The recent decision of Shord v Commissioner of Taxation
 AATA 355 highlights the inconsistent approach taken by
Tribunals when looking at an individual's residency.
Mr Shord's case
Mr Shord was born in the UK in 1950. He first came to Australia
in 1977 on a holiday and started living in Australia in 1978. Mr
Shord became an Australian citizen in 2004. Mr Shord worked at
numerous places around the world as an oilfield diver.
Mr Shord married his second (and current) wife in 1992. In 1991,
they purchased a property in Western Australia as joint tenants.
Mrs Shord at all times lived at this property. When Mr Shord was in
Australia, he also lived at this property with Mrs Shord.
In Shord, the AAT explained that:
A place may be a person's residence even though
that person is away from that place for periods of time. The test
is whether the person has retained a 'continuity of
association' with the place, coupled with an intention to
return to that place, and an attitude that the place remains
The AAT concluded that Mr Shord maintained significant physical,
emotional and financial ties to Australia, primarily through his
wife and the property in Western Australia. As a result it was held
that Mr Shord maintained a 'continuity of association' with
Australia and therefore resided in Australia.
I'm an expat – what does it mean for me?
This decision is likely to have ramifications for expatriates
living and working overseas who continue to maintain some ties to
Australia. It gives the ATO the opportunity to argue that an
Australian remains a tax resident if they have
'connections' or 'continuity of association' with
The first step is to check your 'connections' and
'continuity of association' with Australia and see whether
these are likely to create a tax residency risk.
In Dempsey v Commissioner of Taxation  AATA 335,
the AAT appeared to provide some relief to expatriates by reining
in the Commissioner's approach to taxing non-residents. In
Dempsey, the AAT confirmed that the meaning of the word
'resides' in Australia must be taken from the High Court
decision in Federal Commissioner of Taxation v Miller
(1946) 73 CLR 93. The AAT stated 'resides' has its ordinary
English meaning, which is:
'to dwell permanently or for a considerable time,
to have one's settled or usual abode, to live in or at a
We acted for Mr Dempsey. However, the ATO's
Decision Impact Statement from Dempsey indicated that
the ATO would continue to pursue Australians working overseas who
retain connections with Australia.
Taxpayers and advisors need to be particularly careful as the
ATO audit activity continues to increase in this area.
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