Cooper Grace Ward has confirmed its role in a case that has far-reaching effects for Australian expatriates.
The Brisbane-based firm successfully acted for the taxpayer in “Harding v Commissioner of Taxation” in which the Full Court of the Federal Court of Australia rejected the Australian Taxation Office’s (ATO) residency assessment.
The case involved Glenn Harding, an Australian citizen who left the country in 2009 to live and work in the Middle East. He lived in an apartment in Bahrain and commuted to his permanent job in Saudi Arabia.
Harding intended for his wife and youngest son to join him in the Middle East by the end of 2011, when the son finished high school in Australia. His wife was to live in the family home on the Sunshine Coast until then.
The plan did not come to fruition as Harding and his wife separated before the planned reunion. The ATO assessed Harding, saying that he was a tax resident of Australia for the 2011 income year, which meant that his income from the Middle East was taxed in Australia.
The ATO said that Harding did not have a “permanent” dwelling outside Australia at the time because his apartment in the Middle East was only temporary while he waited for his wife and child to join him.
The Full Court rejected that argument, saying that the test was whether the person had abandoned their residence in Australia.
Cooper Grace Ward partner Fletch Heinemann acted for Harding. He said that the decision can help Australian expatriates, but warned that there are still key risks to consider.
“Australians living overseas in serviced apartments or hotels on long‑term arrangements may get comfort from the decision, as long as they can show they have abandoned their residence in Australia,” he said. “Even with this decision, there are still key risks for Australian expatriates when it comes to checking their tax residency status. Australian expatriates who maintain a family home in Australia will continue to be high risk and will need to review their personal circumstances carefully.”