Mike Boer and Commissioner of Taxation
[2012] AATA 574
[2012] AATA 574
Division TAXATION APPEALS DIVISION File Number
2011/5578
Re
Mike Boer
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President P E Hack SC
Date 30 August 2012 Place Brisbane The decision under review is affirmed.
........................................................................
Deputy President P E Hack SC
CATCHWORDS
TAXATION – Income tax – whether applicant was an Australian resident during income year – employment overseas –rotational work roster – no exclusive right of possession of unit – no permanent place of abode outside Australia – decision affirmed.
LEGISLATION
Income Tax Assessment Act 1997 (Cth) ss 995-1
Income Tax Assessment Act 1936 (Cth) s 6CASES
Federal Commissioner of Taxation v Applegate [1979] FCA 37; (1979) 27 ALR 114
R v Hammond (1852) 17 QB 772; 117 ER 1477REASONS FOR DECISION
Deputy President P E Hack SC
30 August 2012
The issue in these proceedings is whether the applicant, Mr Mike Boer, was an Australian resident during part of the 2009 income year – that part between 21 November 2008 and 30 June 2009. He contends that he was not, with the consequence that income earned by him from employment overseas is not taxable in this country; the respondent, the Commissioner of Taxation, took the contrary view and assessed Mr Boer on that foreign source income.
The term "Australian Resident" is defined in s 995-1 of the Income Tax Assessment Act 1997 to mean “a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936”. In s 6 of that latter Act the term is defined to mean, relevantly[1],
(a)a person … 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…
[1] Neither party suggested that the expanded definitions in s. 6(a)(ii) and (iii) were relevant.
In the present case the arguments of the parties have focused upon two questions, (a) did Mr Boer reside in Australia during the relevant period, and, (b) he having conceded that his domicile was in Australia, did he have a permanent place of abode outside Australia.
For the reasons that follow, I am not satisfied that Mr Boer had a permanent place of abode outside Australia. In those circumstances I find it unnecessary to decide whether he resided in Australia.
The background facts are largely uncontroversial. Mr Boer was born in South Africa in December 1957. He migrated to Australia and became an Australian citizen. He has been married but has been divorced since 2002. He was not in any stable domestic relationship during any of the period in issue in these proceedings. He has three children: two adult sons and a teenage son who lives with Mr Boer's former wife in Brisbane.
Mr Boer has worked for many years as a technician in the oil and gas industry. Frequently, he has been employed on projects in remote areas. Between 2001 and 2004 Mr Boer was working in Port Hedland Western Australia. During the course of his employment he lived in the unit at Port Hedland rented from his employer but during the five lengthy breaks each year he returned to a house that he owned in Capalaba, an outer suburb of Brisbane. Thereafter he was employed on a “fly in/fly out” basis at the gas fields in the Timor Sea.
In early October 2008 Mr Boer received an offer of employment as a Senior Start Up Operations Technician with Occidental Petroleum. The position was based in a desert location in southern Oman. He accepted that offer and left Australia on 21 November 2008 to take up that employment. The offer of employment is not, on its face, shown to be limited for a period of 12 months although that is Mr Boer’s recollection of its length. He was required to work 12 hours a day, seven days a week on a 35/35 rotation, that is, 35 days on and 35 days off.
Mr Boer completed the term of that contract and more. He entered into a fresh contract with Occidental, commencing on 1 February 2010 for a term of one year, on this occasion working a 28/28 rotation. That contract was renewed on its expiry for a further term of one year. In October 2011 he left the employ of Occidental to return to Australia to deal with issues arising from the Commissioner's audit of his affairs.
Mr Boer’s tax return for the 2009 income year was lodged on the basis that the earnings from his employment in Oman were not taxable. A notice of assessment, on the basis of the return as lodged, was issued to Mr Boer on 6 May 2010. On 21 September 2010, following an audit, the Commissioner made an amended assessment which increased Mr Boer's taxable income to include his foreign source income. Mr Boer objected to the amended assessment however his objection was disallowed on 24 October 2011. In that decision, which is the subject matter of these proceedings, the Commissioner took the view that, as Mr Boer was living in Oman, he was not considered to be residing in Australia. It was concluded however that Mr Boer was an Australian resident because he was domiciled in Australia and because the Commissioner was not satisfied that he had established a permanent abode in Oman.
As I have said it has been expressly conceded[2] that Mr Boer had a domicile in Australia. Thus for him to be not regarded as a resident under the expanded definition in s 6(a)(i) of the Income Tax Assessment Act 1936 I need to be satisfied that he had a permanent place of abode outside Australia. And, as I have also said, I am not so satisfied.
[2] Exhibit 4, paragraph 75.
To explain why I have reached that view some further reference to the facts is necessary.
Mr Boer departed Australia on 20 November 2008 to take up the position with Occidental. The period between the end of his previous employment and his departure was not sufficient to allow him time to pack up his house at Capalaba, to put his furniture and effects into storage and to rent out the house prior to leaving Australia. He arrived in Oman on 21 November 2008. He applied for, and obtained, an Omani resident card and multiple-entry employment visa. He commenced work shortly thereafter.
Mr Boer was based at Mukhaizna, situated in the Omani desert, some hundreds of kilometres from the nearest city or town. There, Occidental had constructed a township of some 1000 persons to service its oil operations. There was accommodation provided in approximately 1000 apartments, dining facilities, a library, two gyms, a football field with artificial turf, barbecue areas, a hospital, a small shop, a police station and a fire station. The township was, to a basic level, self-contained.
Occidental allocated Mr Boer a single room apartment with an attached ensuite. Within the single room was a bed, a lounge area and a mini kitchen area. The kitchen area was not equipped to allow Mr Boer to prepare meals but it had a small refrigerator and a microwave oven. He ordinarily ate at the dining facility but could, if he wished, purchase a meal from the facility, store it in the refrigerator and re-heat it in the microwave oven. Mr Boer had no legal interest in the apartment beyond the right to reside in it whilst on site and that right was conditioned by the fact that he shared the apartment with another employee. He and the other employee were not required to share in the sense of living together, rather they appear to have worked complimentary rosters such that generally their needs to use the apartment did not conflict. There were, though, occasions of one or two days when it was necessary for Occidental to arrange alternative accommodation for one or other of them until the apartment became vacant.
Within the apartment Mr Boer kept some personal documents, personal effects and limited clothing. The bulk of his belongings remained in Australia. He had a personal computer which travelled with him and with which he conducted the majority of his financial affairs. Initially he opened a bank account in Oman but found it difficult to continue to operate on that account. During periods when he was rostered on he socialised and built relationships with other employees of Occidental. He joined the social running and walking group and met regularly with other friends in the gym and for soccer matches. There were regular barbecues with other local and expatriate employees. On occasions, when travelling into and out of Oman on leave Mr Boer met up with other co-workers for social occasions in other cities in the region.
After his first 35 day rotation on Mr Boer returned to Australia in early January 2009. He arranged for his furniture and personal effects to be put into storage and for the Capalaba house to be rented out. He owned a motor vehicle which he ultimately kept garaged at a friend's house for use by him on return trips to Australia. During this visit he stayed in the house at Capalaba. Mr Boer returned to Oman in mid-February 2009.
Mr Boer did not return to Australia on his next rotation off; he travelled to South Africa and Holland to visit relatives in those countries. He next returned to Australia in early June 2009 and spent a little over a month visiting family and friends in this country. He maintained a similar pattern of generally returning to Australia when he was rostered off; unsurprisingly he did not remain in Oman during the periods when he was rostered off.
If “abode” is to be regarded purely as the place where he lived and where he slept at night[3] whilst in Oman it is undoubtedly the case that Mr Boer had a place of abode in Oman – the question is whether it was permanent. Three matters in particular, in my view, preclude the conclusion that it was a permanent place of abode.
[3] See e.g. R v Hammond (1852) 17 QB 772; 117 ER 1477.
The first is that, at best, it was Mr Boer’s place of abode for only half of that part of the 2009 income year that is in issue. Secondly, and perhaps allied to the first point, there is at least an equivalent basis for regarding Australia as Mr Boer’s permanent place of abode. The final matter is that he did not have an exclusive right of possession of the apartment; it was shared by another employee.
As to the first of these matters, in both his initial contract and his subsequent contract with Occidental, Mr Boer had the same number of days off as he had on. The result was that at the end of each rotation on he would depart from Oman and generally, but not invariably, return to Australia. The present case is readily distinguishable from that in Federal Commissioner of Taxation v Applegate[4] on which Mr Boer placed much reliance. In that case the taxpayer, a solicitor, was sent by his firm to open and run a branch office in Vila in what was then the New Hebrides. But, unlike Mr Boer, he leased a residence on a long term basis and planned to remain in Vila on a fulltime basis. Mr Boer’s “abode” in Oman was bare accommodation, and for only half of the period in issue. It could not be described as a permanent base, a place that Mr Boer might call home, where he could have friends visit or stay over. He acquired no furnishings or fittings but simply availed himself of that which was provided by his employer. He had mail sent to Australia rather than to Oman. He left Oman as soon as he was able after the completion of his roster and returned immediately prior to the start of the next. In short, he had no apparent ties to Oman beyond the fact that his employment required him to live, sleep and eat there for a number of consecutive days.
[4] [1979] FCA 37; (1979) 27 ALR 114.
At least to mid-February 2009 Mr Boer had a residence in Australia where he kept the majority of his possessions, to which he had resort on his return to Australia in January 2009. After the Capalaba house was rented out his possessions were kept in storage. But throughout the period in issue he had with him in Oman only the most basic of his possessions, the majority remained in Australia.
It is significant that Mr Boer did not have an exclusive right of possession of “his” unit in Oman; it was shared with another and, where it suited the convenience of Occidental to do so, Mr Boer (or his co-resident) could be required to occupy another unit owned by Occidental. That, to me at least, tells against the notion that the apartment was Mr Boer’s permanent place of abode.
It may be that persons in Mr Boer’s position – employees who fly in and fly out of remote areas and who reside in basic accommodation provided by an employer but who have no particular home base – ought to be regarded as having no permanent place of abode. I need not decide that question in the present case; it is enough to say that I am not satisfied that Mr Boer had a permanent place of abode outside Australia. That being so I am satisfied that the decision under review was correct and ought be affirmed.
I certify that the preceding 23 (twenty-three) paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC.
........................................................................
Associate
Dated 30 August 2012
Date of hearing 16 August 2012 Solicitors for the Applicant Cooper Grace Ward Lawyers Counsel for the Respondent Mr VG Brennan Solicitors for the Respondent Australian Taxation Office Legal Practice
0
2
0