Deputy Commissioner of Taxation v Shi

The Deputy Commissioner of Taxation (DTC) sought to recover from Mr Shi an amount of $1,037,500. This sum represented the value of shares in a company, which the DTC alleged had been transferred to Mr Shi in contravention of s 160ZJ(1)(b) of the *Income Tax Assessment Act 1936* (Cth) (the Act). The dispute concerned whether Mr Shi was a "resident of Australia" for the purposes of the Act at the relevant time. The matter came before Bell and Keane JJ of the Federal Court of Australia.

The primary legal issue before the Court was whether Mr Shi was a resident of Australia for the purposes of the Act during the income year ending 30 June 1997. This determination was crucial because if Mr Shi was not an Australian resident, the capital gains tax provisions under which the DTC sought to recover the sum would not apply. The Court was required to consider the meaning of "resident of Australia" as defined in s 6(1) of the Act, which includes a person who has their "usual place of abode" in Australia.

The Court analysed the evidence concerning Mr Shi's domicile, his intention to reside in Australia, and the physical presence of his "home" or "abode" in Australia. Bell and Keane JJ applied the principles established in cases such as *DTR Nominees Pty Ltd v FCT* and *Harding v FCT*, which emphasise the importance of the taxpayer's settled or ordinary home. The Court found that Mr Shi's circumstances, including his continued ownership of property in Australia, his family ties, and his intention to return to Australia, indicated that his "usual place of abode" remained in Australia during the relevant period, notwithstanding his extended periods of absence overseas.

The Court therefore held that Mr Shi was a resident of Australia for the purposes of the Act for the income year ending 30 June 1997. Consequently, the appeal by the Deputy Commissioner of Taxation was allowed, and the orders of the primary judge were set aside.