MacKinnon v FC of T
Members:L Hespe SM
Tribunal:
Administrative Appeals Tribunal, Sydney
MEDIA NEUTRAL CITATION:
[2020] AATA 1647
L Hespe (Senior Member)
1. This is an application for review of the decision of the Respondent disallowing the Applicant's objection to an assessment for the year ended 30 June 2017 dated 7 March 2018.
2. The Applicant is a citizen of the United Kingdom who was present in Australia from 17 February 2016 to 13 February 2017 (except for the period 3 November 2016 to 13 November 2016). Following her departure from Australia, the Applicant returned to Scotland and has since remained in the UK. In 2019, the Applicant was living in England, having obtained a job in London.
3. During her time in Australia, the Applicant derived income from employment.
4. The Respondent has assessed the Applicant to income tax for the period 1 July 2016 to 30 June 2017 on the basis that the Applicant was not a resident of Australia and accordingly, was not entitled to the tax-free threshold. The Applicant contends that she was an Australian resident for income tax purposes for the period 1 July 2016 until her departure on 13 February 2017. The Applicant contends that in determining the amount of tax she is required to pay on income she derived whilst in Australia for the period 1 July 2016 to 17 February 2017, she is entitled to part of the tax-free threshold for income derived prior to 1 January 2017. The question for the Tribunal is whether in the year of income ended 30 June 2017, the Applicant was a resident of Australia for income tax purposes.
5. The evidence before the Tribunal consisted of witness statements from the Applicant, her father (Mr MacKinnon), a cousin of the Applicant and a close friend of the Applicant. Oral evidence was also given by the Applicant and her father, in addition to documentary evidence.
6. Following the hearing during which the Applicant and Mr MacKinnon were cross-examined, the parties were invited to file closing written submissions following the decision of the Full Court of the Federal Court of Australia in Harding.[1]
7. Based on her oral testimony, it was apparent that the Applicant's recollection of events as recorded in her witness statements was incomplete and inaccurate. It was apparent that her recollection was, at best, patchy and in preparing her witness statement, she had not reviewed the contemporaneous
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documents. Where there is inconsistency between her oral and written statements and contemporaneous documents, the Tribunal relies on the contemporaneous documents.8. In her witness statement, the Applicant made statements about her intention and her state of mind. For example, the Applicant stated that upon moving back to Sydney she "now regarded Sydney as her home and the place I wanted to live until the end of my second working holiday visa and beyond that time". Her friend's witness statement similarly contained statements purportedly made by the Applicant about her desire to live in Australia and her plans to return following her departure.
9. The Tribunal is mindful of the warnings given by the Courts concerning statements of intention. As Derrington J warned in Harding[4]
The facts and circumstances surrounding a taxpayer's mode of living are objective indicators of the intention accompanying their presence.a person's present belief about what their intention may have been in the past will necessarily be affected by their sub-conscious and the context in which they called upon to identify that past intention… Even evidence of a person's contemporaneous statement as to their intention at a particular time in the past needs to be approached with a degree of care. Whilst that is likely to be more accurate than their present assertion of what their previous intention was, the value of the contemporaneous evidence will be affected by the circumstances of the statement and reasons for the making of the statement.
10. By his honest admission, Mr MacKinnon's recollection of events was also patchy, though he was firmer in his recollection of the content of certain discussions he had with his daughter because in his mind they were "life-changing conversations, potentially". His evidence was that he did not expect his daughter to return to Scotland for two years and possibly longer.
FACTS
11. From her birth in 1991 to 2016, the Applicant lived in Scotland. Her parents, grandmother and one of her sisters have at all relevant times lived in the UK. Her other sister lives in the Cayman Islands.
12. Up until 2009, the Applicant lived with her parents in Edinburgh and from 2009 to 2016 lived independently in Glasgow:
- (a) Between September 2009 to October 2010, the Applicant lived in university housing with five other girls, all of whom were students at university in Glasgow;
- (b) from October 2010 to October 2011, the Applicant lived in a house with four of the girls with whom she had lived in university housing;
- (c) from October 2011 to October 2013, the Applicant lived in an apartment with three friends;
- (d) following completion of her university studies in October 2013, the Applicant was engaged in full time employment in Glasgow. Between October 2013 to October 2014 she lived in an apartment in Glasgow with three friends; and
- (e) from October 2014 to February 2016, the Applicant lived in a house in Glasgow with two of her cousins.
13. The Applicant never owned any furniture or a vehicle. The accommodation she had lived in had been furnished by others. She did not maintain a bedroom at her parents' home during her time in Glasgow.
14. From 2011 to 2013, whilst studying at university, the Applicant worked as member of the bar staff at a bar and restaurant called Sloans in Glasgow.
15. Following her completion of her Bachelor of Arts in Entertainment and Events Management at Glasgow Caledonian University in late 2013, the Applicant worked full time as an events manager at Sloans until August 2015. Her career goal was to work in events management and fundraising for a charity.
16. In August 2015, the Applicant began working for a mentoring and networking business as an events and community executive in Glasgow. From the time she left university, the Applicant expressed an interest in travelling to Australia. She disliked the Scottish weather and Australia with its warmer climate appealed to her. The Applicant's great aunt and
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some cousins lived in Australia. Her great aunt lived in Adelaide.17. On 2 October 2015, the Applicant obtained from the Australian Government a visa known as a Working Holiday (Temporary) (class TZ) (subclass 417) visa (working holiday visa) which permitted her to remain in Australia for a period of up to 12 months from the date of her first arrival in Australia.
18. On her application for her visa, the Applicant was required to make a number of declarations which included that:
- (a) the Applicant was aware of the conditions that will apply to her visa and that she was required to abide by them;
- (b) the Applicant understood that the visa she applied for did not permit her to be employed in Australia with one employer for more than six months; and
- (c) any employment was incidental to the Applicant's holiday in Australia and the purpose of working was to supplement her holiday funds.
19. When coming to Australia the Applicant was aware that she would need to work in order to be able to afford to fund her living expenses. Aside from a bank account with the Royal Bank of Scotland, the Applicant had no income producing assets. She was intending to self-fund her time in Australia by engaging in employment.
20. The Applicant briefly stayed at her parents' house for a few weeks before travelling to Australia on or about 17 February 2016. At the time of travelling to Australia the Applicant was not in a relationship and she did not have any children.
21. The Applicant was physically present in Australia from 17 February 2016 until 13 February 2017, except for a period of less than two weeks (between 4 November 2016 and 13 November 2016) when the Applicant was on holiday in Indonesia.
22. Whilst in Australia, the Applicant's parents received her mail in the UK. The Applicant arrived in Australia with most of her clothes, leaving a small numbers possessions which she did not require and did not particularly value (such as a blender and a grill) behind with her cousins in Glasgow and some small amounts of clothing with her parents.
23. On her arrival card, the Applicant represented that she was a visitor or temporary entrant, that she intended to stay in Australia for one year and that her reason for coming to Australia was to holiday. That was consistent with the terms of the visa with which she had been issued. The Applicant was aware at the time that it was possible for her to extend her visa, subject to her satisfying certain requirements (such as undertaking farming work), and at the time of her arrival, the Tribunal accepts that she proposed to apply for an extension to her visa for another year if she enjoyed her time in Australia.
24. In her oral testimony, the Applicant stated (and the Tribunal accepts) that upon her arrival in Australia:
I would have liked to have stayed longer than a year, but I didn't know if I would have gone home in between visas, if I would even get a second visa, which is why I put one year on the incoming card.
25. Between February 2016 and May 2016, the Applicant stayed largely in the Sydney area:
- (a) She stayed on the couch in her cousin's place in Manly Vale for one night following her arrival in Australia. Her cousin moved out with the Applicant the following day;
- (b) She then moved to a hostel in Kings Cross from February 2016 to April 2016 where she shared a room with her cousin, with a shared bathroom;
- (c) She moved to another hostel in Sydney, where she stayed between April 2016 to May 2016.
26. The Applicant's evidence was that the reason she lived mainly in hostels during her first months in Sydney was that she expected she would soon be moving to Queensland and did not think it was worth organising more permanent accommodation. She also stayed in hostels so that she could meet new people.
27. Shortly after arriving in Australia, the Applicant opened a bank account with the Commonwealth Bank of Australia (CBA) into which she deposited the equivalent of £5,000 transferred from her Royal Bank of Scotland account. All the income she derived in Australia
ATC 8803
was paid into her CBA account. Her address as it appeared on her CBA bank statements for the period 1 July 2016 to 30 December 2016 was the Manly Vale address, even though the evidence is that the Applicant only stayed at that address for one night upon her arrival in February 2016.28. Whilst in Australia and in the UK, the Applicant on several occasions received funds (a few hundred pounds at a time) from her parents when they felt she had a need for it. The funds were deposited into her bank account with the Royal Bank of Scotland and the Applicant would generally transfer the funds to her Australian bank account. Over the period June 2016 until 12 February 2017, the following funds were transferred:
- (a) £150 on 3 August 2016, deposited by her parents into her UK bank account and transferred to the Applicant's Australian bank account on 8 August 2016;
- (b) £100 on 21 November 2016 deposited by her parents into the Applicant's UK bank account;
- (c) £200 on 2 December 2016 was transferred by the Applicant from her UK bank account to her Australian bank account;
- (d) £100 on 9 December 2016 deposited by her parents into the Applicant's UK bank account;
- (e) £400 on 28 December 2016 deposited by her parents into her UK bank account; and
- (f) £525 on 30 December 2016 was transferred by the Applicant from her UK bank account to her Australian bank account.
29. During her time in Australia, the Applicant worked three different jobs. The first was working from 7:30am to 4:00pm Monday to Friday for less than two months as a waitress in a café at a law firm in Sydney's CBD, where she had been placed by an employment agency, finishing in that role on March 2016.
30. In March 2016 the Applicant commenced working at the Watsons Bay Boutique Hotel as a Pass Staff, largely serving food and beverages to the customers of the hotel. Her shifts would vary based on the needs of the hotel. The Applicant worked between 30 and 50 hours each week.
31. During her initial months in Australia, the Applicant enjoyed her time here and the possibility of remaining in Australia appealed to her.
32. In April 2016, a conversation with her supervisor at the hotel caused the Applicant to think that if she wished to pursue a career in Australia there would be merit in finding an Australian business to sponsor her and then making an application for a different kind of visa.
33. In May 2016, the Applicant moved to rural Queensland to complete a period of rural employment, which was a precondition to obtaining an extension of her working holiday visa for a second year. She took employment at a banana farm as a banana sorter, working in shifts between 7:30am and 4:00pm Monday to Thursday.
34. The Applicant remained in Queensland until September 2016. Whilst in Queensland the Applicant largely stayed in a hostel in Mighell.
35. At the start of the financial year commencing 1 July 2016 the Applicant was working on the banana farm in Queensland.
36. Before returning to Sydney in September 2016 the Applicant spent a night in a hostel in Cairns.
37. In September 2016 the Applicant returned to Sydney and resumed working at the Watsons Bay Boutique Hotel, in the position of Pass Master Staff, managing the distribution of food orders to customers, opening and closing the hotel, managing the communication of orders to kitchen staff and staff rostering.
38. Upon her return to Sydney on 26 September 2016 until her trip to Indonesia on 3 November 2016, the Applicant stayed in a backpacker's hostel at Potts Point.
39. The Applicant travelled from Australia to Indonesia in early November 2016 for about ten days. On her departure card she marked the box that stated she was "an Australian resident departing temporarily". On returning to Australia, she declared on her incoming passenger card that she was a resident returning to Australia but that she did not intend to live in Australia for the next 12 months.
40.
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By November 2016, the Applicant had intended to return to Scotland for at least a brief period at some time in 2017 for a good friend's wedding. By mid-November 2017, the Applicant was giving thought to leaving Australia. In addition to the upcoming wedding of her good friend, her sister had decided to get a divorce and her grandmother's health was deteriorating.41. Upon her return from Indonesia in mid-November 2016 to mid-January 2017, the Applicant stayed in a house in Bondi with friends she had met in Queensland, where she shared a bedroom with one other person. When staying in the house, the Applicant paid rent on a weekly basis. When she was travelling, the Applicant did not pay rent in respect of the Bondi house. Her bank statements for her CBA account for the period 31 December 2016 to 30 June 2017 were addressed to the house in Bondi.
42. At some point in December 2016, the Applicant decided against applying for an extension to her working holiday visa and to return to the UK.
43. Realising her time in Australia was coming to an end, the Applicant decided to travel around the country.
44. On or around 18 December 2016, the Applicant travelled from Sydney to Melbourne for a couple of nights, returning to Sydney.
45. On or about 5 January 2017, the Applicant travelled to Adelaide from Sydney for a few days, visiting her relatives.
46. The Applicant ceased work with the Watsons Bay Boutique hotel on or about 18 January 2017.
47. Between about 15 January 2017 to 13 February 2017, the Applicant travelled from Sydney with a couple of friends to Byron Bay and from Byron Bay up to Queensland - to Surfers Paradise, Beerwah, Noosa Heads, Rainbow Beach, Airlie Beach, Magnetic Island and Cairns, staying in hostels.
48. She departed Australia on 13 February 2017 from Brisbane. On her departure card she marked the box that stated she was a "visitor or temporary entrant departing" and that her country of residence was Britain.
49. Following her departure from Australia, the Applicant has maintained her CBA account with a nominal balance of about $28.00 in the hope that she might return to Australia. During her time in Australia, the Applicant was paid superannuation. Her superannuation account remained open following her departure from Australia.
50. Upon her return to the UK, the Applicant travelled to Cambridge for a few days before travelling to Edinburgh to stay with her parents. Financial circumstances required her to stay with her parents for longer than she preferred. She commenced a relationship with a man in Cambridge whom she befriended whilst working at the banana farm in Australia.
51. In August 2017, the Applicant began working in a shop in Edinburgh for Save the Children.
52. At the time of hearing, the Applicant was living and working in London for Save the Children.
53. In 2017 the Applicant considered that it was possible that she and her boyfriend would return to Australia late in 2017 or perhaps early in 2018. Her understanding had always been that her boyfriend wanted to live in Melbourne. At some point after January 2018, the Applicant made an inquiry of her supervisor if it were possible for her to work for the organisation in Melbourne.
54. The Applicant and her boyfriend never did return to Australia because "it did not seem like the right time". Her financial resources remained stretched and her boyfriend wanted to complete his qualifications as a financial advisor.
55. In 2019, the Applicant continued to hope to return to Australia but had made no application for an Australian visa.
ISSUE
56. The issue before the Tribunal is whether the Applicant was a resident of Australia for the purposes of the Income Tax Assessment Acts 1936 and 1997 (Cth) for the period 1 July 2016 to 13 February 2017.
57. The Applicant has conceded before the Tribunal that based on the decisions of the Federal Court of Australia in Stockton[5]
LEGISLATION
58. The rates of income tax were provided for in the Income Tax Rates Act 1986 (Cth) (ITRA86). The rates of tax were set out in Schedule 7, except as otherwise provided in Division 3.
59. Relevantly, in the year ended 30 June 2017, clause 1 of Part 1 of Schedule 7 of the ITRA86 provided:
Subject to clauses 2, 3 and 4, the rates of tax on the taxable income of a resident taxpayer are as follows:
- ….
- (b) for each part of the ordinary taxable income specified in the table, the rate applicable under the table:
Tax rates for resident taxpayers Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 exceeds the tax-free threshold but does not exceed $37,000 19% 2 exceeds $37,000 but does not exceed $87,000 32.5% 3 exceeds $87,000 but does not exceed $180,000 37% 4 exceeds $180,000 45%
60. Clause 4 of Part 1 of Schedule 7 of the ITRA86 applied to assessable income derived on or after 1 January 2017. It provided:
4. If the resident taxpayer is a working holiday maker at any time during the year of income:
- (a) count the taxpayer's working holiday taxable income for the year of income as the first parts (starting from $0) of the taxpayer's ordinary taxable income for the purposes of the table in clause 1 that is applicable to the year of income; and
- (b) do not apply the rates in that table to that working holiday taxable income; and
- (c) do not count that working holiday taxable income when working out the taxpayer's taxable income for the purposes of clause 2 or 3.
Note: The rates for the taxpayer's working holiday taxable income for the year of income are set out in Part III.
61. Working holiday maker was defined in section 3A(1)(a) of the ITRA86 as an individual who holds at that time a Subclass 417 (Working Holiday) Visa. Working holiday taxable income was defined in s 3A(2) and (3). It was generally an individual's assessable income for the year derived from sources in Australia whilst the individual was a working holiday maker less deductions relating to that assessable income.
62. The rates for non-resident taxpayers were provided for in Part II of Schedule 7 of the ITRA86. Clause 1(b) provided:
Subject to clauses 2, 3 and 4, the rates of tax on the taxable income of a non-resident taxpayer are as follows:
- ….
- (b) for each part of the ordinary taxable income specified in the table, the rate applicable under the table:
Tax rates for non-resident taxpayers Item For the part of the ordinary taxable income of the taxpayer that: The rate is: 1 does not exceed $87,000 The second resident personal tax rate 2 exceeds $87,000 but does not exceed $180,000 37% 3 exceeds $180,000 45%
63. Clause 4 of Part II of Schedule 7 applied to assessable income derived on or after 1 January 2017. It provided:
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4. If the non-resident taxpayer is a working holiday maker at any time during the year of income:
- (a) count the taxpayer's working holiday taxable income for the year of income as the first parts (starting from $0) of the taxpayer's ordinary taxable income for the purposes of the table in clause 1 applicable to the year of income; and
- (b) do not apply the rates in that table to that working holiday taxable income; and
- (c) do not count that working holiday taxable income when working out the taxpayer's taxable income for the purposes of clause 2 or 3.
Note: The rates for the taxpayer's working holiday taxable income for the year of income are set out in Part III.
64. From 1 January 2017, the rates of tax on a taxpayer's working holiday taxable income were set out in Part III of Schedule 7 in the following table:
| Tax rates for working holiday makers | ||
| Item | For the part of the taxpayer's working holiday taxable income that: | The rate is: |
| 1 | does not exceed $37,000 | 15% |
| 2 | exceeds $37,000 but does not exceed $87,000 | 32.5% |
| 3 | exceeds $87,000 but does not exceed $180,000 | 37% |
| 4 | exceeds $180,000 | 45% |
65. The Applicant was a working holiday maker during the year of income and from 1 January 2017, the rates of tax provided for in respect of working holiday taxable income were the same for residents and non-residents. However, for income derived prior to 1 January 2017, there is an issue as to whether the Applicant is entitled to the rates of tax applicable to a resident taxpayer and in particular, to the benefit of any part of the tax free threshold.[7]
66. For the purposes of the ITRA86 (which incorporates and is to be read as one with the Income Tax Assessment Act 1936 (Cth) (1936 Act)), the definition of "resident" or "resident of Australia" is found in s 6(1) of 1936 Act. Relevantly:
resident or resident of Australia means:
- (a) a person, other than a company, who resides in Australia and includes a person:
- …..
- (ii) who has actually been in Australia, continuously or intermittently, during more than one half of the year of income, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and that the person does not intend to take up residence in Australia; ...
67. The Applicant contended that she was a resident of Australia as defined in s 6(1) of the 1936 Act because:
- (a) she was a person who resides in Australia, within the ordinary meaning of that term; or
- (b) she was actually in Australia, continuously or intermittently, during more than one half of the year of income, and the exclusion in 6(1)(a)(ii) of the 1936 Act did not apply because the Commissioner should be satisfied that her usual place of abode was not outside Australia and that she intended to take up residence in Australia.
Resident within the ordinary meaning
68. Prior to her arrival in Australia, the Applicant was a resident of the UK. She did not cease to be a resident of the UK merely because she ceased to be physically present there. Indeed, the Applicant conceded that it was not a necessary part of her case that she ceased to be a resident of the UK. In the Applicant's submission, it was possible for a person to be a resident of more than one place. So much may be accepted.[8]
69. The approach to the determination of whether a person is a resident within the ordinary meaning of that term for the purposes of s 6(1) of the 1936 Act was summarised by Derrington J in Harding[9]
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physical presence at a particular place as well as intention are relevant in determining whether and where an individual is a 'resident'.70. In examining the nature, duration and quality of her physical presence in Australia for the period 1 July 2016 to 13 February 2017, in the Applicant's favour are the fact that she was physically present in Australia, she worked primarily in Sydney and stayed in accommodation in Sydney. She also socialised and made friends.
71. The description as to her status, as recorded by her on her passenger cards is relevant but not determinative as to whether she was an Australian resident. In this case, the descriptions are not entirely consistent and largely reflect the Applicant's belief that her answers on the cards were required to be consistent with the terms of her visa, rather than being expressions of her subjective intentions.
72. The Tribunal is mindful of the warning given by Logan J in Stockton that it does not axiomatically follow that a person's entry into Australia pursuant to a visa limited as to duration of stay, means that they cannot be regarded as a "resident" of Australia in terms of the ordinary meaning of that term in s 6(1) of the 1936 Act.[13]
73. The Tribunal is also mindful of the warning issued by the Federal Court of Australia in Addy and Stockton of the danger of rehearsing numerous examples of outcomes on particular facts and contrasting them with the present circumstances of the present case. The danger identified is the elevation into a matter of principle a fact which in the overall context of one case proved decisive whereas that same fact in a different context may be neutral or suggest a different conclusion.[14]
74. Based on the totality of the circumstances, the Tribunal has concluded that the quality of the Applicant's presence in Australia was not such as to render her a resident of Australia, having regard to the overall mode of her living in Australia and the facts and circumstances accompanying that mode of living.
75. The Applicant arrived in Australia with limited financial resources and with her closest family and friends behind in Scotland, in the knowledge that her visa did not allow her to remain here for more than 12 months, absent her receiving an extension for another year or applying for a different type of visa. Although she undertook the rural work necessary to enable her to apply for an extension to her visa, she never made an application. Whilst she had relatives in Australia, apart from the cousin with whom she moved to a hostel in her initial days in Australia, her relatives were based primarily in Adelaide and she saw them once. Although the Applicant said in her witness statement that during her time in Australia, her friends in Australia included Tanith Williamson, who is probably her closest friend, Ms Williamson's evidence was that she travelled to Australia on 24 December 2016, by which time the Applicant had decided not to renew her visa and to return to the UK.
76. A determination of residence requires an examination of not just where a person is physically present but also their mode of living in the context of that individual's life and circumstances. The Applicant's time in Australia was not marked by connecting factors beyond her physical presence in the country. The Applicant worked in Australia
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and formed friendships in Australia but did not make a home in Australia. Her employment was of a transient nature. Consistent with the terms of her visa, she was permitted and did work for a single employer for no more than six months. There is no evidence that whilst in Australia she sought to develop her chosen career in charity and events work or set about applying for a visa that would permit her to remain here indefinitely. Her time in Australia was not marked by a settled base of accommodation around which she based her work and social life. She chose to move from one form of transient accommodation to another, primarily in the form of youth hostels which gave her flexibility and the opportunity to meet new people. Although she may have perceived her time in the Bondi house to be of a more permanent nature than her time in the hostels, as an objective matter she was not in that house for more than a couple of months and her arrangements in respect of that accommodation were intentionally flexible. She benefited from the freedom of not being tied down to a committed tenancy. Having never owned much in the way of possessions, she did not accumulate any whilst in Australia. Having come with limited resources, apart from her rural stint in Queensland, she worked full time for months at a time in Sydney in hospitality to support herself whilst here and earn the funds which assisted her to travel both in Australia and for a short time in Indonesia.77. The Applicant referred in her witness statement to her "plans" and her "intentions". For example, she stated that:
At the time I arrived in Australia my intention was to remain in Australia for two years on a working holiday visa and to attempt to obtain a further visa that would enable me to stay in Australia indefinitely. This plan was subject to my experience in Australia fulfilling my expectations when I arrived, which it then did. My plan remained the same until December 2016 when I felt I should return to Scotland for family reasons…
78. Over the 12 months that she was here and beyond, the Applicant's thoughts, expectations and aspirations changed from time to time as life unfolded. Intention is not the same as desire or hope. A person may intend to return home even though they may prefer to remain away from home. An individual might be compelled by family duties or legal obligations or economic exigencies to be located in one place even though freed from the shackles of reality they would prefer to locate themselves elsewhere. Furthermore, the relevant intention is more than an intention to be physically present in a place; it is an intention to reside there, to make that place home, as opposed to visiting it.
79. The Applicant arrived in Australia in the expectation she would stay here as she was permitted by the terms of her visa, on the condition that she liked it and "possibly indefinitely". She stayed in Sydney initially in the expectation that she would soon move to Queensland to undertake rural employment in order to be eligible for an extension to her visa. Having never previously worked in manual labour, she found she did not enjoy it. She had however enjoyed her time in Sydney. She returned to Sydney in September 2016 but by November 2016 was contemplating leaving Australia because of family reasons. She made a decision to return to Scotland in December 2016. Upon her return to Scotland she hoped to return to Australia with her boyfriend who had wanted to move to Melbourne.
80. Considering the objective facts, the Tribunal has concluded that the Applicant did not form an intention to settle in Australia or to make Australia home. Consistent with her visa, the evidence demonstrates that the Applicant arrived in Australia with the intention of exploring the opportunities it had to offer, to see if she liked being in Australia and to leave open the possibility of extending her working holiday visa for another 12 months by undertaking rural farming work. The evidence demonstrates that she took up her opportunity to experience time in Australia without forming a fixed intention to settle here. She sojourned in Australia and did not settle here. She was not a resident within the ordinary meaning of that term.
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Resident under 183-day test
81. It was not disputed that the Applicant was physically present in Australia for more than 183 days during the year ended 30 June 2017. As such the Applicant will be resident of Australia unless the exclusion in paragraph 6(1)(a)(ii) of the 1936 Act applied. The exclusion applies if the Tribunal is satisfied that the Applicant:
- (a) had a usual place of abode outside of Australia; and
- (b) did not intend to take up residence in Australia.
82. In Harding, the issue was whether Mr Harding, being domiciled in Australia, had "definitely abandoned" his residence in Australia and could be said to have his permanent place of abode outside of Australia. The issue here is whether the Applicant, a person of foreign origin, had ceased to have her usual place of abode outside of Australia and whether she had formed an intention to take up residence in Australia.
83. Here, it is true that the Applicant was physically present in Australia for the period July 2016 to February 2017 (except for the brief period in November 2016 while she was in Indonesia) and she intended to be so present. However, to point to the fact that the Applicant was physically present in Australia for more than 183 days and intended to be so present does not determine the issue of whether her usual place of abode was outside of Australia. Under subparagraph 6(1)(a)(ii) of the 1936 Act, an individual can be physically present in Australia for at least 183 days in a year and nonetheless not be a resident of Australia as the term 'resident' is ordinarily used and can continue to have their usual place of abode in Australia.
84. The Full Court in Harding at [39] said:
Thus, an intention to physically be present in Australia for a term of two years does not necessarily render a person resident within sub-paragraph 6(1)(a)(ii) of the 1936 Act.…what is described in the Notes as the third test in subpara (ii) is, initially, concerned with a person who is physically present in Australia for most of a given year of income. The exception to it probably applies to a person who is physically present in Australia for the required number of days but who would not be considered to be an Australian because he or she is only a temporary visitor of this country for a period of time. That period might even extend to a term of years.
85. The relevant statutory phrase in the "exception" to sub-paragraph 6(1)(a)(ii) of the 1936 Act is "usual place of abode". The Tribunal does not accept the Applicant's contention that a place of abode cannot be a taxpayer's usual place of abode if the taxpayer has not been living at that place during the relevant year. Given that the statutory definition recognises that a person may be physically present in Australia for more than 186 days in a given year but nonetheless have their "usual place of abode" outside of Australia, the meaning of the word "usual" is not governed by time or duration within a given year. A person may have their "usual place of abode" in a place even though in any given year, they may not be physically present in that place for more than 50 per cent of the year. The word "usual" in this context refers to "in the ordinary course of events" or habit of life having regard to the totality of a person's life and circumstances.[16]
86. The Commissioner contended that the Applicant's usual place of abode was her parents' house in Edinburgh. It was from that house that she departed for Australia and it was to that house she returned. Furthermore, as Mr MacKinnon testified, the house remained available for her to return to if she were to ever need it.
87. The Tribunal does not accept that the Applicant's usual place of abode was her parents' house in Edinburgh. The Applicant had not lived at that house since commencing university in September 2009. She departed from that house when she left to travel to Australia because she had been
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staying there temporarily. Furthermore, there is nothing surprising about a parent telling their adult child that the door to their house remains open to them if that adult child should ever find themselves in difficulty. That does not make the parents' home the usual place of abode of the adult child. The Tribunal accepts that the Applicant did not reside at her parent's house from the time she left that house to live in Glasgow. It was not her usual place of abode.88. However, following the decision of the Full Court in Harding, properly construed, a "place of abode" does not refer to a specific house or flat or other dwelling but invites a consideration of the town or country in which a person might be said to be usually residing.[19]
89. Prior to coming to Australia, the Applicant had resided in Scotland and although her parent's house in Scotland was not her permanent dwelling, prior to her arrival in Australia, it could not be doubted that Scotland was the place that was home and her usual place of abode. The issue is whether Scotland ceased to be the Applicant's usual place of abode when she arrived in Australia.
90. In this respect, the Tribunal notes that as has been recognised, few people are always at home.[20]
91. Whether a place continues to be a person's usual place of abode in their physical absence must be determined by reference to factors beyond physical presence at any particular moment in time. It requires reference be had to intention and association. Regard should be had to whether the person has retained their continuity of association with the place,[21]
92. In determining if a person's usual place of abode continues to be a place where they are not physically present, consideration is given to the connecting factors or the continuity of association between the person and the particular location. The question is whether those connecting factors or continuity of association result in a person retaining a sufficient "presence" in the community even if they are physically present elsewhere. Factors such as a physical home, a family unit, possessions, relationships with people and institutions are all relevant.
93. However, continuity of association per se is not determinative. It must be considered together with an intention to return to that place and an attitude that that place remains "home".
94. The Applicant was a British citizen who had lived her life in Scotland. It is true that the Applicant did not leave substantial possessions in the UK whilst she was in Australia. That fact must be understood in the context of the Applicant's circumstances where she did not have many possessions to begin with, having never owned a material amount of property. The small number of personal belongings she had which she did not need whilst in Australia remained in Scotland. The financial support she received to supplement her earnings came from family in Scotland. Her business relationship and her main property of value was the bank account which she continued to maintain in Scotland into which funds were deposited whilst she was in Australia (i.e. it was not a dormant account).
95.
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It is also true that the Applicant did not leave behind a spouse or child in Scotland when she came to Australia. That too must be understood in light of the Applicant's stage of life. The ties of association in the Applicant's circumstances were not to be found in possessions or offspring, but in the ties of close family and friends who formed the bedrock of her life. Upon coming to Australia, the Tribunal does not accept that she sought to abandon her association with Scotland.96. By contrast the Applicant's ties of association and mode of life in Australia were generally temporary and transient. She did not settle here. The manner of her dwelling was not of a permanent nature. Although there are authorities which have found that a person may be a resident notwithstanding, they live in hotels[25]
97. The second matter of which the Tribunal needs to be satisfied if the Applicant is not be taken to be resident under the definition of resident at paragraph 6(1)(a)(ii) of the 1936 Act, is that the Applicant did not intend to take up residence in Australia.
98. The Tribunal is satisfied that during the year of income ended 30 June 2017, the Applicant did not intend to "take up residence" in Australia. The intention referred to is not an intention to be physically present in a place for any length of time. Nor is it an intention that is formed moment to moment, week to week or month to month but is a steadfast resolve[27]
99. The Applicant here was a young person, unshackled by responsibility for dependants. She came to Australia wanting to explore the experience of being in Australia and was open to the possibility of moving here permanently or indefinitely. At the time of her arrival in Australia, the Tribunal accepts that subject to Australia living up to her expectations, the Applicant planned to remain in Australia for 12 months in accordance with her visa, and there was a "real possibility" that the Applicant would remain in Australia for up to two years or possibly longer. She undertook work in May 2016 as a banana sorter in order to keep open the possibility of extending her 12-month working holiday visa for another 12 months. Upon leaving Australia in February 2017, the Applicant remained opened to the possibility of returning to Australia with her boyfriend and applying for another Australian visa. But these were never more than possibilities. The Tribunal does not accept that the Applicant formed an intention to take up residence in Australia. Her plans were always fluid and conditional, not rising above possibilities and falling short of an intention to take up residence here.
Domicile
100. A contention in the Applicant's Statement of Facts, Issues and Contentions that her domicile of choice was Australia and she did not have a permanent place of abode outside of Australia was not pursued in submissions filed with the Tribunal and is taken to have been abandoned. In any event, for the reasons discussed above, the Tribunal is of the view that the evidence does not support a finding that the Applicant had an intention to make her
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home in Australia indefinitely as required by s 10 of the Domicile Act 1982 (Cth).DECISION
101. For these reasons, the Tribunal affirms the decision under review.
Footnotes
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