Background

Working overseas while your family remains in Australia can create a complicated taxposition. This was the situation in Bulie and Commissioner of Taxation (Taxation and business) [2026] ARTA 1003 (Bulie). Mr Bulie, an Australian permanent resident, began full-time employment in Singapore in November 2017, earning approximately $700,000 a year.

His wife and younger child continued living in the family’s Sydney home. He maintained Australian superannuation, bank accounts and private health insurance, and spent approximately 38% of his time in Australia from 2018 to 2022.

It was common ground that Mr Bulie was a tax resident of both Australia and Singapore under their respective domestic laws.  Nevertheless, if Mr Bulie was treated as solely resident in Singapore for the purposes of the Australia-Singapore Double Tax Agreement (DTA), his Singaporean employment income would generally only be taxable by Singapore pursuant to Article 11 of the DTA.

The question was therefore whether Mr Bulie was treated as solely resident in Singapore for DTA purposes. Article 3(2) applies three residency tie-breaker tests in sequence:

• firstly, whether the person has a permanent home in one country but not the other;
• secondly, if the above is not applicable, whether the person has a habitual abode in one country but not another; and
• thirdly, if the above is not applicable, which country the person’s personal and economic relations are the closest to.

It was common ground that Mr Bulie had a permanent home available to him and a habitual abode in both countries. The dispute therefore turned on the country with which his personal and economic relations were closest.

Key Findings

Applying the principles in the Federal Court’s decision in Pike v Commissioner of Taxation [2019] FCA 2185 and the subsequent appeal, Commissioner of Taxation v Pike [2020] FCAFC 158 (Pike), the Administrative Review Tribunal (ART) allowed Mr Bulie’s objection in full.

Legal test

The ART first reiterated that ‘the taxpayer’s personal and economic relations are to be considered in a holistic way, and that the test is a “composite” one’. It also quoted the following OECD commentary on the test, which was approved in Pike:

[R]egard will be had to his family and social relations, his occupations, his political, cultural and other activities, his place of business, the place from which head ministers his property, etc. The circumstances must be examined as a whole, but it is nevertheless obvious that considerations based on the personal acts of the individual must receive special attention.

Application to Mr Bulie’s circumstances

Although MrBulie conceded that his personal relations were closer to Australia, the ART concluded that his personal and economic relations, considered together, were closest to Singapore. In respect of ‘economic relations’, the ART made the following relevant findings:

• Source of ongoing income. As the Federal Court did in Pike, the ART considered Mr Bulie’s source of ongoing income as the ‘primary consideration when considering his closest economic relations’. It found that Singapore is the ‘centre of his day-to-day life and source of economic lifeline for himself and his family’.
• Australian assets. The ART acknowledged the economic significance of Mr Bulie’s Sydney home but noted it was not income-producing and distinguished unrealised capital growth from his ongoing employment income. His recurring economic activity remained centred in Singapore.
• Retirement plans and Australian superannuation. The ART did not accept that Mr Bulie had a definitive plan to retire in Australia. While his superannuation savings were not insignificant, the accounts were not income-producing ‘in the relevant sense’ and were not large compared with his earned income. The ART also emphasised that, for the tie-breaker rule, the source of income was more relevant than its destination. His employment income remained his strongest and most important economic relation.

The ART gave little weight to other factors like Mr Bulie’s maintenance of private health cover, Medicare access, and bank accounts in Australia. It considered those to be ‘a function of the administrative realities and conveniences of dual residency’.

With regard to Mr Bulie’s personal relations, the ART noted that although his family was in Australia, Mr Bulie had still developed ‘meaningful personal relations’ in Singapore during his time there, including having his closest personal friends there. Further, Mr Bulie spent the majority of his time in Singapore, and his Australian visits were for personal and not work or business reasons.

In these circumstances, the ART found that Mr Bulie had discharged his onus of proof and, when considered holistically, his strongest personal and economic relations during the relevant periods were with Singapore.

Takeaways

• Check domestic residency and treaty residency separately. Even if you qualify as an Australian tax resident under domestic law, a treaty may restrict Australia’s right to tax certain income sources, such as overseas employment income.
• Start with the applicable treaty. Identify its tie-breaker rules and apply them in the required order. In Bulie, the closest-relations test arose because the earlier tests did not resolve the position.
• Assess personal and economic connections together. Family location, asset ownership, employment and social connections all need to be considered. In Bulie, overseas employment carried substantial weight on the particular facts. However, that factor should not be treated as automatically decisive in all cases.
• Keep evidence of life in both countries. The taxpayer bears the burden of establishing that an assessment was excessive. Maintaining good employment records, leases, travel histories and evidence of social connections can help substantiate the factors examined in a treaty residency dispute.

To discuss cross-border tax residency, treaty relief or an ATO assessment, please contact Velocity Legal’s tax team.

This articlein no way constitutes legal advice. It is general in nature and is the opinionof the author only. You should seek legal advice tailored to your individualcircumstances before acting on anything related to this article.