The key aspect of the case elaborated here is whether Mr Harding has any right as a resident in the year of 2011. According to the law court “Harding v Commissioner of Taxation (2018)”, any resident of Australia will only be considered as the permanent resident of the country if the person has not set up any residential place in overseas. In contrary with this fact, if the person has any residence outside of Australia then that should not be the permanent one to consider himself as the resident of Australia.
The reside’s test:
This particular test I the basic test that is required to check if any person resides in Australia. The person will be considered as the Australian citizen and this will not be dependent upon their religion or origin. According to “Applegate v FCT (1979)”Justice Northrop adopted the explanation and it states that the person can dwell for a particular time period or permanently at any place that shouldn’t be their origin. In contrary with this discussion, court has declared that the permanent word is not putting strength towards residing at any place for unlimited time, however this will be judged every year. In this case the identification factors are regularity, physical existence and purpose for visiting Australia.
The permanent place of abode test:
An individual’s residence is in relation with the country laws and the person is allowed to invoke those laws for their own purposes. Referring to “section 6 (1)”, an individual is considered as Australian resident if they are having Australian Domicile and also hey have to prove they are not liable for any permanent resident being established by them outside of Australia. According to “Applegate v FCT (1979)” the court considers “permanent place of abode”. In this case, the Federal court has noticed that “Applegate” had permanent resident outside of Australia in spite of having the Australian Domicile.
Ordinary concepts test:
As per the Justice Derrington Mr Harding, he was not present in Australia for the relevant income year. However, he has proved while having argument with Commissioner that he has visited Australia numerous times for meeting his family. The financial activities are also observed for Mr Harding over Australia. According to Justice Derrington, Mr Harding’s actual intention was to leave Australia and settle down over Middle East for work purpose.
Mr Harding appealed for the facts that were being discussed by the court however, Justice Logan have stated that they have identified overlap among the permanent place of abode test and ordinary concept test. Apart from this, Justice Logan has also elaborated that Mr Harding had a fixed place as residence and that was out of Australia. As per their analogy, Mr Harding should not be treated as Australian resident under “ordinary concept test”.
Permanent place of abode test:
As per Justice Derrington verdict Mr Harding was considered as the resident of Australia under the “section 6 (1), ITAA 1936”. This is defined according to the extended explanation of “resident” under this section. Mr Harding has stated that his plan was not to settled down over Middle East and he was planning to come back permanently in Australia. Justice Derrington elaborated that his activities over Australia and his presence in overseas is not justified to prove him non- resident. According to “permanent place of abode test” Justice Derrington proved Mr Harding the resident of Australia.
After the appeal of Mr Harding, Justice Logan highlighted that Mr Harding was domiciled in Australia for 2011 under “subpara (i) of section 6”. Thought Justice Logan agreed with the facts presented by Justice Derrington, however he strongly believed that Mr Harding was living in Bahrain permanently and Mr Harding was not Australian resident at that point of time.
Opinion on case’s practical impacts:
According to the discussions have been elaborated over this segment, the definition of permanent resident in Australia is matter of concern. According to the laws, the settled home out of Australia can make the person non- resident. However, in case of Mr Harding, he has used both his permanent and temporary resident according to his needs and he gave priority being a Australian citizen. The court in this instance noted that temporary intended and the actual use of accommodation was considered critical. The expatriates must carefully take into the account their overseas arrangements for accommodations in relation to the degree of permanence from the first day. The Harding’s case highlights the Factors associated to living arrangements, mail directions and utility arrangements continues to be critical.
Issues:
Is an individual taxpayer treated as an Australian resident under section 6 (1), ITAA 1936?
Laws:
Ordinary test:
According to the reside test, it elaborates the permanent nature of the taxpayer who is staying outside of resident country. Along with this, this elaborates considerable time period where the person stayed outside of the resident country. In this case the intention of the taxpayer while staying at any place is considered.
Domicile Test:
A taxpayer is considered as Australian if they have maintained their presence with their domicile over Australia. According to “Applegate v FCT (1979)”, the court stated that permanent is not judge for an unspecified time span, this is checked every year. Likewise, in “Harding v FCT (2018)” the taxpayer was held to be the Australian resident as the home established out of Australian was impermanent in nature.
183 days’ test:
According to this test, a resident of Australia is considered to be a permanent resident if they are staying here for more than 6 years and this is considered including their activities in overseas.
Analysis:
According to the Ordinary concept test Misha did not stay in Australia permanently. Misha, was also not physically present in Australian for greater than six months of the income year. Therefore, the 183 days is not applicable in case of Misha. However, according to the domicile test, and according to “Applegate v FCT (1979)” Misha have portrayed her domicile over the Australian citizenship and she returned to Australia after her five year out of the country stay. Hence, she will be treated as Australian resident under the Domicile Test because has kept her domicile in Australia and only resided temporarily stayed at overseas. Quoting the case of “Harding v FCT (2018)” the living arrangement that was made by Misha in the overseas nation was transitory in nature and did not had permanent quality. Therefore, she will be treated as Australian resident within the extended definition of “section 6 (1)”.
Conclusion:
This can be concluded that Misha meets the criteria of permanent resident of Australia as per the Domicile test. However, she was proved to be an Australian resident as per the extended elaboration of Australian resident according to “section 6 (1), ITAA 1997”.
References:
“Ustlii.Edu.Au”, Ustlii.Edu.Au (Webpage, 2019) <https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC//2019/29.html>
Deutsch, Robert Et Al, Australian Tax Handbook 2018 (THOMSON REUTERS AUSTRALIA, 2018)
Grange, Janet, Geralyn A Jover-Ledesma and Gary L Maydew, 2014 Principles Of Business Taxation
Jover-Ledesma, Geralyn, Principles Of Business Taxation 2015 (Cch Incorporated, 2014)
Kenny, Paul, Michael Blissenden and Sylvia Villios, Australian Tax 2018
Sadiq, Kerrie et al, Principles Of Taxation Law 2018
Taylor, C. J et al, Understanding Taxation Law 2018
Woellner, R. H et al, Australian Taxation Law 2018
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