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Cases

Tax Telegraph, November 2012

Cases

No permanent place of abode outside Australia – taxpayer a resident and foreign source income assessable

Boer and Commissioner of Taxation [2012] AATA 574

The AAT has held that a taxpayer was an Australian resident for tax purposes during part of the 2009 income year – between 21 November 2008 and 30 June 2009 – and accordingly income earned by him from employment overseas was taxable in Australia. The taxpayer worked as a technician in the oil and gas industry and in October 2008, accepted an offer of employment as a technician for Occidental Petroleum. The role was based in Oman, and the offer of employment was not, on its face, shown to be limited for a period of 12 months.

The taxpayer left Australia on 21 November 2008. The taxpayer’s tax return for the 2009 income year was lodged on the basis that the earnings from Oman were not taxable, and the Commissioner subsequently issued amended assessments to include the foreign source income. In considering whether the taxpayer had a permanent place of abode outside Australia for the purposes of the residency test in section 6(a)(i) of the Income Tax Assessment Act 1936 (ITAA 1936), the AAT found that at least to mid-February 2009 the taxpayer had a residence in Australia where he kept the majority of his possessions. After that date, the residence was rented out and his possessions were kept in storage but throughout the relevant period the taxpayer kept only the most basic of possessions in Oman and the taxpayer had no apparent ties to Oman beyond his employment there.

Further, it was found that the taxpayer did not have an exclusive right of possession of the apartment provided by the employer in Oman, which was shared with another employee of Occidental Petroleum who worked a complimentary roster. Accordingly, the taxpayer was found to have been an Australian resident during the relevant period and therefore, his foreign source income had been correctly assessed.

Excess super contributions tax assessment set aside – special circumstances existed

Longcake and Commissioner of Taxation [2012] AATA 576

The AAT has set aside the Commissioner’s objection decision to impose excess superannuation contributions tax on the basis that special circumstances existed and ordered that concessional superannuation contributions paid in early July 2009 be reallocated to the 2008-09 financial year. During the 2009-10 financial year, the taxpayer’s employer made concessional superannuation contributions totalling $71,551.44 to two superannuation funds, AMP and Tasplan. The salary sacrifice agreement between the taxpayer and employer indicated that contributions would be made to AMP until 30 June 2009, and any payments thereafter would be made to Tasplan.

In early July 2009, the employer made contributions totalling $25,367.22 to AMP, which resulted in the taxpayer exceeding the concessional superannuation contributions cap of $50,000 for the 2009-10 income year. The Commissioner assessed the taxpayer as having made excess concessional superannuation contributions in the 2009-10 financial year and imposed excess superannuation contributions tax.

The taxpayer lodged an application requesting the Commissioner to disregard or allocate all or part of the excess concessional superannuation contributions to another financial year, which the Commissioner refused. The taxpayer objected to the Commissioner’s decision, contending that “special circumstances” existed and the Commissioner disallowed the objection.

In concluding that it was appropriate to reallocate part of the concessional superannuation contributions made in the 2009-10 financial year to the 2008-09 financial year, the AAT found that there were special circumstances for the purposes of section 292-465(3) of the ITAA 1997 on the basis that:

  • The taxpayer sought to arrange his affairs so that the concessional superannuation contributions cap was not exceeded
  • The agreement with the employer required the employer to cease making contributions to AMP on 30 June 2009, and the fact that the July 2009 payments were made to AMP indicated that they were intended for the 2008-09 financial year
  • It was not reasonably foreseeable that the concessional contributions cap would be exceeded because if the contributions to AMP were made in accordance with the agreement, it would have been confined to the 2008-09 financial year
  • The taxpayer did not control the timing of the contributions to the superannuation funds in practical terms, relied entirely on the terms of the agreement with his employer and expected the contributions to be made in a timely manner.

In addition, the AAT was of the view that reallocation of the concessional superannuation contributions into the previous financial year was consistent with the object of Division 292 of the ITAA 1997.

 “Citizen of the world” with no permanent place of abode outside Australia held to be a resident

Sully and Commissioner of Taxation [2012] AATA 582

The Administrative Appeals Tribunal (AAT) has held that a taxpayer was an Australian resident for tax purposes for the 2009 income year as he was unable to establish  that he had a ‘permanent place of abode’ outside Australia. The taxpayer was a marine engineer who, from 2008 until 2010, undertook work with a Dubai based company. As part of the employment arrangement, the taxpayer was provided with a shared apartment in Dubai. However, during the relevant income year, the taxpayer spent very little time in Dubai, and instead spent time on board the company’s vessel at various locations around the world. Further, in September 2008 the taxpayer was posted to the United States in a managerial capacity.

In deciding that the taxpayer was an Australian resident within the meaning of section 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936), the AAT was satisfied that the taxpayer did not ‘reside’ in Australia during the relevant income year.  However, the AAT found that in applying  the ‘domicile test’ in section 6(1)(a)(i) of the ITAA 1936, the taxpayer did not have a ‘permanent place of abode’ in Dubai as there were few signs of an attachment to the United Arab Emirates apart from some personal effects which had been housed in the Dubai apartment. Further, the AAT found that the taxpayer had not established a permanent place of abode anywhere else in particular, and saw himself as a “citizen of the world”.  Therefore, as the taxpayer’s domicile was Australia, the taxpayer satisfied the ‘domicile test’ in section 6(1)(a)(i) and was a resident of Australia for the 2009 income year.

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