University Taxation Law Assignment: Case Note Analysis of Harding Case

This assignment presents a comprehensive case note analysis of Harding v Commissioner of Taxation, focusing on the legal issue of residency under Australian tax law. The analysis begins with a summary of the key legal issues, which revolve around the determination of residency based on the Income Tax Assessment Act 1936 (Cth). The case note outlines the relevant legal provisions, including the three tests for residency: domicile, continuous presence, and superannuation membership. The application of law to the facts involves Mr. Harding's work in the Middle East and his subsequent return to Australia. The analysis then details the legal reasoning of the judges, highlighting how they determined Mr. Harding's residency. The assignment also includes an assessment of the practical impacts of the case, emphasizing its significance in interpreting residency laws. Part 2 of the assignment addresses a hypothetical scenario involving Misha's residency status, applying the same legal principles to determine if she was a tax resident of Australia. The document concludes with references to the relevant legal sources, including the Harding case judgments and the Income Tax Assessment Act.

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

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Part 1: Harding v Commissioner of Taxation1
Case Note
Key Legal Issue
The key legal issue in this case was the residency relating to the taxpayer. Whether the
taxpayer is the resident of Australia under section 6 of the Income Tax Assessment Act 1936
(Cth)2. Whether rented accommodation, which has been held for a temporary period can be
treated as a place of permanent abode. Whether the a particular dwelling of permanent nature
or particular geographical location can be treated place of permanent abode. Whether the
residency of the taxpayer can be terminated by the judge for his being absent in Australia and
is intention of not returning to Australia. Whether the court has the power of going beyond
for the identification of an error connected to the law in the state of satisfaction of the
Commissioner.
Relevant Law
Section 6 of the Income Tax Assessment Act 1936 (Cth)3 contains the provisions relating
to the determination of the residency of an individual for the purpose of taxation. This section
provides for three tests that can be applied to determine the residency of an individual, which
not a company4. The first test for determining the residency of a person is whether the
domicile of the taxpayer is located in Australia and the commissioner is not satisfied that his
place of permanent abode is not situated outside Australia. The second test for determining
the residency of a person is whether the he has been continuously present in Australia for half
of the year and the commissioner is satisfied that his usual residence is not located outside
Australia or he does not desire to leave Australia. The third test for determining the residency
1 [2019] FCAFC 29
2 The Income Tax Assessment Act 1936 (Cth) s. 6
3 The Income Tax Assessment Act 1936 (Cth) s. 6
4 https://www.ato.gov.au/, "Home Page", Ato.Gov.Au (Webpage, 2019) <https://www.ato.gov.au/>

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of a person is whether the taxpayer is a member of the superannuation scheme or employee
eligible for the Superannuation Act 19765 or the child who is under 16 years or the spouse of
such an individual.
Application of Law to the Facts
This case revolves around Mr. Harding’s residency in Australia. Mr. Harding has been
working in the Middle East for a period of around fifteen to sixteen years. In the year 2006 he
returned to Australia along with his children and wife. They stayed in Australia up to 2009
and after that Mr. Harding took an employment in Saudi Arab. His family was stating at
Australia up to. Afterwards he got separated from his wife and started living in Saudi Arab.
The question arose regarding his residency in Australia for the tax purposes in the year 2011
and whether he had a permanent place of abode in Australia.
Legal Reasons given by each Judge
In this case, the Davies and Steward JJ has considered Mr. Harding as a resident in
Australia as he does not have a place of permanent abode in Australia in the year 2011. The
place he has been living in was a temporary accommodation that has been rented for the
purpose of his stay in Australia in order to facilitate his employment there. Moreover, in that
year Mr. Harding also resided in Australia.
Practical Impacts
This case has been a landmark judgement in the laws relating to residency in Australia.
This has been an useful application of the provisions and the tests provided under section 6 of
the Income Tax Assessment Act 1936 (Cth)6.
5 The Superannuation Act 1976
6 The Income Tax Assessment Act 1936 (Cth) s. 6

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Part 2
Issue
Whether Misha was a tax resident of Australia during those five years.
Rule
Section 6 of the Income Tax Assessment Act 1936 (Cth)7 contains the provisions relating
to the determination of the residency of an individual for the purpose of taxation. This section
provides for three tests that can be applied to determine the residency of an individual, which
not a company. The first test for determining the residency of a person is the domicile test.
Under this test it needs to be satisfied that whether the domicile of the taxpayer is located in
Australia and the commissioner is not satisfied that his place of permanent abode is not
situated outside Australia. The second test for determining the residency of a person is
whether the he has been continuously present in Australia for half of the year and the
commissioner is satisfied that his usual residence is not located outside Australia or he does
not desire to leave Australia. This is called the 183-day test8. The third test for determining
the residency is the Superannuation test. This test is concerned about the fact that whether the
taxpayer is a member of the superannuation scheme or employee eligible for the
Superannuation Act 19769 or the child who is under 16 years or the spouse of such an
individual.
Application
In this present situation, Misha has been living in Australia until she finishes her Bachelor
of Commerce degree. After completing that degree, she travelled to UK for a job as an
accountant for three years. This makes her visit to UK a temporary stay. During her stay in
UK, she rents a flat and makes many friends. This cannot be treated as a permanent place of
7 The Income Tax Assessment Act 1936 (Cth) s. 6
8 https://www.ato.gov.au/, "Home Page", Ato.Gov.Au (Webpage, 2019) <https://www.ato.gov.au/>
9 The Superannuation Act 1976

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abode outside Australia as it was only a temporary accommodation facilitating her
employment. At the end of the three-year period she has saved enough money to travel.
Misha then spends a year travelling around Europe and a year travelling around North
America. At the end of the five years she returns to Australia. This shows her intention of not
permanently leaving Australia. These information is likely to treat her as a resident of
Australia for tax purposes, but to make the likelihood more evident the information of
whether she had a permanent place of domicile in Australia will be required to determine her
residency.
Conclusion
Misha was a tax resident of Australia during those five years. , if she had a permanent
place of domicile in Australia.

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References
Harding v Commissioner of Taxation [2019] FCAFC 29
The Income Tax Assessment Act 1936 (Cth)
The Superannuation Act 1976
https://www.ato.gov.au/, "Home Page", Ato.Gov.Au (Webpage, 2019)
<https://www.ato.gov.au/>