Taxation Law: Implications for Australian Expats Living Abroad

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Introduction:
Australia has bot the Federal as well as the Statement Government that levies taxes of
numerous kings. The income tax is usually imposed on all the individuals that are considered
tax resident of Australia and taxes are imposed on their worldwide earnings. The non-resident
of Australia are imposed on all sources of income from across the world. The non-resident
are held liable for taxes only for income earned from the Australian sources, even though
their liability to impose tax is lowered based on the provision of double taxation treaties that
are entered into by Australia and other nations (Lam, 2018). Former residents that have now
become non-resident should be aware that Australian tax might still be applied to the trailing
payments and certain other forms of benefits received from the employee share plan in regard
to the Australian employment.
The essay investigates the case of “Harding v Commissioner of Taxation [2018]
FCA 837” and “Harding v Federal Commissioner of Taxation [2019] FCAFC 29” who
worked as the expatriates in Bahrain. The study would be focussing on the tax implications
for the Australians that are living in the overseas nation as the expats. Further analysis will be
made to include the implications of applying the ordinary concepts test and permanent place
of abode test in the aforementioned case.
Implications for Australians living as expats in other countries
The Australian expats can find it very easy for them to argue that they are not a
resident of Australia for levying tax after the new ruling of the federal court against the
Australian Taxation office. The ruling suggest that the place where a taxpayer generally lives
is considered of higher importance than those that form their accommodation. The federal
court overturned the actual decision held in “Harding v Commissioner of Taxation [2019]

TAXATION LAW2
FCAFC 29” that involved a previous aircraft engineer (Forbes, 2018). The case demonstrated
the difficulty in ascertaining the “permanent place of abode” of the taxpayer.
Accordingly, it becomes very important for the employers and their expatriate to
sensibly assess their position of tax residency on the basis of all the facts and circumstances.
This helps in assuring that the tax implications relating to the project is understood and
correct reporting of tax is undertaken all through the payroll and in respect of the personal tax
returns (Maxwell, 2019). The judgement given by the federal court is considered as the
indication that taking a less amount of narrow position on what amounts to a “permanent
place of abode” could result in interpreting that a taxpayer that portrays that he or she is
staying in the overseas nation for the prolonged time period can break the tax residency of
Australia.
If a person is moving abroad, then they would be exposed to the numerous tax
consequences. The first stage of ascertaining the tax implications is whether the taxpayer
remains as the tax resident of Australian or else they simply turn into the non-resident under
the Australian tax laws. For the Australian expats that are residing in overseas there can be
three possible tax implications. Firstly, a person might be held as the tax inhabitant of
Australia and will be considered taxable for all their global earnings but would be permitted
to avail the credits for the taxes paid in overseas (Jones, 2018). Secondly, a person will be
considered tax resident of Australia under the present Australian law but might also be treated
as the tax resident of the foreign nation as well. Given that there is a double taxation treaty
with that nation, then in such case the ability of imposing tax gets restricted by the Australian
authorities. Finally, a person may be treated as non-resident under the taxation law of
Australia and may only be held taxable in Australia on specific earnings and gains that are
earned from the Australian sources.