Definition of reside


intransitive verb

1a: to be in residence as the incumbent of a benefice or office

b: to dwell permanently or continuously: occupy a place as one’s legal domicile

As such, most people with a permanent Australian abode would be tax residents under domestic tax law.

But not always – the actual test is more complicated when a person does not solely reside in Australia.

In such a case, the ATO considers whether the person has retained a ‘continuity of association’ with Australia and has ‘an intention to return to that place and an attitude that that place remains home’.


Resident for Tax Purposes: Example


In practice, that means that a person who owns residential property in Australia, and who has a family who resides in Australia, may not be a resident for tax purposes.

A recent example occurred in the case of Harding v Commissioner of Taxation [2019] FCAFC 2.

In this case, Mr Harding departed Australia to live in Bahrain.

He owned property in Queensland where his wife and children continued to live in.

The ATO initially ruled that this was a sufficient connection with Australia for Mr Harding to be ruled a resident for tax purposes.

However, the Court concluded that Mr Harding did not reside in Australia based on the ordinary meaning of the word ‘resides’.

This is because Mr Harding made it clear that he intended to move permanently to Bahrain.

Mr Harding no longer considered his Australian property ‘home’ and was in the process of making plans for his wife and children to join him in Bahrain once their second son finished high school.

The Harding case was also an example of the ATO’s usual checklists giving a wrong result.

Based on the factors they considered, the ATO concluded that on balance Mr Harding was a resident for tax purposes – a conclusion that the Courts disagreed with once they analysed the legislation.


Multiple Tax Residency


Based on the factors considered, it is possible to be a tax resident of multiple countries at once – especially depending on the laws of the other country.

If you spend notable amounts of time in multiple countries it may be worth checking if Australia has a tax treaty or ‘double tax agreement’ with the other country.

These agreements are intended to prevent double taxation between multiple tax jurisdictions.

The full list of treaties is maintained on the Australian Treasury website.


Contact Us


For more information about residency for tax purposes, contact us at Bambrick Legal today. We offer a free, no-obligation 15-min consultation for all enquiries.

Read more about our Tax Law services here.

Related Blog – Tax Avoidance vs Tax Evasion: Key Differences & Consequences

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