In a recent case, the Administrative Appeals Tribunal (AAT) confirmed that a taxpayer was a resident of Australia for taxation purposes while he was living overseas.

In this case, the person had left Australia in January 2008 to work, an presumably live, in their country of origin. Before leaving Australia, he sold an investment property in Queensland, cancelled his Medicare card, cancelled his Australian private health insurance and had his name removed from the electoral roll. Additionally, when he left Australia, he completed an outgoing passenger card indicating that he was permanently departing Australia.

Severing ties

However during the time that he was living overseas, his wife remained in Australia at a jointly-owned dwelling. He had also returned to Australia for three holidays where he stayed at the home with his wife. He also maintained an Australian bank account and sent money to Australia to help pay his wife’s living expenses and to assist with repaying the mortgage on the home.

He ended up working 21 months in his country of origin before returning to Australia permanently in September the following year. Once he returned, the ATO took the view that he had remained a resident of Australia during his absence. The AAT concluded the taxpayer had not severed his connections with Australia and had not established enduring and lasting ties in his country of origin. Therefore he was still a resident of Australian and as such his income was still taxable in Australia.