Australian Tax Implications for Expatriates Living in Other Countries

This essay discusses the Australian tax implications for expatriates living in other countries, focusing on the implications of the Harding v Commissioner of Taxation case. It explores the concept of permanent place of abode and its importance in determining tax residency. The decision in this case has significant implications for expatriates working overseas.

Running Head: TAXATION LAW
Taxation Law
Name of the Student
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Author Note

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Introduction
An Australian taxation Law seems to be quite complex in respect to all the countries.
Therefore the business individuals and expatriates should have the will to know and
understand all the allowances as well as downsides for the one who makes an arrangement
for their employment and considerations for financial interest that helps them to return
Australia. It has seen that for the expatriates Australia is well-known amongst all the
countries (Jones, 2018). Income tax is charged on the person who is an Australian resident
and the taxes that charged upon them on the collective earning. For the non-Australian
residents the taxes charged upon them is on the Australian source of an income. It is even
knowing that this liability may reduce on the basis of provision of double taxation accords
arrived in Australia and other nation.
The main purpose of this essay is to have a proper understanding of the Australian
tax implications for those who ate living as emigrants in different nation. The judgment
announced in the case “Harding v Commissioner of Taxation (2018)” and “Harding v
Federal Commissioner of Taxation (2019)” has been discussed in this essay to comprehend
the implications of putting the Ordinary Concepts test as well as permanent place of abode
test.
Australian Tax Implications Living as an Expatriate in Other Nation:
The Australian Taxation structure has two dwelling status that the expatriates must be
aware about. A resident of Australia for the purpose of taxation and overseas residents.
Unrelatedly to the residential status, an individual must be go through the tax return
(Norbury, 2019). It is very important matter in respect to taxation that must not ignore and to
be considered by an individual to finish their obligations before leaving Australia. In view of
that, it is anticipated that an individual is no more treated as an Australian resident once when

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they left Australia. On the other hand non-residents must concern to the fact that apart from
the tax liability of Australia that is source of gains and income from Australia also can be
trailing tax liability respective to employee benefit plan or it can be deferred bonus plan that
is related partially to the time of Australian employment.
Some groundwork must be made respect to the filing of tax returns in the year of
person leaving Australia (Morgan & Castelyn, 2018). Vital information like date on which an
individual concluded to be a resident, details of an employment, receiving investment till the
time of departure and details about income from Australian sources earned after the departure
time.
“Harding v Commissioner of Taxation (2018)”- a case in which the decision has
made that would definitely benefited so many Australians that have decided to locate
themselves for a long span of time (Murray & Sarah 2018). The Federal Court led that those
Australians who is working in foreign can conclude their Australian resident for tax benefit
when they have taken house temporarily in the foreign location. The question that is related
to the position of residency for the purpose of tax was portrayed by the Federal court in the
given case of “Harding v Commissioner of Taxation (2018)” which has focused on the
several issues that is a concern for the Australian residents who is working in foreign for a
long span of time (Pwc.com, 2019). The taxpayer has stayed in a foreign country for ten
years and after that he was living in Australia for eight years and finally he has decided to
move in other country on a permanent basis with having an intention of not coming back to
Australia.
Mr. Harding’s family had a plan to live together outside Australia when the middle
child finish his high school studies which was about a span of two years. After that also Mr.
Harding has a residence in Australia for their family to stay together (Pwc.com, 2019). He

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carried all his personal things along with him and also sold his water skies and boat. At the
time of his working in other country he used to stay in a fully furnished apartment and had
decided that he has to move in another residence after his wife and children joins him in that
nation. However, Mr. Harding got separated with his wife in that period and take a small new
house.
On investigating of the case law, the judge said that Mr. Harding’s usual place of
abode was no more in Australia (Liu, 2018). But, the judge stated that Mr. Harding had not
taken any permanent place to reside in the place of abode in other nation, as he has taken a
full furnished house on rent and had plan to relocate himself with his wife and children over
there. Thus, Mr. Harding stayed as an Australian resident for matter of tax as his apartment
was in Australia.
“Harding v Federal Commissioner of Taxation (2019)”- In this Mr. Harding had
made an appeal in the Federal Court that has resulted in reversing of the previous decision
and said by the court that in the matter related to tax he is no more an Australian resident
(Pwc.com.au, 2019). On agreeing the appeal the court concerned that the expression of
permanent place of abode reflects to a particular town or city and not to a building. It was
viewed as a communal place for the individuals that are having employment in foreign who
has initially taken as a temporary residence and searching for a new better accommodation as
permanent. This situation of an individual must not stop them in overlooking the tax
residence related to Australia. Harding sometimes visited his family during that period in
Australia while his family residing in Australia treated as a tax residents (KPMG, 2019).
Other genuine factor was considered like carrying all the personal things of him from
Australia resulted in the conclusion that Mr. Harding has cleared his house and also planned
to move out of Australia permanently.

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For the tax expats the decision made at initial got much concerning to leave Australia
to get employed in foreign or to those working in foreign at present. Expats use fully-
furnished home in different nations (Hugo, 2017). Remarkably, the court has acknowledged
that it can be possible to consider these home as a permanent place of abode. Though, in the
case of Harding the court found his temporary and genuine used house to consider critical.
Expats must carefully deliberate the arrangements of their foreign residence as permanent
from the very first day. Other factors includes the mail address, furniture acquisition and
utility for the made arrangements remained critical.
Implications for the application of Ordinary Concept test:
Within “section 6 (1), ITAA 1936” definition of “Australian Resident” in Ordinary
Concepts included an individual who stays in Australia and also those individual who have
their residence in Australia (Langdon et al., 2016). If not, then the taxation commissioner
must content the taxpayer has his fixed place of abode out of Australia. The case considered
the circumstance of Mr. Harding and also supported his verbal proof that he has left the place
Australia in the year 2009 to reside in Middle East with an intention to leave Australia
permanently. As he was not present in Australia during that period so his absence was quite
enough to dismiss his residency as to the ‘ordinary concepts’ of residency.
“Harding v Commissioner of Taxation 2018” - The commissioner agreed that it is
important matter to determine the residency of an individual in respect to Ordinary Concepts.
As the case had rare issue, the court at first found that the individual did not resides in
Australia within the Ordinary concept (Judgments.fedcourt.gov.au, 2019). While after
reassuring the decision as appealed by the taxpayer. The full court consist of three judges has
concluded its decision in “Harding v Commissioner of Taxation (2019)”.

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The taxation officer reliant on the connection that the Mr. Harding is with Australia
like citizenship, and his staying with family in Australia for 91 days and his bank account in
Australia. In “Harding v Commissioner of Taxation (2019)” the full Federal Court has gone
with a holistic approach in the period of first instance considering the fact that Mr. Harding
has decided to not to return Australia on a permanent basis after departure in year 2009
(KPMG, 2019). Federal Courts further considers the circumstances of Mr. Harding and he did
not thought of home to that place. As a result, the court considers his place of living as his
residence.
The Federal Court has refused to consider some aspects presented under the ordinary
concepts by the commissioner while some of them considered to be useful for the case such
as he did not resides in Australia (Pwc.com, 2019). However, the Federal Court said that the
level and quality of the stated that the connection for the evidence are not enough to dwarf
the purpose of Harding to leave Australia permanently. The court declared that law should be
upon the facts with Ordinary Concepts.
Implications of Permanent Place of Abode and its Importance:
Another measures was based on the sense of an individual within “section 6 (1),
ITAA 1936”- If an individual has the residence or domicile in Australia and if not, then the
commissioner agrees with the “permanent place of abode” of that individual is out of
Australia (BarNet Jade, 2019). Once the concept of “permanent place of abode” be clear to
everyone it will no longer create any kind of difficulty or seems as mysterious in respect to
the taxable law to answer in concern with fact and degree of the created circumstances in
case.
A temporary residence cannot help a person in preventing themselves with the
“permanent place of abode” overseas (Lexology, 2019). In the first decision in “Harding v

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Commissioner of Taxation 2018” Mr. Harding full furnished home in foreign did not satisfied
the criteria of permanent place of abode test. “Section 6, ITAA 1936” states Australian
residents consists person who is staying in Australia and has residence in Australia. If not
then the tax commissioner agrees with the permanent place of abode is not in Australia.
Therefore, in full Federal Court the case “Harding v Federal Commissioner of Taxation
(2019)” presents whether the commissioners agreed or evidence on fact basis that Mr.
Harding permanent place of abode out of Australia and not presents whether his permanent
place of abode in or outside Australia.
In the initial, the full Federal Court seems the concept so narrow that can consider as
his permanent place of abode. To make a judgment it needed a thorough documentation of
that state or nation residence (BarNet Jade, 2019). Also hose in Bahrain will considered as
temporary residence as per a planned purpose to pursue and hence, permanent place of
abode’ in Bahrain.
Conclusion
At the first decision made by the Federal Court, it raised difficulties for the expatriates
who was a will to work overseas. The latest decision has a relaxing impact on all the
Australians who will to work as outside of Australia. In the argumentative situation the
Federal Court ha swell-adjusted the situation by stressing on the taxpayer that had residing
out of nation permanently. Also it is compulsory to surround with the facts and the type of
residence for matter of tax.
The decision also provided the supervision would consider to review the Board of
Taxation for the determining rules and laws for the residents. The Harding’s case reflects a
difficult situation in implementation of the present law and necessity for change on clear view
to define the Australian residency to the expatriates as a matter of tax.

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References:
BarNet Jade - Find recent Australian legal decisions, judgments, case summaries for legal
professionals (Judgments And Decisions Enhanced). (2019). Retrieved 5 September
2019, from https://jade.io/article/635593
Hugo, G. (2017). Malaysian migration to Australia. Malaysian Journal of Economic
Studies, 48(2), 147-174.
Jones, D. (2018). Complexity of tax residency attracts review. Taxation in Australia, 53(6),
296.
Judgments.fedcourt.gov.au (2019). Harding v Commissioner of Taxation [2018] FCA 837.
(2019). Retrieved 4 September 2019, from
https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/
2018/2018fca0837
KPMG, (2019). Australia – “Permanent Place of Abode” Outside Australi. (2019). Retrieved
4 September 2019 2019, from https://home.kpmg/xx/en/home/insights/2019/03/flash-
alert-2019-039.html
Langdon, R., Rowland, B., & Biggs, H. (2016). Non-resident workers: A comparison of
family support services for resource, health, and defence communities. Australian
Bulletin of Labour, 42(1), 93.
Liu, J. (2018). Understanding Australian commercial law. Taxation in Australia, 53(6), 300.
Morgan, A., & Castelyn, D. (2018). Taxation Education in Secondary Schools. J.
Australasian Tax Tchrs. Ass'n, 13, 307.

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Murray, S., & Sarah L. (2018). Ex-pats beware - recent residency decision makes it much
harder to be a non-resident. Mondaq Business Briefing, p. Mondaq Business Briefing,
June 13, 2018.
Norbury, M. (2019). Mr Harding's residence reconsidered. Taxation in Australia, 53(9), 497.
Permanent place of abode refers to country or town, not specific address - Harding appeal-
Update 8 April | Lexology. (2019). Retrieved 5 September 2019, from
https://www.lexology.com/library/detail.aspx?g=577d0472-8a35-4133-a73c-
16824335c473
Pwc.com, P. (2019). Pwc.com. Retrieved 5 September 2019, from
https://www.pwc.com/gx/en/services/people-organisation/global-employee-mobility/
global-mobility-country-guides/assets/pwc-gm-folio-australia.pdf
Pwc.com.au. (2019). Retrieved 5 September 2019, from
https://www.pwc.com.au/tax/taxtalk/assets/alerts/australia-becoming-a-non-resident-
just-became-harder-20jun18.pdf
Pwc.com.au. (2019). Retrieved 5 September 2019, from
https://www.pwc.com.au/tax/taxtalk/assets/alerts/australia-residency-case-a-win-for-
the-taxpayer-25022019.pdf