Facts
Mr Shard worked overseas as an oilfield diver or supervisor on offshore platforms, barges and other vessels and derived income from foreign sources for that work.
From 1999 to August 2010, he worked various foreign companies overseas. He lodged an income tax return for 1999 in which he identified himself as a ‘non-resident’. He did not lodge income tax returns for 2000 to 2011.
In July 2011 he began working for an Australian company in Australia and applied for a TFN identifying himself as a resident.
In November 2011 he was sent a reminder to lodge his returns for 2000 to 2011, and was apparently advised of a review. He was sent a questionnaire in December 2011 that he returned in February 2012.
In the questionnaire he set out that he did not consider himself a resident between 2000 and 2011 as he had received a 1999 notice of assessment issued by a Deputy Commissioner which as additional information stated ‘ You have been deemed to be a non-resident of Australia for income tax purposes – no tax-free threshold is available to non-residents. If your residency status has changed, please read the information on residency in TaxPack.’ In addition to this, Mr Shard stated to the AAT that he had received written advice from a tax officer in 1998 that he was a non-resident for tax purposes. He was unable to provide evidence of this advice in the AAT and some of his evidence on this point was contradictory.
In the questionnaire he said that he considered his permanent home to be the UK, where he and his parents were born. He owned a house in Australia that his spouse lives in that he acquired in 1999, as well as a rental property that he acquired in 1991.
Mr Shard had married his current Australian wife in 1992 and he has been an Australian citizen since 2004.
When in Australia he resided at the property he owned with his wife. All his pay from his overseas employment was banked into his Australian home loan account. Mr Shard was able to provide no evidence of a home being maintained overseas, though he had some mail sent to UK addresses, being properties where he stayed while in the UK visiting family.
In October 2012 the ATO asked Mr Shard to lodge returns for 2006 – 2011 and while still under audit he did, but as a non-resident. The ATO in May 2013 issued amended assessments treating him as a resident. The tax, penalties and interest resulting from the amended assessments amounted to approximately $300,000. Penalties were imposed at the level of 50%.
Issues
Amongst the issues considered by the Tribunal were:
- Was he a resident of Australia according to ordinary concepts, and if no,
- Was his home in Australia, and if so, did he have a permanent place of residence overseas?
- Should the penalties and interest be remitted?
Decision
The Tribunal had little difficulty, given Mr Shard’s pattern of movements between 2005 and 2009 and in particular in 2010 and 2011 in treating him as a resident according to ordinary concepts. The Tribunal appears to have taken into account the fact that he had no offshore assets, that he transferred all of his employment income to Australia, that on outgoing passenger cards on trips to the UK he said he was going on ‘holiday’ (as opposed to back to a home there), outgoing and incoming passenger cards where he said he was a resident, that he maintained health insurance in Australia, and that he had a 23 year relationship with his wife, who he lived with when in Australia.
He was said to have maintained a ‘continuity of association’ with Australia throughout the relevant period and Mr Shard had claimed to have ‘let go’ of Australia in 1999, the relevant facts and evidence proved otherwise: Hafza v Director-General of Social Secur ty [1985] FCA 164.
The AAT also considered that Australia was Mr Shard’s ‘home of choice’ throughout the relevant period. He did not prove that any other home replaced Australia as his ‘home of choice’ at any time in the relevant period. With Australia as his home he could still be a non-resident if he had a permanent place of residence outside of Australia, but none of his places of work represented such a permanent place of residence, nor did the places he stayed while in the UK, on the balance of probabilities.
In relation to penalties the AAT was not satisfied that Mr Shard ever received advice from the ATO in 1998 that he was a non-resident, but that even if he had, it was reckless to rely on this advice some 8 to 13 years later and the penalties were maintained at their 50% level.
Citation Re Shard and FCT [2015] AATA 355 (Senior Member CR Walsh, Perth)
w http://www.austlii.edu.au/au/caseslcth/AATA/2015/355.html
