IYENGAR v FC of T

Members:
CR Walsh SM

Tribunal:
Administrative Appeals Tribunal, Perth

MEDIA NEUTRAL CITATION: [2011] AATA 856

Decision date: 30 November 2011

---

CR Walsh SM

Introduction

1. In May 2007, Mr Iyengar left his family and his family home in Perth, Western Australia, to move to Dubai, in the United Arab Emirates ( UAE ), and later Doha, Qatar, to work as a "Site Engineering Manager" for Maersk Oil Qatar AS ( Maersk ) on "Package 13", pursuant to a two year contract which contained an option to extend the contract for two further periods of six months each.

2. Mr Iyengar's Australian income tax returns for the years of income ended 30 June 2008 and 30 June 2009 stated that he was a non-resident for Australian income tax purposes and did not include any assessable income. The Commissioner subsequently issued Mr Iyengar with notices of assessment for those income years in accordance with his returns for those income years.

3. On 22 November 2010, the Commissioner issued Mr Iyengar with notices of amended assessment for the income years 30 June 2008 and 30 June 2009, which included in his assessable income foreign source income of $182,344 (in respect of the income year ended 30 June 2008) and foreign source income of $213,725 (in respect of the income year ended 30 June 2009), respectively.

4. Mr Iyengar objected to those amended assessments on 1 December 2010 and the Commissioner disallowed that objection on 21 February 2011.

5. Before the Tribunal, Mr Iyengar seeks a review of the Commissioner's objection decision of 21 February 2011. Mr Iyengar's position is that he was not a "resident" of Australia during the income tax years ended 30 June 2008 and 30 June 2009 such that none of the foreign source income, he derived in the UAE from working for Maersk, is subject to Australian tax. Mr Iyengar also contends that the amended assessment which was issued to him by the Commissioner on 22 November 2010, in respect of the income year ended 30 June 2008, was issued out of time and was therefore unauthorised. Each of these issues is considered in turn below.

Relevant facts and evidence

6. Mr Iyengar, who is a civil engineer by profession, was born in India in 1952.

7. In 1998 Mr Iyengar emigrated from India to Australia with his wife and two children (daughter and son). They all became Australian citizens in June 2003.

8. Mr Iyengar's marriage to his wife has at all material times been, and is presently, harmonious.

9. Since about 2003, Mr Iyengar has jointly owned a house at 49 Kirwan Way, Winthrop in Western Australia with his wife, Mrs Mangala Iyengar which is mortgaged to the ANZ Bank in Perth ( Winthrop home ). Except for the periods he has been absent from Australia, Mr Iyengar has resided at the Winthrop home. Mr Iyengar acknowledged before the Tribunal that he regards the Winthrop home as the "family home".

10. There was some suggestion that Mr Iyengar worked and lived in Bangalore India between October 2004 and February 2006 and further, that at some point after moving to Australia in 1998, he had also worked in Malaysia for a period. However, there was no clear evidence of this before the Tribunal.

11. In April 2007 Mr Iyengar entered into discussions with Maersk regarding an engineering position in the Middle East. On 23 April 2007, Maersk offered Mr Iyengar a contract for "temporary employment" as "Site Engineering Manager" to be located in Dubai, UAE for a two year period (from 28 May 2007 to 28 May 2009), with an option to extend the contract for a further two periods of six months each. Mr Iyengar accepted that offer on 26 April 2007 ( Contract ).

12. The Contract related to a specific project involving the fabrication of offshore oil and gas platforms and their installation which was referred to by Maersk as "Package 13". It was disclosed that "Package 13" was one of 17 packages comprising the project to be undertaken by Maersk in the Middle East at that time. However, the exact details of this are unclear on the evidence provided to the Tribunal.

13. Other terms of the Contract included:

• • the Contract could be terminated by either party giving, in writing to the other party, not less than one month's prior notice;
• • Maersk had an option, exercisable by the giving of not less than one month's prior notice, to extend the Contract for up to two consecutive periods of six months;
• • Maersk agreed to pay the rent of adequate furnished accommodation selected by Maersk according to local practice, including out-of-pocket expenses for all local and all business telephone calls, electricity, gas, heating and air-conditioning costs;
• • Insurance of Mr Iyengar's personal effects in Qatar or elsewhere and third-party liability insurance would be at his own expense;
• • Maersk agreed to place a car selected by Maersk at Mr Iyengar's disposal and to pay all running costs;
• • Maersk agreed to reimburse Mr Iyengar for "hospitalisation, medical treatment, doctor's fees, prescribed medicine, pregnancy and associated check-ups and tests, periodontal treatment, emergency dental treatment, expenses and surgery, certain medical expenses for Mr Iyengar", subject to prior approval by Maersk (except emergency situations);
• • Subject to prior approval, Maersk agreed to indemnify Mr Iyengar for medical and dental expenses of his spouse and children but only when they were visiting him in Dubai;
• • Airfares direct to Doha or elsewhere for Mr Iyengar would be borne by Maersk;
• • Subject to prior approval by Maersk, expenses associated with packing and transporting Mr Iyengar's personal effects to Doha or elsewhere would be covered by Maersk; and
• • Mr Iyengar was to devote his entire capacity for work to Maersk during the term of his employment.

14. The above contractual conditions were expressly agreed to be subject to Mr Iyengar's family not joining him in "Qatar or elsewhere". Mr Iyengar told the Tribunal that the Contract was the standard form contract provided to Maersk employees and that he advised Maersk at the time of accepting their offer of his intention that his wife should be joining him in Dubai after approximately six months of commencement of the Contract, after she had made relocation arrangements. There was no evidence before the Tribunal to support this statement.

15. According to Mr Iyengar, at the time he accepted Maersk's employment offer he was advised by Maersk that the Project would be for a period of between two to three years and that no guarantees were made that the Project would not exceed three years. There was no evidence before the Tribunal to support this. All that is clear is that, pursuant to the Contract, Mr Iyengar was employed by Maersk for a period of two years with the possibility of that two year period being extended by up to a year.

16. Mr Iyengar's Witness Statement, dated 26 September 2011, includes the following statement:

"9. Whilst I considered Australia would be a likely place of retirement, I had not made any decision to make my home indefinitely or permanently in Australia during the relevant years.

17. However, Mr Iyengar told the Tribunal that his intention at the time he left Perth for Dubai was to work in Dubai on the Contract for as long as it took and that he had it in his mind that he would return to Perth upon its completion. He also said that the "whole point of going overseas was to liquidate the mortgage [on the Winthrop home] asap." Mr Iyengar did not give evidence that his intention at the time of leaving Australia for Dubai was to remain outside of Australia for an indefinite period of time, although that was the submission made by his Representative at the hearing of this application.

18. Mr Iyengar obtained what he referred to as a 3 year "work residency visa" to enable him to live and work in Dubai in the UAE. The exact details of the Dubai visa are unclear from the evidence.

19. Mr Iyengar first arrived in Dubai on or about 27 May 2007, initially staying in hotel accommodation. As stated above, the Contract provided that Mr Iyengar was to be supplied with "adequate furnished accommodation" selected by Maersk "according to local practice". According to Mr Iyengar, in Dubai, Maersk's practice was for the employee to source and arrange for the lease by Maersk of unfurnished accommodation, within a rental limit prescribed by Maersk, and then for the employee to furnish the accommodation within the furnishing allowance provided by Maersk.

20. Mr Iyengar told the Tribunal that he sourced, and arranged with Maersk, the lease of a villa style house with 3 bedrooms, 3 bathrooms, a study, living room, kitchen, backyard and independent car parking, being Villa 2, Street 6, Springs 10, Dubai) ( Dubai Villa ). He said that the Dubai Villa had previously been leased by Maersk for another one of its employees but that that employee had left Dubai and Maersk's employment, as it had not "worked out". Consequently, the Dubai Villa was only partly furnished at the time Mr Iyengar inspected it. For that reason, Mr Iyengar stated, Maersk HR (Human Resources) suggested to him that he use his furnishing allowance from Maersk to purchase additional furnishings for the villa, including a refrigerator, cooking range, microwave oven, dishwasher, wall cabinet, study work table, table lamps, pantry chairs, new curtains etc., which he did.

21. According to Mr Iyengar, the Dubai Villa was located in the "married people's locality" of Dubai. However, there was no direct evidence to support this statement.

22. The Dubai Villa lease payments were made by Maersk and the lease was executed by a rental agent on behalf of Maersk.

23. Mr Iyengar's meals were not catered and he was required to purchase food and household requisites at his own expense. He also employed a maid and a gardener at his own expense.

24. Mr Iyengar's Witness Statement, dated 26 September 2011, provides that whilst he was in Dubai he was a member of several sporting and recreational associations, namely a golf and tennis club, local gym and swimming centre. It also states that Mr Iyengar dined out frequently and was a member of a local hotel group's discount restaurant program in Dubai. It further provides that he "considered [his] house in Dubai to be [his] permanent home."

25. Mr Iyengar and his wife did not sell or let the Winthrop home. Instead, Mr Iyengar's wife and son, who was at the relevant time a full-time university student, (but not daughter, who had married and left home) continued to reside at the Winthrop home after the departure of Mr Iyengar to Dubai.

26. Mr Iyengar left behind personal and jointly owned items of personal property at the Winthrop home when he went to Dubai, including two motor vehicles, household furniture and electrical appliances, some clothing and other household items. However, he took with him to Dubai various items of personal property (some jointly owned with his wife), including clothing, sporting ad recreation equipment, CDs, books and family photographs.

27. Whilst in Dubai, Mr Iyengar did not lease any property nor did he look into the legal requirements involved in buying a property on his own account. He said that he was more concerned about first paying off his mortgage on the Winthrop home.

28. Mr Iyengar continued to stay at the Dubai Villa until April 2009.

29. During the period of the Contract, Mr Iyengar returned to Australia and stayed with his wife and son at the Winthrop home on 12 October 2007, for a period of 14 days, and again in August 2008, for a period of 10 days.

30. Mr Iyengar's wife travelled to Dubai and stayed with him at the Dubai Villa in the following three periods:

• (i) 24 January 2008 to 23 February 2008 (one month);
• (ii) 26 September 2008 to 26 November 2008 (two months); and
• (iii) 23 January 2009 to 22 February 2009 (one month).

31. On 31 December 2007, Mr Iyengar's wife gave notice of her resignation to her employer, Professional Pharmacy Services, effective from 16 January 2008. She stated in that notice that she was "planning on joining" her husband who was working in Dubai. However, after staying with her husband in Dubai for one month, in the period 24 January 2008 to 23 February 2008, Mrs Iyengar returned to Australia (on 23 February 2009) and continued to reside at the Winthrop home and successfully reapplied for her former position. The stated reason for Mrs Iyengar's return to Perth was to provide support to her daughter who was going through a divorce at that time.

32. While Mr Iyengar was absent from Australia in Dubai (and subsequently in Doha, Qatar) his salary was deposited in Australian dollars (at his request) into a HSBC bank account maintained by Mr Iyengar in the UAE (Jebel Ali branch). During that period, funds from this account were regularly transferred to a joint account in the name of Mr Iyengar and his wife at a Perth branch of ANZ Bank. In total, approximately $400,000 was transferred from Mr Iyengar's HSBC account to the joint ANZ account in that period. These funds were used to make regular mortgage payments on the jointly owned Winthrop home. Mr Iyengar's wife had access to their joint ANZ Bank account in Perth and could access funds from it when and if she needed to.

33. No tax was payable in Dubai on the income earned by Mr Iyengar in Dubai.

34. Mr Iyengar's income tax return for the year ended 30 June 2008 was lodged on his behalf by his tax agent on 27 October 2008. That return stated that Mr Iyengar was a non-resident of Australia for income tax purposes and did not include any assessable income for that income year.

35. On 4 November 2008 the Commissioner issued an income tax assessment to Mr Iyengar for the year ended 30 June 2008 in accordance with the above income tax return.

36. On 1 March 2009 Maersk offered Mr Iyengar an extension of his Contract until 31 August 2009. On 2 March 2009, Mr Iyengar accepted that offer. This was the first extension of the Contract by Maersk.

37. The fabrication of the relevant offshore oil and gas platforms was completed in July 2009. The next phase of the Project was the installation of those platforms in offshore Qatar. The hook-up and commissioning work was performed out of Maersk's Qatar office in Doha, Qatar. This required Mr Iyengar to relocate from Dubai to Doha to manage those works.

38. In April 2009, Mr Iyengar moved out of the Dubai Villa and into a serviced hotel apartment in Dubai, paid for by Maersk. He remained in that serviced hotel apartment until July 2009, awaiting his relocation to Doha.

39. On 8 July 2009 Mr Iyengar was offered a further extension of his Contract until 1 October 2009. On 14 July 2009 Mr Iyengar accepted Maersk's offer. This was the second extension of the Contract by Maersk.

40. On 18 August 2009 Maersk offered Mr Iyengar another extension of his Contract until 31 October 2009. On 23 August 2009 Mr Iyengar accepted that offer. This was the third extension of the Contract by Maersk.

41. From August 2009 until he returned to Australia in December 2009, Mr Iyengar was accommodated in Doha, Qatar in another villa provided by Maersk.

42. When Mr Iyengar moved to Doha, his Dubai visa was cancelled and he obtained what he referred to as a two year "work residency visa" for Qatar.

43. On 5 October 2009 Maersk offered Mr Iyengar another extension of his Contract until 31 December 2009. On 25 October 2009 Mr Iyengar accepted that offer. This was the fourth extension of the Contract by Maersk.

44. On 16 November 2009 Mr Iyengar's income tax return for the year ended 30 June 2009 was lodged on his behalf by his tax agent. That return stated that Mr Iyengar was a non-resident of Australia for income tax purposes and did not include any assessable income. On 24 November 2009 the Commissioner issued an income tax assessment to Mr Iyengar for the year ended 30 June 2009 in accordance with that return.

45. The Commissioner's data matching processes identified that Mr Iyengar had received income from foreign source transactions in the income years ended 30 June 2008 and 30 June 20009. As a result, on 30 July 2010 the Commissioner wrote to Mr Iyengar to advise him, among other things, that he had determined that Mr Iyengar was a resident for income tax purposes for the years ended 30 June 2008 and 30 June 2009 and that he proposed amending Mr Iyengar's tax returns for those income years to include the foreign source income derived by Mr Iyengar in the relevant income years.

46. On 23 August 2010 Mr Iyengar's tax agent contacted the Commissioner, on his behalf, and said that Mr Iyengar was not a resident in the income years concerned, despite what the Commissioner had said in his letter of 30 July 2010. This led the Commissioner to issue Mr Iyengar with a document titled "Questionnaire - Permanent Place of Abode" requesting that he provide the Commissioner with the information requested in that questionnaire within 14 days. The purpose of the questionnaire was to assist the Commissioner in determining whether Mr Iyengar was in fact a resident for income tax purposes in the income years concerned. A response to the questionnaire was received by the Commissioner on 10 September 2010 and considered.

47. The outcome of this was that on 22 November 2010 the Commissioner issued Mr Iyengar with Notices of Amended Assessment for the years ended 30 June 2008 and 30 June 2009. Pursuant to those amended assessments:

• (a) Mr Iyengar's taxable income for the year ended 30 June 2008 was increased from nil to $181,904 as a result of the inclusion of $182,344 of foreign source income received by Mr Iyengar from Maersk; and
• (b) Mr Iyengar's taxable income for the year ended 30 June 2009 was increased from nil to $213,607 as a result of the inclusion of $213,725 of foreign source income received by Mr Iyengar from Maersk.

48. A Maersk "Exit Requisition Form" dated 18 November 2009 states:

"Ravi [Mr Iyengar] has not resigned. His contract is not being renewed as the work on Package 13 is nearing completion."

49. The evidence was that Mr Iyengar made an enquiry with Maersk HR to determine if there was any further work for him with Maersk but there was none suited to his particular expertise. Mr Iyengar confirmed before the Tribunal that he was aware that the Project (which it was said comprised 17 "Packages") was on-going at the time he ceased employment with Maersk.

50. Mr Iyengar returned to Australia on 16 December 2009 and, since then, has lived with his wife at the Winthrop home. Mr Iyengar told the Tribunal that upon his return to Australia he took about two months holiday and in about February 2010 he commenced looking for a new job. In about March 2010, he started work as a construction manager for Worley Parsons in Perth.

Was Mr Iyengar an "Australian resident" for income tax purposes in the years ended 30 June 2008 and 30 June 2009?

Relevant law

51. An "Australian resident" is generally assessable on ordinary and statutory income derived from all sources, whether in or out of Australia, during the income year: sections 6-5(2) and 6-10(4) of the Income Tax Assessment Act 1997 ( ITAA 1997 ). In contrast, a "foreign resident" is generally assessable only on ordinary and statutory income derived from all Australian sources, during the income year: sections 6-5(3) and 6-10(5) of the ITAA 1997.

52. The definition of "Australian resident" in section 995-1 of the ITAA 1997 provides that "Australian resident" means a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 ( ITAA 1936 ). The definition of "foreign resident" in section 995-1 of the ITAA 1997 states that a "foreign resident" means a person who is not a resident of Australia for the purposes of the ITAA 1936. In other words, the definition of "Australian resident" and "foreign resident" in the ITAA 1997 both cross-reference back the definition of "resident" or "resident of Australia" in section 6(1) of the ITAA 1936.

53. The definition of "resident" or "resident of Australia" in section 6(1) of the ITAA 1936 includes not only a person who "resides" in Australia within the ordinary meaning of that word (referred to as the "ordinary concepts test") but also a person who satisfies any one of three additional statutory tests set out in section 6(1)(a)(i) to (iii) of the ITAA 1936 (being: (i) the domicile test; (ii) the 183 day test; and (iii) the superannuation fund test). Of the three statutory tests, only the "domicile test" in section 6(1)(a)(i) of the 1936 ITAA 1936 is relevant to this application. That test is considered in further detail later in these reasons. A useful summary of the law on the residence of individuals for Australian income tax purposes is provided in CCH Australia Limited's Australian Federal Income Tax Reporter ITAA 1997 Volume A ( AFITR ) at [29-010] - [29-130]. Much of what is written below concerning the law on the residence of individuals has been borrowed from that source and relevant paragraph references to the AFITR have as far as practicable been provided below.

1. Ordinary Meaning of "Resides" (Ordinary Concepts Test)

54. The primary test for deciding the residency status of an individual is whether the individual resides in Australia according to the ordinary meaning of "resides". Residency status is a question of fact (and degree) and not of law:
Federal Commissioner of Taxation v Miller (1946) 73 CLR 93.

55. The term "reside" is not defined in Australian income tax law and consequently it takes its ordinary meaning. The Macquarie Dictionary 5^th Ed. (2009) defines "reside" as "to dwell permanently or for a considerable time; have one's abode for a time". Further, the New Shorter Oxford English Dictionary Vol.2 (1993) defines "reside" as meaning "b. Dwell permanently or for a considerable time, have one's regular home in or at a particular place." According to the High Court of Australia in Miller (at 73 CLR 93 at 99-100, per Latham CJ), the term "reside" should be given a wide meaning for the purposes of section 6(1)(a) of the ITAA 1936: see AFITR at [29-020].

56. Similarly, in
Subrahmanyam v Commissioner of Taxation 2002 ATC 2303, Deputy President Forgie said at [43-44] that the widest meaning should be attributed to the word "reside" as it is used in the opening words of section 6(1)(a) of the ITAA 1936, for two reasons:

"The first is the context of the 1936 Act which is mirrored in the 1997 Act. The context is that of legislation to levy income tax. It provides for the levy of that income tax upon both residents and non-residents. However, given that the income regarded as assessable income under both the 1936 Act and the 1997 Act is more broadly based for a resident than for a non-resident, it can be presumed from the fact that it is income tax legislation that Parliament intended that the word 'reside' should be given its broadest ordinary meaning rather than any narrower meaning. That is so because it is its broadest meaning that leads to the greatest pool of assessable income upon which income tax is assessed.

The second is the form in which Parliament has chosen to frame the definition of 'resident'. It has chosen the 'means and includes' form of definition. As a general rule, which an expression is defined by reference to 'means … and includes', it 'indicates an exhaustive explanation of the meaning which for the purposes of the statute must be attached to the term the subject of definition, and conveys both the idea of enlargement and exclusion'."

57. Further, in Subrahmanyam at [23] Deputy President Forgie referred to decision of Wilcox J of the Federal Court of Australia in
Hafzav v Director-General of Social Security (1985) FCR 444, wherein his Honour (at 449-450) discussed various earlier cases which have considered the issue of "residence" as follows:

"There is a plethora of decisions, arising in various contexts but predominantly matrimonial causes and revenue cases, relating to the legal concept of residence. As a general concept residence includes two elements: physical presence in a particular place and the intention to treat the place as home; at least for the time being, not necessarily forever. The concept was explained in a taxation case,
Koitaki Para Rubber Estates Limited v The Federal Commssioner of Taxation [19419 HCA 13; (1941) 64 CLR 241 at 249 by Williams J:

'The place of residence of an individual is determined, not by the situation of some business or property which he is carrying on or owns, but by reference to where he eats and sleeps and has his settled or usual abode. If he maintains a home or homes he resides in the locality or localities where it or they are situate, but he may also reside where habitually lives even if this is in hotels or on a yacht or some other abode.'

Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place even involuntarily (see
Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 248 and
Keil v Keil [1947] VicLawRp 56; [1947] VLR 383) a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place (
Levene v Commissioners of Inland Revenue [1928] UKHL 1; [1928] AC 217 at 225 and
Judd v Judd (1957) 75 WN (NSW) 147 at 149) together with an intention to return to that place and an attitude that that place remains 'home' (see
Norman v Norman (1969) 16 FLR 231 at 236)……………where the general concept of [residence] is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as 'home', a change of intention may be decisive of the question whether residence in a particular place has been maintained."

58. In Subrahmanyam, in considering the meaning of the word "resides", Deputy President Forgie said at [48]:

"In its broadest sense, 'resides' carries with it the notion of having a home in a particular place. It carries with it the notion of some physical presence with the notion of an intention to treat the place as home, at least for the time although not necessarily forever. It may be expressed in terms of dwelling in a place. In general terms, that would seem to be the sense in which the word is used in the definition of 'resident' in s.6(1) of the 1936 Act…"

59. Although the question of whether a person "resides" in a particular country is a question of fact and degree, the courts have referred to and taken into account various factors considered to be relevant to this question. These factors are outlined below: see AFITR at [29-020].

60. The weight to be given to each factor will vary with the individual circumstances and no single factor is necessarily decisive. As acknowledged by the Tribunal in
Shand v Federal Commissioner of Taxation 2003 ATC 2080 at [35], "questions of residence, domicile, permanent place of abode, have frequently been found by the courts and tribunals to be difficult to assess on a factual level and not easy to define in concrete legal terms" : see AFITR at [29-020].

i. Physical Presence

61. Whether the person is physically present in a country at some time during the year of income is a factor which has been considered by the courts as relevant: see AFITR at [29-025]. There is a distinction between maintaining a place of residence and actually residing in that place. In
Joachim v Federal Commissioner of Taxation 2002 ATC 2088, the Tribunal stated (at 2090):

"Physical presence and intention will coincide for most of the time but few people are always at home. Once a person has established a home in a particular place, even involuntarily, a person does not necessarily cease to be resident there because he or she is physically absent. The test is, whether the person has retained a continuity of association with the place, together with an intention to return to that place and an attitude that the place remains home ." [Emphasis added]

62. Physical presence in a country for some period during a particular year of income is usually considered by the courts as necessary in order that a person should be resident in that country during that particular income year: see AFITR at [29-025]. However, there have been exceptions to this:
Rogers v Inland Revenue Commissioners (1879) 1 TC 225 and
Slater v Commissioner of Taxation (NZ) (1949) 9 ATD 1. It does not necessarily follow that the mere presence of a person in a country for a period of time during a year of income is sufficient to make that person a 'resident' of that country. For example, in
Federal Commissioner of Taxation v Pechey 75 ATC 4083 Waddell J held that the short and temporary nature of the taxpayer's stay in Territory of Cocos (Keeling) Islands (i.e. four weeks) was such that he could not be said to be a "resident" there during his stay within the meaning of former section 7 of the ITAA 1936: see AFITR at [29-025].

63. As set out above, Mr Iyengar first arrived in Dubai (from Australia) on about 27 May 2007, ready to commence his Contract with Maersk on 28 May 2007, and he returned to Australia (to his family and the Winthrop home) on 16 December 2009. During the period that he was overseas working (being approximately 2 years and 7 months), Mr Iyengar returned to Australia and stayed with his wife and son at the Winthrop home for a two week period in October 2007 and for 10 days in August 2008.

64. Despite Mr Iyengar's limited physical presence in Australia in the relevant income years, it is clear from the evidence that he not only maintained a place of residence in Australia (namely, the Winthrop home) he also retained a continuity of association with Australia (specifically, Perth) together with an intention to return to Australia upon completion of his Contract with Maersk and, further, that he had an attitude that the Winthrop home at all material times remained his "family home": Joachim.

65. Evidence that Mr Iyengar retained a 'continuity of association' with Australia during the relevant income years includes, but is not limited to, the following facts - Mr Iyengar's wife, son, and daughter remained in Perth during the relevant period (except for three short visits by his wife to Dubai), his "family home" (the Winthrop home) was in Perth, he was happily married to his wife, he requested that he be paid in Australian dollars, he returned almost all of the income he earned from working for Maersk to Australia to pay down the mortgage on the Winthrop home, he returned on holiday and stayed in the Winthrop (family) home during the course of his employment with Maersk, he retained many items of his personal property in Australia (at the Winthrop home) during the relevant period, the Contract provided that his employment was "temporary" and was for a finite period of 2 years with an option that it could be extended by Maersk for up to one year, he was employed for his particular expertise as a "Site Engineering Manager" for a particular task ("Package 13"), he did not lease or purchase a property in Dubai (or later Doha), he did not purchase any substantial items of personal property whilst abroad (for e.g. a car) and he returned to Australia, the Winthrop home and his family upon completion of the Contract and his obligations to Maersk.

ii. Nationality

66. In most cases, the nationality of a person would not be a factor to be taken into account along with other circumstances in determining where his or her residence is. However, in cases that could go either way, the citizenship of a person may not be completely irrelevant in the conclusion to be drawn from all the relevant facts:
Levene v IR Commrs (1928) 13 TC 486 at 506 per Lord Cave: see AFITR at [29-030].

67. As stated above, Mr Iyengar was born in India in 1952 and moved with his family (wife, daughter and son) to Australia in 1998. They all became Australian citizens in June 2003.

iii. History of Residence and Movements

68. Both past and subsequent history of a person's residence may be relevant in determining whether that person is ordinarily resident in a country in a particular income year: see AFITR at [29-035]. For example, in Levene it was held by the House of Lords that the Commissioners were correct in taking into account, with regard to the years of assessment, conduct which occurred subsequently. The Commissioners said that all the facts put before them in regard to the taxpayer's past and present habits of life, the regularity and length of his visits to the United Kingdom and his ties with that country, together with his freedom from any attachments abroad, led to the conclusion that at least until January 1925, when he took the lease of a flat in Monte Carlo, he continued to be resident in the United Kingdom. Levene has been referred to and applied in a number of Australian cases such that it would appear that a similar view would apply here in relation to both past and subsequent events in the life of the relevant taxpayer:
Shand; Subrahmanyam; Pechey; Federal Commissioner of Taxation v Applegate 79 ATC 4307 and
Federal Commission of Taxation v Efstathakis 78 ATC 4486: see AFITR at [29-035].

69. As set out above, Mr Iyengar moved to Australia from India with his family in 1998, they all became Australian citizens in 2003 and he and his wife purchased the Winthrop home (and entered into a mortgage with an Australian bank, the ANZ bank) in about 2003. Although Mr Iyengar was absent from Australia for almost 2 years and 7 months whilst working on the Contract for Maersk (apart from two short return visits to Australia), as soon as the Contract ended Mr Iyengar returned to his family and the Winthrop home in Australia in December 2009, where he proceeded to take a short two month holiday before seeking re-employment. In March 2010 he commenced work as a construction manager for a company in Perth and his employment with that company subsists. Mr Iyengar's conduct subsequent to the period he spent in the middle east working for Maersk, taken together with his continuity of association with Australia and his intention to return to Australia upon completion of the Contract, is consistent with him being a "resident" of Australia. Although there was some suggestion that Mr Iyengar worked overseas (in India and Malaysia) after moving to Australia in 1998 and becoming a citizen in 2003, there was no clear evidence before the Tribunal confirming this.

iv. Habits and "Mode of Life"

70. There are several cases in the United Kingdom where, in considering whether the relevant taxpayer had ceased to reside in the United Kingdom, their habits of life were looked at in order to determine whether there had been any change or break in their mode of life which would lead to the conclusion that they had ceased to reside there: see Levene;
Reid v Inland Revenue Commissioners (1926) 10 TC 673 and
Inland Revenue Commissioners v Brown (1926) 11 TC 292: see AFITR at [29-040].

71. As regards mode of life, in his Witness Statement (dated 26 September 2011), Mr Iyengar stated:

• "22. Family and friends visited and stayed with me at my Dubai residence on numerous occasions
• 23. I was a member of several sporting an recreational associations whilst in Dubai, namely a golf and tennis club, local gym and swimming centre.
• 24. I dined out frequently and was a member of a local hotel group's discount restaurant program in Dubai."

However, there was nothing in the evidence to substantiate these statements. Further, these activities are normal pursuits for most normal expatriate persons who are employed abroad.

72. It was submitted by Mr Iyengar's representative in the hearing that whilst in Dubai Mr Iyengar worked hard "often 10 hours a day six days a week" and that "he applied for and was granted a liquor permit by the Ministry of the Interior to purchase and consume alcohol. This permit is only granted to long term permanent residents of the UAE." There was no clear evidence about these matters before the Tribunal. Accordingly, there is nothing to suggest that Mr Iyengar's habits and mode of life whilst in Dubai was inconsistent with him being a "resident of Australia" for income tax purposes in the relevant income years.

v. Frequency, Regularity and Duration of Visits

73. Where a person is resident in one country and visits another, the frequency and regularity of their visits is an important factor to be considered in determining whether or not they are resident in that other country:
Lysaght v Inland Revenue Commissioners (1928) 13 TC 511; Shand; Subrahmanyam; Applegate; Efstathakis and Pechey. However, as illustrated in Lysaght, the mere fact that the visits are of short duration does not of itself exclude residence in that country: see AFITR at [29-045].

74. As stated earlier, Mr Iyengar spent almost 2 years and 7 months in Dubai and later Doha working for Maersk. In that period Mr Iyengar spent about two weeks and then a further 10 days visiting and holidaying with his family in Australia. Also in that period his wife visited him in Dubai on three occasions (for one month, two months and one month respectively). The fact that Mr Iyengar's visits to Australia in the relevant income years were relatively short in duration compared to the time spent abroad in those years, does not preclude him from being an Australian "resident" in those income years: Lysaght. No one factor is decisive of residence which is a question of fact and degree depending upon an individual's circumstances: Miller and Shand.

vi. Purpose of Visits to or Absences From a Country

75. There have been a number of cases in Australia where this factor has arisen because of circumstances associated with World War II: Miller; 10 CTBR (OS) Case 104; 15 CTBR (OS) Case 57; 11 CTBR (OS) Case 78 and (1952) 3 TBRD Case C23: see AFITR at [29-050].

76. The evidence was that Mr Iyengar's intention was to go to Dubai (and later Doha) and work for Maersk for as long as it took to complete his Contract and then to return to Australia, which he did. His motivation for doing so was to use the money he earned under the Contract to pay down the mortgage on the Winthrop home as soon as possible. Such an intention (and motive) is indicative that Mr Iyengar was an Australian "resident" in the relevant period.

vii. Family and Business Ties With a Country

77. Family or business ties with a country are an important factor to be taken into account in determining whether or not a person has ceased to be resident in a particular country. In Australia, it would appear that family ties will outweigh business ties where the two are in conflict: Shand. Further, the location of an individual's family can be decisive: Joachim: see AFITR at [29-055].

78. In Shand, the taxpayer was born in Canada but relocated to Australia with his family in 1972. He and his wife returned to Canada for approximately two years in 1991 and 1992 for business purposes, during which time their daughter lived in their house in Australia. Thereafter, the taxpayer spent a considerable amount of time travelling abroad on business (i.e. 257 days during 1994/95 and 193 days in 1995/96), most of which time was spent in Kuwait. He claimed that during the relevant years he did not reside in Australia, his apartment in Kuwait was his permanent place of abode, and he visited his wife in Australia from time to time. In finding that the taxpayer had not abandoned his residence, domicile of choice and place of abode in Australia, the Tribunal was mindful, among other things, that the taxpayer's "personal effects and emotional ties were within Australia, whereas the only factor which tied him to Kuwait was his business": see AFITR at [29-055].

79. In
Crockett (No 2) v Federal Commissioner of Taxation 99 ATC 2221 the taxpayer relocated from the United Kingdom to Australia in 1987 with his second wife. During the 1988 to 1990 financial years the taxpayer was permanently employed as a baggage handler in the United Kingdom (where the children of his first marriage resided) but travelled frequently to Australia, where his second wife remained. Following the breakdown of his second marriage in 1990, the taxpayer returned to Australia in 1991 and was granted Australian citizenship in 1993. The Tribunal found that the taxpayer was a resident of Australia according to ordinary concepts during the relevant period as evidenced by his deliberate decision in 1987 to migrate to Australia, the subsequent application and grant of citizenship, and his family and social ties with Australia. Location of assets (funds from the sale of United Kingdom properties were used to purchase properties in Australia) also appears to have been a persuasive factor: see AFITR at [29-055].

80. Despite the fact that Mr Iyengar spent almost 2 years and 7 months working in Dubai and later Doha for Maersk, his family ties with Australia were such that he remained a "resident of Australia" in the relevant years of income. That is, after moving to Australia from India in 1998 he and his family took the step of becoming Australian citizens 2003 and acquiring a home in about 2003. While he was overseas working on the Contract for Maersk, his wife, daughter and son remained in Australia (except for three short visits to Dubai by his wife), his most substantial asset (the Winthrop home) was located in Australia, he used almost all of the money he earned abroad to make accelerated payments on his Australian mortgage on the Winthrop home (which he acknowledged he considered to be the "family home") and he took his holidays (albeit short) in Australia at the Winthrop home with his family: Shand and Crockett.

viii. Maintenance of a Place of Abode

81. Another important factor in determining whether or not a person has ceased to be resident in a particular country is whether the person maintains a 'place of abode' in that country, whether owned by them or not, when they are absent from that country. In Australia, the maintenance of a home in a particular place has usually arisen in relation to the question whether the taxpayer had a "permanent place of abode" outside Australia within the meaning of the first statutory test (the domicile test) in section 6(1)(a)(i) of the ITAA 1936: see, for example,
Case 2/98, 98 ATC 105;
Wessling v Federal Commissioner of Taxation 2002 ATC 2096; Joachim and Shand.

82. Early English case law also placed a great deal of emphasis on the maintenance of a place of abode. For example, in
Inland Revenue Commissioners v Brown (1926) 11 TC 292, the giving up by the taxpayer of his house in the United Kingdom appeared to be the decisive factor in the finding that he was not resident in the United Kingdom. In earlier years, when he maintained the house, he was held to be resident despite spending most of his time abroad. Further,
Lloyd v Sulley (1884) 2 TC 37,
In re Young (1875) 1 TC 57,
Rogers, Thomson v Bensted (1918) 7 TC 137 and
Peel v Inland Revenue Commissioners (1928) 13 TC 443 are all English cases in which the taxpayer had a residence available in the United Kingdom and was held to be resident there.

83. It is clear from the evidence that Mr Iyengar maintained a place of abode in Australia while he was in employed Dubai, and later Doha, working for Maersk. As discussed, since about 2003 Mr Iyengar has jointly owned the Winthrop home with his wife and he considers that home to be the "family home". During the income years concerned, Mr Iyengar sent almost all of the income he earned from working for Maersk back to Australia to pay down the mortgage on the Winthrop home as quickly as possible. Further, whilst Mr Iyengar may have taken some items of personal property with him to Dubai (such as clothing, sporting and recreation equipment, CDs, books and family photographs), he left behind two motor vehicles, household furniture and electrical appliances, some clothing and other household items at the Winthrop home in Australia. All of this is consistent with Mr Iyengar being a "resident of Australia" for income tax purposes in the relevant period.

Conclusion - Ordinary Meaning of "Resides" (Ordinary Concepts Test)

84. As discussed, questions of 'residence' can be difficult since what is required is a weighing of the facts in a particular case. Mr Iyengar's application is no exception. However, based on the totality of facts and evidence before it, the Tribunal considers that on balance Mr Iyengar was at all material times, and is presently, a "resident of Australia" for the purposes of the definition of that term in section 6(1)(a) of the ITAA 1936. That is, he was and remains an Australian "resident" according to ordinary concepts: Joachim; Shand and Crockett. That is not to say that this could change in the future if and when his individual circumstances change. It follows, therefore, that Mr Iyengar was also an "Australian resident" for the purposes of the definition of that term in section 995-1 of the ITAA 1997 and as used in section 6-5(2) of the ITAA 1997.

85. Such a finding is consistent in principle with the recent decision of the Tribunal in
Mynott v Federal Commissioner of Taxation 2011 ATC ¶10-195[2011] AATA 539 (that the applicant in that case resided in the Philippines) and the decision in Joachim (that the applicant in that case was an Australian resident). For the reasons already set out, the 'continuity of association' required (as illustrated in Mynott and Joachim and explained in Koitaki Para Rubber Estates) is established in the case, that continuity being with Australia: see also Case Q68, 83 ATC 343 which is discussed in further detail below.

86. In reaching this conclusion, the Tribunal is mindful of the fact that it has been previously held that the ordinary meaning of "reside" in section 6(1)(a) of the ITAA 1936 should be attributed with the widest possible meaning as that is what Parliament intended: Subrahmanyam.

2. Domicile Test

87. Having reached the conclusion that Mr Iyengar was a "resident of Australia" according to ordinary concepts, it is unnecessary for the Tribunal to consider whether he was a resident in the relevant period under any of the three additional statutory tests in section 6(1)(a) of the ITAA 1936. In Case 78, a Board of Review stated that the three additional statutory tests in the definition of "resident" (including the domicile test, above) must be read as enlarging, and not restricting, the ordinary meaning of "resident" in the antecedent part of the definition. Accordingly, even if a person is found not to be a resident of Australia according to ordinary concepts, the person will nevertheless be resident in Australia if he or she satisfies any one of the three additional statutory tests in section 6(1)(a) of the ITAA 1936. Conversely, if an individual "resides" in Australia according to the ordinary meaning of the word, the other tests do not require consideration:
Applegate 79 ATC 4307.

88. However, for completeness, the Tribunal will briefly examine the "domicile test" in section 6(1)(a)(i) of the ITAA 1936 (being the only statutory test of residence relevant to this application) and how it considers it would have applied to the facts in Mr Iyengar's particular case if it had not found him to be a resident according to ordinary concepts, as discussed above.

89. Section 6(1)(a)(i) of the ITAA 1936 states:

" resident or resident of Australia means:

• (a) a person, other than a company, who resides in Australia and includes a person:(i) whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia;
• …………………."

90. Under the domicile test in section 6(1)(a)(i) of the ITAA 1936, a person is resident in Australia if his or her domicile is in Australia, unless the Commissioner is satisfied that the person's "permanent place of abode" is outside Australia. 40. In
Tanumihardjo v Federal Commissioner of Taxation 99 ATC 5330 Hill J (with whom Tamberlin and Finkelstein concurred) said (at 5332):

"The inclusory words [in the first para of the definition in s 6(1)(a)(i)] extend the ordinary meaning of the word resident to persons domiciled in Australia but subject to the exclusion if the Commissioner is satisfied that the person has a permanent place of abode outside Australia. The second paragraph may or may not relate to persons who, in the ordinary sense of the words, reside in Australia in the year of income. It is arguable that they extend the definition only to persons who do not so reside despite a presence in Australia for the statutory period of more than one half of a year. The alternative view is that the language of (ii) may be intended more to subtract from the ordinary case of a resident, the special case described in (a)(ii) but subject to the exclusory words and thus apply to a person who in the ordinary sense is a resident of Australia."

91. For the purposes of the domicile test, it is thus first necessary to determine the "domicile" of the relevant person: see AFITR at [29-085].

92. "Domicile" is a legal concept to be determined according to the Domicile Act 1982 (DA) and common law rules. Where "domicile" has to be determined for a period after 30 June 1982 (as is the case here), the modifications to the common law, as modified by the DA, apply: see AFITR at [29-085].

93. Under the common law, "domicile" has been defined as the legal relationship between an individual and a territory with a distinctive legal system that invokes that system as the individual's personal law:
Henderson v Henderson (1965) 1 All ER 179 at 180-181. A person's "domicile" is the place that is considered by law to be his or her permanent home:
Udny v Udny (1869) LR 1 Sc & Div 441. A person may only have one "domicile" at the one time, whereas a person may be 'resident' in two or more places. The law requires that a person have a "domicile": see
Re Craignish, Craignish v Hewitt (1892) 3 Ch 180, at p 192 (CA) and
Bell v Kennedy (1868) LR 1 Sc & Div 307 (HL): see AFITR at [29-085].

94. There are three types of domicile: (i) domicile of origin; (ii) domicile of choice; and (iii) domicile by operation of law. Since the introduction of DA in 1982, "domicile by operation of law" has been virtually eliminated for the purposes of the Australian income tax law. The primary common law rule is that a person acquires a "domicile of origin" at birth. A person retains the "domicile of origin" unless and until he or she acquires a "domicile of choice" in another country, or until he or she acquires another "domicile by operation of law": see AFITR at [29-085].

95. The common law attributes to everyone at birth a "domicile of origin", which is generally the country of his or her father's permanent home. The actual place of birth is generally immaterial:
Somerville v Lord Somerville (1801) 5 Ves 750 at 787: see AFITR at [29-085].

96. A person's "domicile of origin" is retained until the acquisition of a "domicile of choice" (
Bell v Kennedy and
Somerville v Lord Somerville), or until some other domicile is attributed to that person by operation of law. Expressions of intention of "domicile" cannot prevail against a course of conduct leading to a contrary inference:
Ross v Ross (1930) AC 1
; In the Estate of Fuld (No 3) 1968 P 675 at 692;
Re Liddell-Grainger's Will Trusts and
Dormer v Liddell-Grainger (1936) 3 All ER 173: see AFITR at [29-085].

97. The common law test of "domicile of choice" has been restated in section 10 the DA, namely that the "intention" that a person must have in order to acquire a domicile of choice in a country is the intention to make his or her home indefinitely in that country. The domicile of choice which a person has at any time continues until that person acquires a different domicile of choice. Whether a person has abandoned a domicile of choice with the "intention" of remaining permanently or indefinitely in the country of new domicile is a question of fact dependant on the particular circumstances of each case:
Bell v Kennedy;
Udny v Udny;
Terrassin v Terrassin (1968) 3 NSWLR 600 and In the Estate of Fuld (No 3), quoted with approval in
Buswell v IR Commrs (1974) 2 All ER 520). The acquisition of a "domicile of choice" is complete as soon as the intention is formed:
Udny v Udny. The determination must be to settle in a particular country but not necessarily at a particular place:
Bell v Kennedy. A move to another country without intending the move to be permanent is of no effect (
Jopp v Wood (1865) 4 De GJ & S 616), while a mere intention to move permanently to another country without actually doing so is equally ineffective (
Munro v Munro (1940) 7 C1 & F 842): see AFITR at [29-085].

98. In determining this question it is important that "motive" should not be confused with "intention": see AFITR at [29-085]. A person's "motive" in choosing his or her place of residence may be important in arriving at a conclusion as to whether or not the person intended the stay to be permanent or indefinite but it is clearly distinguishable from "intention". "Motive" is defined in the Macquarie Dictionary 5^th Ed.(2009) as "1. something that prompts a person to act in a certain way or that determines volition, an incentive. 2. the goal or object of one's action." In contrast, "intent" is defined as "1. an intending or purposing, as to commit some act… 2. that which is intended, purpose; aim; design; intention…3. Law the state of someone's mind which directs their actions towards a specific object. 4. the end or object intended." Further, "intention" is defined as "1. the act of determining mentally upon some action or result; a purpose or design. 2. the end or object intended." In determining the "residence" of a person, once the necessary intention is established it is usually irrelevant to consider why that intention was formed. For example, a person may have left a country for political reasons or for health reasons. In which case the question which should be asked is whether the intention of the person is to make the new country his or her permanent home without returning to the former country if and when the person's health, or the old country's political situation, improves: see AFITR at [29-085].

Conclusion - Domicile

99. It is not in dispute that Mr Iyengar was born in India and that his "domicile of origin", for Australian income tax purposes, is India. The question for consideration is whether Mr Iyengar acquired a "domicile of choice" in Australia after moving here from India and, if so, whether he acquired a different "domicile of choice" upon his move to Dubai to work for Maersk pursuant to the Contract.

100. The Tribunal considers that by 2003, at the latest, Mr Iyengar had acquired a "domicile of choice" in Australia being different to his "domicile of origin", India. That is, Mr Iyengar and his family immigrated to Australia in 1998. By 2003, some four years later, Mr Iyengar and his family had all taken the step of becoming Australian citizens and Mr Iyengar and his wife had purchased a home in Australia (the Winthrop home), demonstrating a clear intention that Australia was his "domicile of choice":
Bell v Kennedy;
Udny v Udny;
Ross v Ross;
Terrassin v Terrassin and
Somerville v Lord Sommerville.

101. As regards whether Mr Iyengar abandoned his "domicile of choice" of Australia and acquired a different "domicile of choice", being the UAE, upon his move to Dubai to work for Maersk, the Tribunal is of the view that he did not. It clear from the evidence that Mr Iyengar's "intention" at the time he left Australia for Dubai was to stay there as long as it took to complete the Contract with Maersk and to return to Australia upon its completion, which he did. On the facts and evidence before the Tribunal, it cannot be concluded that Mr Iyengar abandoned Australia as a "domicile of choice" by moving to Dubai as it was not established in evidence that he 'intended' to move to Dubai permanently or indefinitely. As for the "motive" behind Mr Iyengar leaving Australia, his "domicile of choice", it is clear that he wanted to pay off the mortgage on the Winthrop home as expeditiously as possible.

Permanent Place of Abode Outside Australia

102. As stated above, under the first statutory test for determining whether a person is "resident in Australia", a person is so resident if he or she is domiciled in Australia unless the Commissioner is satisfied that his or her permanent place of abode is outside Australia.

103. Having found that Mr Iyengar had a "domicile of choice" in Australia in the relevant period the question becomes whether he had a "permanent place of abode outside Australia" in the period concerned.

104. A person's "permanent place of abode" is a question of fact to be determined in the light of all the circumstances of each case: Applegate.

105. The meaning of the word "abode" was referred to by Lord Campbell CJ in the English case,
R v Hammond (1852) 117 ER 1477, where his Lordship said (at 1480):

"A man's residence, where he lives with his family and sleeps at night, is always his place of abode in the full sense of that expression."

106. A more practical meaning of "place of abode" appears to have evolved in Australian case law, which recognises that the meaning of the phrase is coloured by its context and the focus of the definition upon those who properly should be subject to Australian income tax and those who should not. The leading Australian case on the question of a "permanent place of abode outside Australia", for the purposes of the first statutory test in section 6(1)(a)(i) of the ITAA 1936, is
Applegate 77 ATC 405 (Board of Review); 78 ATC 4054 (Supreme court); 79 ATC 4307 (Full Federal Court).

107. In Applegate, the taxpayer was a solicitor employed by a Sydney firm of solicitors. During the income year ended 30 June 1972 he was given the task of opening a branch office at Vila in the New Hebrides. He left Australia on 8 November 1971 and remained in Vila for the remainder of that year of income. Before his departure he gave up the tenancy of his flat in Sydney but during the period of absence maintained his membership of a hospital fund. When the taxpayer and his wife arrived in Vila they spent the first two weeks in a hotel and then moved into a rented house. The taxpayer and his wife had various holidays in Australia and his wife returned to Australia for the birth of their first child. The taxpayer left no assets in Australia apart from a life policy, which he maintained during his absence.

108. After the birth of their child, his wife applied for and received child endowment. In the middle of 1973 the taxpayer became ill and returned to Sydney for treatment. It was then decided by him and by his firm that the climate and environment of Vila, and the lack of medical facilities there, presented a danger to him and that he should return to Sydney to live. It was always intended by the taxpayer and by the firm that, after the lapse of an indefinite period of time at Vila, the taxpayer would return to Sydney office. The period was not specified nor defined in the minds of either the taxpayer or the firm but it was anticipated that it would be of substantial length. The taxpayer retained his Australian domicile of origin.

109. In his income tax return for the year ended 30 June 1972, the taxpayer claimed that the salary he earned in Vila was exempt from Australian tax, being income derived by a non-resident from sources wholly out of Australia. However, the Commissioner took the view that the taxpayer was not a "non-resident" as defined in section 6(1) of the ITAA 1936 since he was not satisfied that the taxpayer's "permanent place of abode" was outside Australia. The Board of Review upheld the Commissioner's Assessment: see
Case J42, 77 ATC 405.

110. The taxpayer in Applegate appealed to the Supreme Court from the Board's decision, where Sheppard J considered the meaning of the expression "permanent place of abode" and concluded that it might mean the house in which a person lived or the country, city or town in which he or she was for the time being to be found. Thus, a person might correctly be said to have a permanent place of abode in Vila, although during a given period he lived in a number of different establishments, occupying each for only a relatively short period. His Honour then said that he accepted the submission that "permanent" was used in the sense of something which was to be contrasted with that which was temporary or transitory and that it did not mean everlasting. After stating that the question was, therefore, one of fact and degree, his Honour said that, having regard to the whole of the evidence, he had reached the conclusion that the Commissioner and the Board ought to have been satisfied that, during the relevant period, the taxpayer had a "permanent place of abode" outside Australia.

111. The decision of Sheppard J in Applegate was affirmed by the Full Federal Court (79 ATC 4307). Franki J said that "permanent place of abode outside Australia" meant something less than a permanent place of abode outside Australia in which the taxpayer intended to live for the rest of his life. His Honour said that the question was one of degree and bearing in mind the association of the phrase "permanent place of abode" with the word "domicile" and the fact that the liability for tax falls to be determined annually, the judgment of Sheppard J was, in his opinion, correct.

112. Northrop J referred to
Henriksen v Grafton Hotel Ltd (1942) 2 KB 184 at 196, and rejected the contention for the Commissioner that the phrase "his permanent place of abode is outside Australia" should be construed as applying to a person who intended to live outside Australia indefinitely without any definite intention of ever returning to Australia in the foreseeable future except at some remote, albeit specific, point of time. His Honour said (
79 ATC 4307 at 4314) that the word "permanent" as used in para (a)(ii) of the extended definition of "resident" must be construed in the context of the particular year of income under consideration:

"If in that year a taxpayer does not reside in Australia in the sense in which that word has been interpreted, but has formed the intention to, and in fact has, resided outside Australia, then truly it can be said that his permanent place of abode is outside Australia during that year of income."

113. The facts of the case clearly established, his Honour concluded, that at the beginning of the relevant year of income the taxpayer had the requisite intention to abandon his place of residence in Australia and to establish a place of residence outside Australia - his "permanent place of abode" was, therefore, outside Australia.

114. Fisher J, said that the word "permanent" could not bear its primary meaning of "everlasting", that it took its colour from its context and had many shades of meaning. His Honour considered it significant that the word "permanent" was used to qualify the expression "place of abode"; it did not necessarily direct attention to the taxpayer's state of mind. A taxpayer's intentions, with respect to the duration of his or her residence was just one of the relevant factors, his Honour said. Attention must also be directed to the nature and quality of the use which the taxpayer makes of the place of abode to determine whether it has the characteristics of a fixed place of abode or of a home. His Honour said (
79 ATC 4307 at 4317):

"It is to my mind perfectly consistent with the establishing of a home in a particular place that the taxpayer is aware that the duration of his enjoyment of a home, although indefinite in length, will be only for a limited period."

115. Fisher J then went on to conclude that a taxpayer's "permanent place of abode" is his or her "fixed and habitual place of abode". His Honour continued (at 4317):

"It is his home, but not his permanent home. It connotes a more enduring relationship with the particular place of abode than that of a person who is ordinarily resident there or who has there in usual place of abode. Material factors for consideration will be the continuity or otherwise of the taxpayer's presence, the duration of his presence and the durability of his association with the particular place."

116. Other decisions which have considered "permanent place of abode" post-Applegate are outlined below. However, it is important to bear in mind that each case is simply a decision on its own facts.

117. In
Federal Commissioner of Taxation v Jenkins 82 ATC 4098, the taxpayer (a bank officer) was transferred to the New Hebrides for three years. He returned to Australia after only 18 months because of ill health. The taxpayer had tried to sell his family home before going overseas but was unable to find a buyer. In the end, the bank agreed to lease the house on a 12-month basis with options to renew. Furniture was stored at the bank's expense. The taxpayer retained a bank account in Australia to deal with rent receipts and expenses in respect of the house. Sheahan J held in Jenkins that the taxpayer had a "permanent place of abode" outside Australia during the period he was overseas. He agreed to go there for three years and had not given any consideration to prolonging his stay beyond that time. However, this fact did not make his stay "temporary" in the sense in which that word is used in contradistinction to "permanent". His Honour considered that if a stay of 10 years could not sensibly be regarded as "temporary", neither should a stay of three years be so regarded. His Honour was not prepared to accept that a stay out of Australia for a fixed period should be regarded as temporary simply because the limits of the stay were fixed and ascertainable.

118. A contrary decision was reached in Case Q68, which involved another bank officer posted to the New Hebrides. The taxpayer was transferred for two years only and never intended to stay longer. During his overseas posting, he maintained bank accounts in Australia and let his Australian home unfurnished. His furniture remained in storage in Australia. The Board could find no evidence that the taxpayer ever intended to abandon Australia as his place of residence or to reside indefinitely outside Australia.

119. Similarly, in Case 11/94, an officer with the Australian Customs Service served in the Solomon Islands from September 1987 to December 1990. During that period he was paid a salary by the Solomon Islands Government (which was exempt under section 23AG of the ITAA 1936) as well as a salary supplement by the Australian Government on which he was assessed by the Commissioner. The Tribunal held that the taxpayer was an Australian resident. His "permanent place of abode" was in Australia, even though he resided in the Solomon Islands for some three and a half years because: (1) he was to remain overseas for a fixed and definite period; (2) he maintained a residential home in Australia; and (3) he had sought leave without pay from the Australian Public Service so he could return to Australia if the Solomon Islands employment was unsuccessful.

120. As discussed above, in Shand the taxpayer, who was born in Canada but relocated to Australia with his family in 1972, returned with his wife to Canada for approximately two years in 1991 and in 1992 for business purposes. Thereafter, the taxpayer spent a considerable amount of time travelling abroad on business (i.e. 257 days during 1994/95 and 193 days in 1995/96), most of which time was spent in Kuwait. He claimed that during the relevant years he did not reside in Australia, his apartment in Kuwait was his permanent place of abode, and he visited his wife in Australia from time to time. The Tribunal found that the taxpayer had not abandoned his residence, domicile of choice and place of abode in Australia. He had no intention of making his home "indefinitely" in Kuwait, where his wife found it impossible to live as she could not venture outside the apartment on her own and was not permitted to drive a car. His apartment there was not a "permanent place of abode" but rather a "temporary" or "transitory" place of abode, used solely for business trips.

121. In Wessling, the taxpayer moved to Suva, Fiji with her husband and three children after he was appointed principal of the International School in Suva for a period of three years. While overseas her previous employer paid her $1,670 as accrued annual leave. In order to take advantage of the tax-free threshold applicable to Australian residents, the taxpayer argued that she intended to return to Australia and resume life here at the end of her husband's contract. Applying Applegate, the Tribunal stated that the real question was whether, as a matter of fact, the taxpayer's "permanent place of abode" was outside Australia at the relevant time. Although intending to return to Australia in due course, the taxpayer did not intend doing that during the year of income and thus her "permanent place of abode" was Fiji.

122. In Joachim, the taxpayer was a fully qualified master mariner who migrated with his family from Sri Lanka to Australia in 1994. He was unable to obtain employment on an Australian vessel and sought employment through a Sri Lankan maritime manning agency. During the relevant year he spent some 316 days outside Australia aboard Sri Lankan registered vessels, maintaining a home for his wife and children in Australia to which he returned between contracts of employment. The Tribunal rejected the taxpayer's claim that his "permanent place of abode" was not within Australia, finding that he was a "resident of Australia" under the ordinary principles of law as there was an intention to return and to continue to treat the place that he was absent from as 'home'.

123. In
Case R92, 84 ATC 615, the taxpayer engineer was sent by his Australian employer to the Philippines for a minimum period of three years. He decided to relocate his family there, although it was always his intention to return to Australia at the completion of the project. He retained his Australian home and rented it out. On arriving in the Philippines, the taxpayer and his family initially resided for short periods at a hotel and in an apartment. Later, he sub-leased a house, which the family occupied until the assignment was terminated after only two years and the taxpayer and his family returned to Australia. The Board held that, having regard to the nature and quality of his use of the place of abode in the Philippines, the taxpayer had established a "permanent place of abode" outside Australia.

124. The taxpayer in
Case Q33, 83 ATC 139 was employed as a marine engineer on a dredge carrying out work in Saudi Arabia. He left his son and estranged wife in Australia. During his nine months' absence the couple reconciled and decided that they would reside together and enter into a business partnership. While in Saudi Arabia the taxpayer lived in single men's quarters and it was always his intention to return to Australia at the end of nine months. The Board found that because the taxpayer had not intended to abandon Australia as his place of residence or to reside indefinitely outside Australia, he had not acquired a "permanent place of abode" outside Australia and remained a resident of Australia. Jenkins' case was distinguishable, the Board said because, in that case, Sheahan J was unable to discern from the evidence whether the taxpayer knew that the duration of his overseas stay was going to be curtailed.

Conclusion - Permanent Place of Abode

125. The Tribunal considers that the following facts and evidence show that Mr Iyengar did not establish a "permanent place of abode" outside Australia in the income years ended 30 June 2008 and 30 June 2009 such that he was a "resident" under the domicile test in section 6(1)(a)(i) of the ITAA 1936 (and it follows an "Australian resident" under section 995-1 of the ITAA 1997):

• • The Contract Mr Iyengar entered into with Maersk described his employment as "temporary employment" and was for a fixed 2 year period with an option for it to be extended by Maersk for up to 1 year;
• • Mr Iyengar was employed specifically as a "Site Engineering Manager" for a specific project, being "Package 13". The Contract was finite and his work for Maersk was limited to "Package 13" which, it was said, was one package out of the 17 packages involved in the overall project;
• • Mr Iyengar returned to Australia in December 2009, his wife and children and the Winthrop (family) home immediately following completion of the Contract and his, specifically, his work on Package 13;
• • Mr Iyengar owned the Winthrop home which he considered to be the "family home". The Winthrop home was the subject of a mortgage with the ANZ bank, for which he was jointly liable with his wife, and which he continued to pay whilst overseas;
• • Mr Iyengar maintained a bank account in Australia which his wife had access to;
• • Mr Iyengar was paid by Maersk under the Contract in Australian dollars (at his own request);
• • Mr Iyengar transferred almost all of the money he earned under the Contract with Maersk back to his Australian account to "liquidate the mortgage" on the Winthrop home as quickly as possible;
• • Mr Iyengar's wife and children remained in Australia (other than three short visits by his wife to Dubai);
• • Mr Iyengar and his wife were at all material times, and are presently, happily married;
• • Mr Iyengar visited and holidayed with his family (albeit briefly), staying at the Winthrop home, during the period he spent working for Maersk pursuant to the Contract;
• • Mr Iyengar left substantial jointly owned items of personal property in Australia at the Winthrop home when he went to Dubai, including two cars, household items and furnishings;
• • The hotel Mr Iyengar stayed in upon his arrival in Dubai, the Dubai Villa and the serviced apartment he stayed in whilst awaiting his move from Dubai to Doha were all 'temporary' or 'transitory' in nature and were not 'permanent'. They were all paid for by Maersk. In relation to the Dubai Villa in particular, it was leased by Maersk, the expenses of running it (e.g. electricity, gas, heating, air-conditioning etc.) were covered by Maersk, as was the cost of the furniture acquired by Mr Iyengar for the Dubai Villa; and
• • There was nothing to show that Mr Iyengar had any enduring relationship with or ties to Dubai as evidenced, for example, by the lease or purchase of a property on his own account, the purchase of his own car etc.: Joachim, Shand, Case Q68, Case 11/94 and Mynott.

Was the Commissioner authorised by Section 170(1) of ITAA 36 to issue Mr Iyengar with an amended assessment for the income year ended 30 June 2008 On 22 November 2010?

126. The Commissioner's powers to amend an assessment, or further amend an amended assessment, are set out in section 170 of the ITAA 1936. Item 1 of the Table in section 170(1) of the ITAA 1936 provides that:

"The Commissioner may amend an assessment of an individual for a year of income within 2 years after the day on which the Commissioner gives notice of the assessment to the individual ." [Emphasis added]

127. The Notice of Assessment for the year of income ended 30 June 2008 was issued to Mr Iyengar (an "individual") on 4 November 2008 and the Notice of Amended Assessment was issued to him on 22 November 2010. Consequently, on the face of it, the Commissioner was not authorised to issue Mr Iyengar with a Notice of Amended Assessment, in respect of the income year ended 30 June 2008, on 22 November 2010.

128. However, item 1 of the table in section 170(1) of the ITAA 1936 is qualified as follows:

"Item 1 does not apply:

……………….

(f) in any other circumstances prescribed by the regulations."

129. Regulation 20 of the Income Tax Regulations 1936 ( Regulations ) which provides:

"If a circumstance in an item of the table exists, the Commissioner of Taxation may amend an assessment of the taxpayer within 4 years after the day on which the day on which the Commissioner gives notice of the assessment to the taxpayer, unless a longer amendment period applies to the taxpayer."

130. Specifically, item 5 of the table in Regulation 20 of the Regulations states:

"Both of the following exist in the year of income mentioned in the item:

• (a) the taxpayer has not identified income (ordinary or statutory) from one or more foreign transactions for the purposes of, or in the course of, an assessment;
• (b) the income has not been received from a resident investment vehicle within the meaning of the Income Tax Assessment Act 1997."

131. In relation to Item 5 of the table in Regulation 20 of the Regulations, Explanatory Statement 166 of 2006 states:

"Omitted income from foreign transactions

Item 5 excludes from the two year period of review individuals and small businesses who omit, from a return or other documents provided in the course of an assessment, ordinary or statutory income from foreign transactions.

The exclusion does not affect individuals and small businesses that correctly include income from foreign transactions in their income tax returns…….

The term 'foreign transaction' takes its common meaning. A taxpayer involved in a transaction which predominantly occurs outside of Australia is caught by this exclusion where the income has not been received through a resident investment vehicle and is not reported for tax purposes."

132. Item 5 of the table in Regulation 20 of the Regulations must be reconciled with sections 6-5 and 6-10 of the ITAA 1997 which sections provide that:

• (i) the assessable income of an Australian resident must include ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year (section 6-5(2)) and statutory income from all sources, whether in or out of Australia (section 6-10(4)); and
• (ii) the assessable income of a foreign resident must include ordinary income derived directly or indirectly from all Australian sources during the income year (section 6-5(3)) and statutory income from Australian sources (section 6-10(5)).

133. Logically, item 5 of the table in Regulation 20 of the Regulations should be read subject to sections 6-5 and 6-10 of the ITAA 1997. That is, if an Australian resident (who is required to include as assessable income in his income tax return for a particular income tax year the worldwide ordinary and statutory income derived by him or her in that year) fails to identify ordinary or statutory income from one or more "foreign transactions" in preparing his or her tax return (i.e. "for the purposes of, or in the course of, an assessment") by, for example, failing to disclose an amount of foreign source income derived by him or her in that year, then the Commissioner would be entitled to amend that taxpayer's assessment within 4 years after the day on which he issued the original assessment to that taxpayer pursuant to item 5 of the table in Regulation 20. In contrast, if a foreign resident taxpayer (who is required to include as assessable income in his income tax return for a particular income tax year only ordinary and statutory income with an Australian "source" which is derived by him or her in that year) fails to identify ordinary or statutory income from one or more "foreign transactions" in preparing his or her tax return (i.e. "for the purposes of, or in the course of, an assessment") by, for example, failing to disclose an amount of foreign source income derived by him or her in that year, then a four year review period would not apply to that foreign resident under item 5 of the table in Regulation 20.

134. In other words, whether the Commissioner has the power, pursuant to item 5 of the table in Regulation 20, to extend the standard two period to amend the assessment of an individual to a four year period as a consequence of a taxpayer's omission of ordinary or statutory from one or more foreign transactions "for the purposes of, or in the course of, an assessment" depends upon whether that individual is an Australian "resident" for Australian income tax purposes.

135. For the reasons provided above, the Tribunal considers that Mr Iyengar was a "resident of Australia" as defined in section 6(1)(a) of the ITAA 1936 (and thus an "Australian resident" as defined in section 995-1 of the ITAA 1997) in the income years ended 30 June 2008 and 30 June 2009, respectively. Consequently, the Commissioner may extend the period in which to issue Mr Iyengar with a notice of amended assessment from two to four years such that the notice of amended assessment he issued to Mr Iyengar on 22 November 2010, in respect of the year ended 30 June 2008, was authorised under section 170(1) of the ITAA 1936 and Regulation 20 of the Regulations.

Decision

136. For the above reasons, the Tribunal affirms the decision under review, being the Commissioner's objection decision dated 21 February 2011.