Article Synopsis:

LexisNexis Australian Tax Law Bulletin 2.1
"Individual residency and the offshore worker"

The Australian understanding of Australian tax residency for individuals changed significantly in 2014, particularly for Australian domiciled people working outside Australia for significant periods who return to Australia periodically during breaks (offshore workers). 

Three cases before the Administrative Appeals Tribunal (the Tribunal), Dempsey v Commissioner of Taxation (Dempsey), Agius v Commissioner of Taxation (Agius) and Engineering Manager v Commissioner of Taxation (Engineering Manager), decided in succession, set a new framework for determining individual tax residency.

As a result of the three cases, an individual may potentially establish that he is not a tax resident in Australia, even if he has a house in Australia available to him and even if his children are in Australia, if it is established that he has significant presence in an off-shore country due to employment or enterprise and his visits to Australia are casual in nature. 

So why the significant change, when there was no change in the underlying legislation? The change as a result of the 2014 cases, it is suggested, turns on a more concise understanding of “resides” and a more natural understanding in turn of “permanent place of abode”, discussed below. Naturally, it is suggested that “permanent place of abode” and “resides” are highly related
concepts.

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