Non-resident despite Australian connections

additionaccounting
Jul 21
2 min read

The Administrative Review Tribunal (ART) has varied an ATO objection decision, deciding that the taxpayer was not a resident of Australia for the 2014 income year and was therefore not liable for administrative penalties or shortfall interest charges for that year.

The taxpayer held executive positions with a company which had business interests in China, where he lived, until he departed in February 2015.

While the ATO had concluded that the taxpayer was a resident of Australia while working in China, the ART disagreed, despite the fact that the taxpayer maintained some strong ties to Australia. His significant physical absence and establishment of a permanent place of abode in Shanghai indicated he had abandoned his Australian residence.

While the taxpayer maintained some connections to Australia, the Tribunal found that these ties were primarily for the convenience of his family residing in Melbourne.

In relation to some factors which ordinarily suggest an ongoing connection with Australia, the Tribunal held that they did not weigh significantly in favour of finding a connection with Australia in this case:

Bank Accounts: The taxpayer maintained joint Australian bank accounts with his wife, necessary for family expenses in Melbourne. His income came from OnCard, and he used company products instead of opening Chinese bank accounts. He also had a Hong Kong-issued credit card.
Health Insurance: The family’s Australian private health insurance covered the taxpayer, though his wife and children made more claims than he did. The ATO couldn’t prove that removing him from the policy would have reduced costs.
Driver’s Licence: The taxpayer kept his Victorian driver’s licence (useful for Australia visits) while also holding a Chinese licence and having access to vehicles in Shanghai.
GPO Box: He retained a Melbourne PO Box due to concerns about China’s mail system, with a friend forwarding contents digitally.
APEC Card & Residency: Despite a 60-day limit per visit, he managed to stay in China long-term (2009–2015) due to his executive roles with OnCard and subsidiaries, without a fixed-term contract.