Contents. “Tax implications for Australians who are liv

Contents
“Tax implications for Australians who are living as expats in other countries”:....................................2
“Implications for the application of the ordinary concepts test”:.........................................................4
“The implications for what can constitute a permanent place of abode and why is this important”:...5
REFERENCE:...........................................................................................................................................7

“Tax implications for Australians who are living as expats in other
countries”:
When one works overseas, that person is imperiled to various tax inferences. The guiding principle
for defining the tax consequence is whether a person stays resident of Australia for duty motives or
if, beneath Australian regulation, they convert to a tax non-resident ("Australians working abroad -
How will you be taxed - Accru", 2019).
In the State Court's finding in “Harding v Taxation Commissioner [2018] FCA 837”, it was discovered
that Mr Harding, an Australian national who resided and toiled overseas for different times but
focused on March 2009 to February 2015, was a native of Australia in the year under review under
the extended scope of citizen in S 6 of the Income Tax Assessment Act 1936 (ITAA 36) (2011). After
the ruling was delivered in June 2018, the authority published the state-initiated evaluation of the
Board of Taxation (BOT) on the subject provided in August 2017. The scenario offers a brilliant
illustration of why Australia's tax residency laws need to alter for people, as suggested by the BOT

("BarNet Jade - Find recent Australian legal decisions, judgments, case summaries for legal
professionals (Judgments And Decisions Enhanced)", 2019).
Mr Harding, an aircraft engineer, spent around seven years living in Saudi Arabia with his first spouse
when he was working for BAE Systems. In this time frame, Mr. Harding and his spouse had two kids.
Because of the escalation of regional instability across Saudi Arabia and the nearby places, Mr and
Mrs Harding moved to Australia where they constructed a residence and had another kid. Mr
Harding lived three years in Australia but, unhappy with his lower wage and consequently more
humble living, he relocated to the Middle East to reside in Bahrain in March 2009, leaving the rest of
the family back at Australia. Mr Harding, while residing in Bahrain, proceeded to travel throughout
the gulf to operate in Saudi Arabia on a regular basis. Every year, Mr Harding returned to Australia to
visit his family, such as one 91-day journey, where he desperately attempted to convince his spouse
to follow him abroad. They split and divorced afterwards. Later on he wedded a lady whom he
comes across in Oman. In 2015, he was issued a notice which claimed he was an Australian citizen
and he had to give tax on his revenue generated from overseas. The BOT found that the current
residency laws are "no longer suitable" for people and propose distinct guidelines for incoming and
outgoing residence, with the problem generally decided by day record exams of "line drawn."
("Harding v Commissioner of Taxation [2018] FCA 837 | Victorian Bar", 2019)
The judgement set out the tax implications on Australians living abroad. An outgoing individual who
goes abroad to toil complete period will be a non-resident if he or she spends under 31 workdays or
a sum of 61 workdays in Australia in a year of revenue and, for incoming, an individual who has not
earlier been a native does not become a citizen if he or she spends under 46 days in Australia in a
year of revenue. Such clear boundary assessments should be accepted, but it stays to be
observed what alterations the government will make, if any, after considering the further
suggestions of the committee ("Australian ex-pats beware – recent residency decision makes it much
harder to be a non-resident - Cooper Grace Ward", 2019). The responsible secretary said she greeted
the review, but requested the committee to somehow advise on important suggestions "until the
state takes any stance on such issues." An Australian local is strained on entire revenue he receives
from around the globe. The person should therefore declare all his income from foreign sources
when he or she is filing their income tax return. In Australia or the country from which it is obtained,
overseas earnings earned as an Australian inhabitant might be taxed. If one has paid foreign tax on
foreign revenue earned in another nation, they may be obligated to an Australian offset of external
income tax. Once a person is non resident as stated, certain issues are highlighted for the purposes
of tax.
The present law offers for certain assets held by individuals exiting Australia to be considered as sold
on the date of exit and being non-residents. Real estate assets are not susceptible to this doctrine
and at the stage of actual sale stay liable for capital gains tax. For non-residents, nearly all stock
trading while abroad is tax-exempt and therefore no Capital Gains Tax will lead to earnings on which
the firm has borne Company Tax would also be tax-free, while the business has not incurred any tax,
a 15 percent withholding tax will be levied ("What are the tax implications for your overseas
investment property?", 2019). Relevantly, all expenses of owning a property can be claimed and any
tax can be offset. Neither should the lengthy-term tax advantages connected with Australian assets
be overlooked and must be essential to all budgeting of expats while abroad.

“Implications for the application of the ordinary concepts test”:
This assessment is used to define whether a being resides in Australia with the help of certain
circumstances to help the view along with other factors to be considered. If the individual moves to
the nation of birth–the rate, rapidity, length and intent of these journeys can be crucial
considerations ("Australian tax residency tests", 2019). If entrepreneurship is the sole reason for the
lack of the individual from Australia, this may not be sufficient in itself to sustain a statement that
the individual is not a native. It is also noted about the person that what are his family and business
relations in Australia and the nation of birth. It should be seen if this person travels all alone or
comes and leaves with his family to Australia from his nation of birth. Another point to consider is
that the person is employed in the nation where he or she comes from. In addition, one must verify
if a domicile remains in the nation of origin or is accessible for the use of the individual whilst there.
Observation should be made whether own stuffs are retained in Australia or the individual's state of
basis, the degree to which any resources or transaction accounts in Australia and the home country
are obtained or sustained, and whether the migrant has started or developed an enterprise in
Australia.
Coming back to “Harding v Commissioner of Taxation [2018] FCA 837”, Justice Derrington ruled that
Mr Harding was not inherent in Australia in the appropriate revenue year as seen with the purview
of "Ordinary Concepts Test." Although Justice Derrington approved with the Attorney general that
there were several considerations indicating that Mr Harding was a local of Australia according to
this criterion, such as the reality that he had taken additional journeys to Australia to meet his
family, his economic activities stayed significantly in Australia, including his ongoing family home
possession, and he mentioned on traveller registers that he was a native of Australia. Thus, Mr
Harding wasn't an Australian resident relying on the "Ordinary Concepts Test."
Australian expats who maintain Australia's domestic household will persist at great peril and will
have to meticulously assess their circumstances. Mr Harding's instance was defined as
'extraordinary' by the experienced main magistrate and it should be noted that after Mr Harding and
his wife were divorced, the ATO did not evaluate the revenue years. The extent of days an individual
is fully present in Australia (although well below 183 days) will proceed to be measured by the ATO
like a danger marker. If a taxpayer is a dweller for tax purposes of the land in which they live and toil,
a twin duty preparation may smear. In twin tax contracts, the impact of the citizenship section is
usually to consider the being to be more than just a resident for tax purposes of one nation. This is
focused on a sequence of exams for the' knot-breaker.' The exams for the 'tie-breaker' differ
between the two-tax contracts. Caution must be engaged in the study of twin tax pacts, as analysis
ideals vary from the implementation of national regulation in Australia.

“The implications for what can constitute a permanent place of abode
and why is this important”:
Domicile is a habitation which is the permanent residing place of a person in the eyes of law.
It is seen as something more than a residence. One may not have a set location of residence
but they will always have a place of residence under the legislation. An individual may have
only one place of residence at given moment, whereas they may have two or more places of
residence. The residency housing review generally applies in which an Australian national
travels for a prolonged time of moment to operate in a foreign nation ("Residency - the
domicile test", 2019).
In this scenario, the domicile exam may collapse as they are going to be away for a long time. The
lack would cast significant doubt as to whether throughout that span they resided in Australia. It is a
sensible hypothesis that a person will be abroad for a long time, generally setting up any sort of
residence there unless there are other important considerations, such as families and economic
connections that persist in Australia; it is generally a done deal that an individual does not reside in
Australia (“Becoming a non-resident just became harder”, 2019). Nevertheless, one might usually
have a home in Australia (should they want to modify it) and the home check can thus be
implemented. Consequently, ascertaining whether an individual has a prominent spot of dwelling
overseas will be the most significant factor in doing so.
Coming back to “Harding v Commissioner of Taxation [2018] FCA 837”, Justice Derrington discovered
Mr Harding to be an Australian local. This was predicated on the broadened interpretation of
"resident" in s 6 (1) (a) (i) of ITAA 36 (the "Domicile Test"), one that delivers that a being is an
inhabitant if his dwelling is in Australia, except when the Attorney general is happy and content that
perhaps the "continuous place of residence" of the individual is outside Australia ("Harding Case
2019| Dwelling as Permanent Place of Abode | Tax Talks", 2019). Keep in mind that the applicant
admitted that Australia had his place of residence. His proof was that he had no intention of staying
permanently in any specific nation in the Middle East and that he could eventually come back to
Australia. The Jury was thus only needed to address the "permanent location of residence" part of
the "home exam." Forward to considering the adequate building of the test widely, Derrington J
concluded that perhaps the measure was associated with the "lasting value" of the housing situation
of the individual in a different nation (“Harding v Commissioner of Taxation”, 2019). There are no set
rules to decide permanent place of residence. “Taxation Ruling IT 2650” on Duty on income states
that residency-permanent place of residence outside Australia describes such issues into account
used by the judiciary, arbitrations and ATO to decide such instances. The critical features, including
the consistency of that visit, are the desired and real duration of visit abroad. This also involves the
presence of a known foreign apartment and the presence of family and monetary connections in
Australia (when abroad). A person would not be regarded to have taken up a permanent place of
residence outside Australia and will therefore be regarded a native of Australia under the home test
if they do not have a set or compulsive place of residence outside Australia however start moving
from one nation to the next start moving repeatedly inside one part of the world.

Throughout the above case, Derrington J paid preferential treatment to the housing situation of Mr
Harding, such as the actuality that Mr Harding did live in a maintained house in Bahrain but was able
to move freely to one of the other two houses rented from the same property owner in the block of
flats on a handful of times, and emerged not to use his domicile in Bahrain as an address for
essential communications. As per the Magistrate, these kinds of variables stated that the lodging of
Mr Harding was of a limited nature and omitted many of the adornments showing a fixed resident
status. Sensibly, the Court ruled that Mr Harding faltered the "prominent spot of abode" branch of
the "Domicile test". The above outcome is quite strange after the discovering that he had a rental
which controlled his housing across the timeframe. It also appears to be making a valuable judgment
on the way of life of Mr Harding.
Harding's judgment is a leading example of why people's tax citizenship legislation in Australia needs
to be fixed. It demonstrates how unsure the legislation is in this region, with its intersecting, wide-
ranging mega-tiered trials, as Derrington J himself accepted, indicating that, such as the "Ordinary
Concepts Test," the implementation of the "Domicile Test" "is very far from simple or concise,"
"appears to lack accuracy in an amount of ways" and "rational people may vary in the
proper definition."

REFERENCE:
Australian ex-pats beware – recent residency decision makes it much harder to be a non-resident -
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https://www.exfin.com/australian-tax-residency
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from https://jade.io/summary/mnc/2019/FCAFC/29
Becoming a non-resident just became harder – PwC. (2019). Retrieved 13 September 2019, from
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Harding Case 2019| Dwelling as Permanent Place of Abode | Tax Talks. (2019). Retrieved 13
September 2019, from https://www.taxtalks.com.au/2019-harding-case/
Harding v Commissioner of Taxation – Tax Bar. (2019). Retrieved 13 September 2019, from
https://www.taxbar.asn.au/single-post/2019/02/22/Harding-v-Commissioner-of-Taxation-2019-
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Harding v Commissioner of Taxation [2018] FCA 837 | Victorian Bar. (2019). Retrieved 13 September
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fca-837
Residency - the domicile test. (2019). Retrieved 13 September 2019, from
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What are the tax implications for your overseas investment property?. (2019). Retrieved 13
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overseas-investment-property/