The Administrative Review Tribunal (ART) has upheld the ATO’s position, confirming that the taxpayer, Mr Quy, maintained a domicile in Australia and was therefore a resident of Australia for tax purposes under section 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). (Quy and Commissioner of Taxation (Taxation and business) [2025] ARTA 174 (28 February 2025))
Background
Mr Quy first arrived in Australia in 1978 and later became an Australian citizen. From around 1986, he worked as an engineer. In 1998, he relocated to Dubai for work, accompanied by his wife and three children. Around 2009, the family returned to Perth. Then, in 2015, Mr Quy moved back to Dubai for employment, while his wife joined him intermittently and their children remained in Australia.
During the income years 2016 to 2020, Mr Quy spent between 29 and 119 days each year in Australia, whereas his wife spent significantly more time in the country—between 183 and 343 days annually. Notably, Mr Quy maintained a residence in Perth and held two investment properties in Sydney. He also kept active bank accounts in Australia, private health insurance, and vehicle registrations.
The ATO issued tax assessments for those years on the basis that Mr Quy was a resident for Australian tax purposes. Mr Quy objected, primarily seeking a refund of PAYG amounts withheld.
Key Issues
The central issue was whether Mr Quy qualified as a resident under either the ordinary concepts test or the domicile test.
Mr Quy argued that he was not a resident under either test. He claimed that he did not reside in Australia and that, if he retained an Australian domicile, then his permanent place of abode had shifted to Dubai.
Initially, the Administrative Appeals Tribunal (AAT) sided with the Commissioner, concluding that despite his physical presence in Dubai, Mr Quy was still a resident under the ordinary concepts test. The AAT highlighted his strong ongoing ties to Australia—his wife’s residence in Perth, the maintained family home, his regular returns, and his apparent long-term connection to the country.
Mr Quy appealed this decision to the Federal Court. The Court found the AAT had incorrectly applied the test by focusing on whether he intended to reside in Australia “permanently or indefinitely,” rather than whether he treated Australia as his home “for the time being.” The matter was referred back to the ART.
Tribunal Decision on Remittal
Upon review, the ART found that Mr Quy was not a resident under the ordinary concepts test. The Tribunal pointed to objective indicators—such as the nature of his overseas employment and the length and consistency of his absences from Australia—as evidence that he did not regard Australia as his home during the relevant period.
However, under the domicile test, the Tribunal concluded that Mr Quy was still a tax resident. Despite his physical absence, his ongoing ties to Australia—including property ownership, financial interests, and family connections—demonstrated he had not severed his residential ties or established a permanent home abroad.
In contrast to the taxpayer in Harding v Commissioner of Taxation, who had shown a clear and sustained intent to live overseas indefinitely, Mr Quy’s relocations were primarily driven by short- to medium-term work assignments and lacked the permanence required to displace his Australian domicile.
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