “ordered his lifestyle around his work commitments” rather than his relationship with his wife and children (The Engineering Manager at [55]).

   (vii)Unlike the Applicant, the taxpayer in The Engineering Manager returned to Australia after a change in circumstances occurred, and he decided to change his living and marital relations based on those changed circumstances. Those changed circumstances were that: (i) his wife communicated to him that she had become overwhelmed with raising their children on her own; (ii) the taxpayer’s eldest son was entering his last year of high school and that the taxpayer resolved to strengthen his relationship with his son; (iii) the taxpayer’s wife’s change in attitude to demand that he return from overseas and the taxpayer’s subsequent decision to improve his marital relations (The Engineering Manager at [40]-[42], [45]-[48], [50] and [55]-[57]).

   (viii)Unlike the Applicant, the taxpayer’s lifestyle of working and living overseas meant that he did not regard the Perth property as his home in the relevant year until he had a change of mind and made the decision to return to Australia (The Engineering Manager at [57]). It is clear from the evidence that the Applicant in this proceeding at all times during the 2016 financial year regarded his [Brisbane] house as his home and that his accommodation in Kuwait as nothing more than temporary accommodation.

   CONSIDERATION

9. From the outset, the Tribunal notes that the Applicant was fixated on the wording of the private rulings issued by the Respondent in relation to which particular tests should subsequently be considered by the Respondent and Tribunal in determining whether he was a resident of Australia for taxation purposes for the 2016 year. Given that if any of the four tests provided for by the definition set out in section 6(1)(a) of the ITAA 1936 are met a taxpayer is considered to be a resident of Australia, this point is moot. While the Applicant contended, he sought to rely on aspects of the private rulings dated 4 September 2015 and 14 October 2015, both concluded that he was to be considered an Australian resident for the 2016 year. There is no evidence before the Tribunal to suggest that at any time the Applicant was provided with a private ruling or other advice in relation to the 2016 year that provided anything other than the Respondent considered him to be a resident of Australia.

10. In determining whether the Applicant was a resident of Australia during the 2016 year, save for the Superannuation Test of which the Tribunal accepts did not apply to the Applicant, the Tribunal has considered the remaining three tests, being the Ordinary Concepts, Domicile and 183-Day Tests. Regardless of previous determinations and decisions made by the Respondent, the role of the Tribunal is to consider the reviewable decision afresh.

11. Having considered the legal authorities as outlined and referred to above and the evidence before the Tribunal, the Tribunal finds that the Applicant was a “resident of Australia” pursuant to the definition in section 6(1)(a) of the ITAA 1936 for the following reasons.

    Resident according to the Ordinary Concepts Test

12. As set out above in the discussion of relevant case law the term reside is not defined in the statute. The principles established by case law provide that physical presence or absence from a particular location is not on its own determinative of where a person is taken to reside. A person’s continuity of association and intention to return to and to continue to treat a place as home is also a determinative factor.

13. The Applicant resided at his Brisbane home before, after and briefly during the period he was working in Kuwait. While in Kuwait the Applicant resided in accommodation arranged by his employer.

14. The Applicant gave evidence that his Brisbane home was not rented or offered for rent or sale in the lead up to or during the period he was working in Kuwait. Further his furniture largely remained where it had always been, his car remained in the garage and his neighbour continued to contact him directly when any issues arose, for example the issue with the alarm system. The Applicant’s explanation as to why his Brisbane home was not offered for rent or sale was due to a disagreement with his wife, who had not agreed to sell the property and as such a final decision in relation to the fate of the property had not been made.

15. At Hearing the Applicant gave evidence that he intended to work overseas, primarily in Kuwait for 10 years, returning to Australia occasionally to visit family. The Tribunal notes that in written submissions provided by the Applicant prior to the Hearing the time period of 10 years was not previously mentioned.

16. The Applicant maintained investment properties and bank accounts in Australia throughout the 2016 year.

17. The Applicant’s evidence indicated that he maintained connection with Australia during the 2016 year in relation to medical treatment. He told the Tribunal that his reason for returning to reside in Australia at the conclusion of his overseas employment contract was due to his poor health. The Applicant said that his hypertension and COPD were present prior to him going to Kuwait and that his hypertension was well managed, however his COPD had caused some issues which were being managed with medication and a spray. He said his symptoms worsened while he was in Kuwait however he did not seek medical attention, as his doctor in Australia has his history. The Applicant also told the Tribunal that he arranged through the Medicare system to have medication dispensed in Australia and sent to him in Kuwait. The Applicant maintained his private health insurance throughout the 2016 year and contended that his insurer told him he was not covered while overseas and took the payment anyway.

18. The Applicant also maintained his connection with his Australian employment, taking advantage of an opportunity to take leave without pay rather than resign from his position after turning 65, which is what he said his intention had initially been. The Applicant did return to that employment after the completion of his contract in Kuwait.

19. The Applicant told the Tribunal that his intention was to no longer reside in Australia for at least 10 years and that he was not sure where he and wife would settle after that time.

20. While the Tribunal accepts that the Applicant was not present in Australia for a substantial period in the 2016 year during which he resided in accommodation in Kuwait, it notes that his employment contract was for 7 months. Although the Applicant provided evidence by way of email exchange that suggests that further employment opportunities may have been available, there is no tangible evidence before the Tribunal that the Applicant did in fact seek further employment contracts to commence at the conclusion of his then current contract. Given the Applicant was granted an employer visa his stay in Kuwait, for all intensive purposes was limited. Although alternative visa types were referred to by the Applicant, no evidence of alternative visas, their availability or requirements were provided to the Tribunal.

21. After considering all evidence before it objectively, the Tribunal considers that the Applicant despite being absent from Australia for 7 months and telling the Tribunal he intended to work outside of Australia for up to 10 years, maintained an intention to return to Australia and an attitude that Australia remained his home during the 2016 year. The Tribunal considers that such an intention and attitude was evidenced by the Applicant:

    ·Not offering his home in Brisbane for rent or sale and more importantly, largely leaving his furniture and personal effects in-situ, meaning that he could seamlessly return to the property at any time, as demonstrated during his return to Australia in December 2015 and at the conclusion of his employment contract.

    ·Taking limited personal items to Kuwait with him, his visa and accommodation being tied to the length of his employment contract did not allow him to establish a connection with his residence in Kuwait.

    ·Failure to demonstrate any connection with Kuwait other than his short-term employment contract.

    ·Choosing to keep his current Australian employment open rather than retiring upon reaching 65.

    ·Continuing to only want to have his hypertension and COPD conditions managed by his Australian doctors who were aware of his history despite being aware of these conditions and the worsening of his COPD prior to accepting a contract in Kuwait.

    ·Maintaining his private health insurance despite potentially the option to cancel the cover with his insurer and seek a refund of premiums paid but not used.

22. This view is further supported when considering the objective manifestations of the Applicant’s intention to continue to reside in Australia, being he did not seek to engage in further employment contacts in Kuwait but rather returned home to Australia. The Applicant did not seek medical treatment overseas, instead preferring to defer to his Australian medical practitioners, at the conclusion of his employment contract he returned to reside in his Brisbane home, recommenced his role with the Queensland Government and claimed the private health insurance offsets in his 2016 income tax return.

23. The Tribunal finds that the for the purposes of the Ordinary Concepts Test the Applicant was a resident of Australia for the 2016 year.

    Resident according to the Domicile Test

24. The Domicile Test requires firstly the consideration of whether during the 2016 year the Applicant was domiciled in Australia and then if so whether the Tribunal is satisfied that his permanent place of abode was outside Australia.

25. In relation to the first component, the Applicant did not advance any argument that he did not continue to be domiciled in Australia. The evidence as set out above establishes that the Applicant’s domicile of choice is Australia. As such the Tribunal considers it necessary to consider whether the Applicant’s permanent place of abode was outside Australia for the 2016 year.

26. As established by case law set out above, to establish a permanent place of abode a person does not need to intend for it to be so indefinitely, however what they need to establish is that it is their permanent place of abode rather than their temporary place of abode. Consideration is given to the continuity or otherwise of the persons presence, the duration of their presence and the durability of their association with the particular place. Further, a person’s intention to make their home a place of abode outside of Australia is relevant, particular whether they can be said to have abandoned their residence in Australia and had commenced living in another country in a permanent way.

27. The Applicant contended that his place of abode was where he lived with his wife and slept at night and during the 2016 year. He submitted that in his view for the majority of the year that was in Kuwait. The Applicant contended that the fact that his accommodation was provided by his employer and was fully furnished does not detract from it being his permanent place of abode. As discussed above the Applicant contended that he resided in Kuwait and did not continue to reside in Australia during the 2016 year. He further made reference to numerous determinations and rulings made by the Respondent and the decision of the Tribunal in The Engineering Manager and Commissioner of Taxation [2014] AATA 969; 2014 ATC 1-071 of which he contended should be applied in his circumstance to determine his permanent place of abode was outside of Australia in the 2016 year.

28. Having reviewed those contentions of the Applicant, the Tribunal agrees with the contentions made by the Respondent that the circumstances in the referenced determinations, rulings and decisions were largely materially different to those of the Applicant and as such have limited application. In particular, the Tribunal considers that the decision in The Engineering Manager and Commissioner of Taxation [2014] AATA 969; 2014 ATC 1-071 provides no assistance to the Applicant’s contentions in this present matter for the reasons set out in the Respondent’s contentions outlined in paragraph 97 above.

29. In objectively considering the evidence before it as outlined above and specifically discussed in paragraphs 102 to 109 above, the Tribunal considers that the Applicant had not abandoned his residence in Australia during the 2016 year, nor had he established a permanent place of abode in Kuwait.

30. Rather the Tribunal considers that the Applicant’s place of abode in Kuwait was more akin to being temporary rather than permanent for the reasons discussed in paragraphs 110 to 111 above.

31. The Tribunal finds that the for the purposes of the Domicile Test the Applicant was a resident of Australia for the 2016 year.

    Resident according to the 183-Day Test

32. There was no dispute that the Applicant was present in Australia during the 2016 year for 187 days or that 187 days is more than half a year.

33. The Applicant contended however that the 183-Day Test does not apply to him on the basis of:

    ·it had not been applied in the private rulings or decisions of the Commissioner leading up to his application to the Tribunal; and/or

    ·he was a visitor not a resident for the period he returned in December 2016 and those days should be considered in calculating the days that he was present in Australia; and/or

    ·the 183-Day Test only applies to those persons entering Australia however he was leaving.

34. The Tribunal does not accept the Applicant’s contentions in relation to the application of the 183-Day Test to his residency status for the 2016 year. The express wording of section 6(1)(a)(iii) of the ITAA 1936 provides “includes a person who has actually been in Australia continuously or intermittently, during more than one-half of the year of income …..”. As such the first limb of the 183-Day Test is satisfied as the Applicant was present in Australia for more than half the 2016 year. The ITAA 1936 does not make reference to application only being to those persons entering Australia or who only enter with the intention of being a visitor.

1. The Tribunal considers it appropriate to consider the 183-Day Test in determining whether the Applicant was a resident of Australia for the 2016 year and having determined the Applicant was present in Australia for more than half of the 2016 year must consider whether or not the Applicant’s usual place of abode was outside Australia and whether he had an intention not to take up residence in Australia.

2. The Applicant’s usual place of abode was his home in Brisbane, in the 2016 year, before, after and during his employment in Kuwait and as determined by the Tribunal above for more than half of the year. For the reasons discussed in relation to the Ordinary Concepts and Domicile Tests above, the Tribunal considers that the Applicant’s usual place of abode was not outside Australia and that he held an intention to resume his residence in Australia.

3. Consequently, the Tribunal is satisfied that the Applicant was a resident of Australia during the 2016 year pursuant to the 183-Day Test.

   CONCLUSION

4. For the reasons set out above, the Tribunal is not satisfied that the Applicant was not a “resident of Australia” in the 2016 year.  Therefore, the Applicant must include his foreign source income in his assessable income for the 2016 year. 

5. The Applicant did not raise any arguments disputing the quantum of his foreign sourced income that had been calculated by the Respondent and formulated the calculation of the Applicant’s tax payable provided for by the Amended Notice of Assessment. The Applicant has not discharged his onus to prove that the assessment for the 2016 year is excessive or otherwise incorrect.

6. Accordingly, the decision under review is affirmed.

I certify that the preceding 129 (one hundred and twenty-nine) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

......[SGD].............................................................

Associate

Dated: 13 October 2020

Date of hearing:	11 December 2019
Applicant:	In Person
Counsel for the Respondent:	Mr B J McEniery
Solicitors for the Respondent:	Australian Taxation Office