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Foreign income assessable

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The AAT has held that a taxpayer was a resident of Australia within the meaning of s 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for the 2006 to 2008 income years. Accordingly, it affirmed the Commissioner's decision to assess the taxpayer on foreign income earned in the relevant periods.

Background

The taxpayer migrated to Australia in 2005 with his family on a business migration permanent resident visa. He was a pilot who worked overseas and was away from Australia for extended periods of time. The Commissioner contended that the taxpayer was a resident of Australia for the 2006 to 2008 income years and assessed the taxpayer on foreign income he had earned. In addition, the Commissioner also imposed a shortfall penalty for recklessness. The taxpayer contended that he was a foreign resident for the relevant years and should not be taxed on the income.

Decision

The AAT held that "the taxpayer was clearly an Australian resident for tax purposes in the year of income" under s 6(1). It came to that decision based on the following factors:

  • the taxpayer indicated his desire to live in Australia in his permanent resident visa application (and subsequently, the taxpayer also applied for Australian citizenship);

  • the taxpayer's wife and children resided in Australia full time throughout the relevant years;

  • the taxpayer retained private health cover in Australia, opened Australian bank accounts and held an Australian driver’s licence;

  • the taxpayer held an Australian investment property and used the bulk of his remuneration from employment to maintain his family in Australia; and

  • when the taxpayer travelled for work, he stayed in "hotel-style", transient-nature accommodation.

The AAT said that as the taxpayer was a resident for tax purposes, the foreign income he had earned for the relevant years was assessable. In relation to penalties, the AAT affirmed the Commissioner's decision to impose a shortfall penalty for recklessness as it said "there is no basis for believing the taxpayer was a foreign resident". Further, it held that there were no circumstances to justify remission of the penalty.

Re Bezuidenhout and FCT [2012] AATA 799, www.austlii.edu.au/au/cases/cth/AATA/2012/799.html

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