Chawki Guissouma and Commissioner of Taxation
[2013] AATA 875
[2013] AATA 875
Division SMALL TAXATION CLAIMS TRIBUNAL File Number(s)
2012/4814
Re
Chawki Guissouma
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Senior Member G Lazanas
Date 9 December 2013 Place Sydney The decision under review is set aside and in substitution the Tribunal decides that the objection is allowed in full.
......................[sgd]..................................................
Senior Member G Lazanas
CATCHWORDS
TAXATION AND REVENUE – income tax – whether Australian resident – whether resident according to ordinary concepts – decision set aside and substituted
LEGISLATION
Income Tax Assessment Act 1936, s 6(1)
Income Tax Assessment Act 1997, s 995-1(1)
Income Tax Rates Act 1986, s 18
CASES
Commissioner of Inland Revenue v Lysaght [1928] A.C. 234
Federal Commissioner of Taxation v Applegate [1979] FCA 66; (1979) 38 FLR 1
Federal Commissioner of Taxation v Miller (1946) 73 CLR 93
Hafza v Director-General of Social Security (1985) 6 FCR 444
Levene v Inland Revenue Commissioners [1928] UKHL 1REASONS FOR DECISION
Senior Member G Lazanas
9 December 2013
INTRODUCTION
This is a case about whether an individual, Mr Chawki Guissouma, is a resident of Australia for income tax purposes. Interestingly, in this case, the Commissioner argued that Mr Guissouma, a French citizen who arrived in Australia in December 2010 on a working holiday visa, was not a resident in the 2012 income year. However, the Commissioner accepted that he was a resident in the 2011 income year.
It is not in dispute that if Mr Guissouma was a resident of Australia in the 2012 year then he would be entitled to the tax-free threshold available to a resident under s 18 of the Income Tax Rates Act 1986.
The sole issue for the Tribunal to determine is whether the Commissioner is correct. I have decided that Mr Guissouma is a resident of Australia for part of the 2012 income year and, therefore, the Commissioner is incorrect.
FACTS
The following findings of fact are based on the documents before the Tribunal and are not in dispute. No oral evidence was given as the hearing proceeded on the papers, by consent of both parties.
Mr Guissouma is a French citizen who arrived in Australia on 3 December 2010 on a temporary working holiday visa.[1] He is 30 years old and unmarried. The main purpose of Mr Guissouma’s trip to Australia was for a holiday and to undertake casual work.[2]
[1] T8-43
[2] T8-40 to 41
It was not Mr Guissouma’s intention to remain permanently in Australia and, at all relevant times, he intended to return to France. Mr Guissouma had a domicile in France (where he generally resides with his parents), and there was no evidence to suggest that he had established a domicile of choice in Australia.
While in Australia, Mr Guissouma maintained an Australian bank account.[3] He also had the following assets in France:[4]
(a)a motor vehicle of approximate value of $1,300; and
(b)a bank account of approximate value of $20,000.
[3] T8-59
[4] T8-44
While in Australia, Mr Guissouma worked for six months as a waiter, and for one month as a casual worker in a factory. His employment straddled the 2011 and 2012 years of income. During the 2012 income year, the only year in dispute, Mr Guissouma’s taxable income from employment in Australia was $5,222.[5] I note that the Commissioner did not take issue with the 2011 year of income, and accepted that Mr Guissouma was a resident for that year.[6]
[5] T8-41, T8-52 to 53
[6] T8-55
Mr Guissouma rented residential premises with friends in Sydney at three separate places.[7] He stayed at the first location for approximately 3 months, from about 3 December 2010 to 28 February 2011; at the second for approximately 3 months, from 1 March 2011 to 4 June 2011; and, in the third for approximately 4 months, from 5 June 2011 to 29 September 2011. All three residences were located in very close proximity to each other within the central business district of Sydney, not far from the Commissioner’s own Sydney offices.
[7] T8-45
During October 2011, Mr Guissouma travelled around Australia. On 30 October 2011, Mr Guissouma left Australia to travel to Fiji and New Zealand during November 2011.[8]
[8] ST2-7, ST4-9
Mr Guissouma returned to Sydney for five days from 23 November 2011 before departing for France on 28 November 2011.[9]
[9] T8-40 to 43
In the 2012 income year, Mr Guissouma spent a total of 128 days in Australia. In other words, he was not present in Australia, continuously or intermittently, for more than 183 days in the 2012 income year.
In his incoming passenger cards dated 3 December 2010 and 23 November 2011, and outgoing passenger cards dated 30 October 2011 and 28 November 2011, Mr Guissouma identified his country of residence as France.[10] Mr Guissouma also identified France as his country of residence in his application for a temporary working holiday visa.[11]
[10] ST3-8, ST5-10, ST4-9 and ST6-11
[11] ST1-1 to 6
On 25 November 2011, Mr Guissouma lodged his income tax return for the 2012 Year.[12] In that return, Mr Guissouma identified himself as an Australian resident and declared taxable income from his employment in Australia of $5,222. He also declared that it was his last Australian tax return.
[12] T3-6
By letter dated 11 May 2012, the Commissioner requested further information concerning the amounts claimed in the tax return.[13]
[13] T4-18 to 27
On 13 June 2012, the Commissioner received further information from Mr Guissouma, including a residency questionnaire which Mr Guissouma had completed.[14] In response to the following questions in that questionnaire, “[w]ere you a resident of another country for tax purposes during your stay in Australia?” and “[i]f Yes, which country?”, Mr Guissouma had answered “[y]es” and “France”.
[14] T5-28 to 31
On 18 June 2012, the Commissioner issued Mr Guissouma with a Notice of Assessment for the year ending 30 June 2012 showing that he owed tax of $497.35 on the basis that his status for taxation purposes was that of a non-resident.
On 20 July 2012, Mr Guissouma objected against the assessment.[15]
[15] T8-36 to 60
By his notice of objection decision dated 22 August 2012,[16] the Commissioner notified Mr Guissouma that he had disallowed Mr Guissouma’s objection to the assessment.
[16] T10-62
On 5 November 2012, Mr Guissouma filed an Application for Review by the Tribunal.[17]
[17] T1-1 to 2
THE ISSUE
As noted above, the sole issue for the Tribunal’s determination is whether Mr Guissouma was a resident of Australia within the meaning of s 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) in respect of the 2012 income year.
THE RELEVANT LEGISLATION
Section 995-1(1) of the Income Tax Assessment Act 1997 defines ‘Australian resident’ as meaning: “a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936”. Section 6(1) of the ITAA 1936 relevantly states, as follows:
resident or resident of Australia means:
(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 the 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 ; or
(B) an eligible employee for the purposes of the Superannuation Act 1976 ; or
(C) the spouse, or a child under 16, of a person covered by sub-subparagraph (A) or (B); and
...
The effect of the definition in s 6(1) of the ITAA 1936 is to provide four tests in determining whether an individual will be regarded as a resident for Australian tax purposes. Broadly, these tests are whether:
(1)a person is resident in Australia as ordinarily understood (the residence according to the ordinary concepts test);
(2)a person is domiciled in Australia unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia (the domicile test);
(3)a person has been in Australia continuously or intermittently during more than one-half of the year of income (that is, 183 days) unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and the person does not intend to take up residence in Australia (the 183 days test); and
(4)a person meets the superannuation requirements (the Commonwealth superannuation fund test).
If an individual does not reside in Australia within the ordinary meaning, the individual may still be considered a resident of Australia for taxation purposes if any of the remaining three statutory tests are satisfied. As a result of the above findings of fact, none of the three statutory tests are relevant in the present case. That is to say, Mr Guissouma does not satisfy any of the domicile, 183 days or Commonwealth superannuation fund residence tests. Accordingly, my reasons deal only with the issue of residence according to the ordinary concepts test.
WAS MR GUISSOUMA A RESIDENT OF AUSTRALIA IN THE 2012 YEAR?
The ordinary concepts test of residence invokes the ordinary meaning of the word “reside”. In the Shorter Oxford English Dictionary,[18] “reside” is defined to mean “to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live, in or at a particular place”. The Macquarie Dictionary defines “reside” as “to dwell permanently or for a considerable time; have one’s abode for a time”.[19]
[18] The Shorter Oxford English Dictionary (6th ed, Oxford University Press 2007).
[19] The Macquarie Dictionary (6th ed, Macquarie Dictionary Press Pty Ltd 2013).
It is generally accepted that the word “reside” has a very wide meaning (Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 per Latham CJ at 99-100). It has also been accepted that a person may reside in more than one country at any one time. The decision of Wilcox J in Hafza v Director-General of Social Security (1985) 6 FCR 444, which addressed the meaning of resident of Australia in a different statutory context, provides the following useful guidance:
13. There is a plethora of decisions, arising in various contexts but predominantly matrimonial causes and revenue cases, relating to the legal concept of residence. As a general concept residence includes two elements: physical presence in a particular place and the intention to treat that place as home; at least for the time being, not necessarily forever. The concept was explained in a taxation case, Koitaki Para Rubber Estates Limited v The Federal Commissioner of Taxation [1941] HCA 13; (1941) 64 C.L.R. 241 at p.249, by Williams J.:
"The place of residence of an individual is determined, not by the situation of some business or property which he is carrying on or owns, but by reference to where he eats and sleeps and has his settled or usual abode. If he maintains a home or homes he resides in the locality or localities where it or they are situate, but he may also reside where he habitually lives even if this is in hotels or on a yacht or some other abode."
14. Physical presence and intention will co-incide 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 a p 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] UKHL 1; (1928) AC 217 at p 225 and Judd v. Judd (1957) 75 WN (N.S.W.) 147 at p 149 -- together with an intention to return to that place and an attitude that that place remains "home" -- see Norman v Norman (1969) 16 F.L.R. 231 at p.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 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.
Where a person resides is a question of degree and therefore one of fact (Commissioner of Inland Revenue v Lysaght [1928] A.C. 234 at 247-8 per Lord Buckmaster). For tax purposes, it is to be determined annually (Federal Commissioner of Taxation v Applegate [1979] FCA 66; (1979) 38 FLR 1).
The Commissioner submitted that in assessing the residency of a person during a period it is permissible to take into account the conduct of the person subsequent to the period (Levene v Inland Revenue Commissioners [1928] UKHL 1, [1928] A.C. 217 at [15] per Lord Sumner). It would be rational to also take into account the conduct of the person in the preceding year in issue, because it would ordinarily follow that a person’s residency status in succeeding years would follow the prior year(s) unless there were factual differences.
As noted above, Mr Guissouma arrived in Australia in December 2010, and worked and lived in Sydney for about ten months. The Commissioner accepted that Mr Guissouma was a resident for the 2011 income year, but did not make any submissions as to what had changed in the 2012 income year, and how the situation had changed on or about 1 July 2011.
Mr Guissouma was not surprisingly somewhat confused by the Commissioner’s change of view, and relevantly stated as follows in a letter dated 16 July 2012 attached to his objection:[20]
“My residency has been changed by mistake.
...
I have read and understood the rules and when I filled up your residency questionnaire online.
The result is: you are an Australian resident for taxation purposes as your behaviour during the time you spend in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.
If you compare the year 2011 and 2012, believe me nothing change.”
[20] T8-40
I believe Mr Guissouma. I could not discern any factual differences that have any relevance to the determination of Mr Guissouma’s residency status between the 2011 and 2012 years, even taking into account the 183 days test. Nor did the Commissioner provide any explanation as to why he reached a different conclusion about the 2012 income year.
I have decided that Mr Guissouma was a resident of Australia during the part of the 2012 income year that he was in Australia, as he in fact resided in Australia. This is because, as a matter of fact, he actually lived in Sydney for over a period of some ten months, even though that period straddled two income years. He chose to work for most of the time that he was in Australia, notwithstanding that he was on a temporary working holiday visa. He lived in regular places in Sydney, not far from each other for periods of between three and four months at each place. He rented that accommodation with friends. The nature of his stay in Sydney demonstrates that he had a settled place which he treated as his home for a limited period of time and developed some routines, including in respect of his work commitments.
While it is true that he maintained connections with his parents in France and some assets there, these were not matters that were of significant importance, particularly having regard to his personal circumstances, including the fact that he was not married. They merely suggested that he was going to eventually return to France, as he did.
The issue of residency must be determined annually, that is, in respect of each income year. My conclusion that Mr Guissouma was a resident of Australia for the part of the 2012 income year that he was physically present here, is consistent with the Commissioner’s own assessment of Mr Guissouma’s residency status in the preceding 2011 income year. It also coheres with the provisions of the Income Tax Rates Act 1986 which require the tax-free threshold to be pro-rated in an income year in which a taxpayer becomes or ceases to be a resident.
Finally, I do not regard the information completed by persons on immigration cards and visa applications to be conclusive of the issue of residency status for income tax purposes. For example, it is not clear to me that Mr Giussouma turned his mind to that specific tax issue when completing the forms or that he necessarily understood the questions or the principles of Australian taxation law regarding the issue of residence. Mr Giussouma may have answered those questions, as well as the Commissioner’s residency questionnaire on the basis, as he made clear to the Commissioner, that he always intended to return to live in France.
CONCLUSION
In my view, Mr Guissouma was a resident of Australia in the 2012 income year until he departed for France in late November 2011. Accordingly, the Commissioner’s objection decision will be set aside and, in substitution, Mr Guissouma’s objection will be allowed in full.
I certify that the preceding 36 (thirty six) paragraphs are a true copy of the reasons for the decision herein of Senior Member G Lazanas ........................................................................
Associate
Dated 9 December 2013
Date of hearing on the papers 13 November 2013 Applicant In person Solicitors for the Respondent ATO Legal Services Branch
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