Tax Residency – another one bites the dust
(the Joubert case)

By Andrew Henshaw, Director at Velocity Legal

They say home is where the heart is. The recent AAT decision in Joubert and FCT [2020] AATA 2645 is a timely reminder that this proverb generally rings true in the context of tax residency. In other words, Australians who live and work overseas, but have a spouse or dependent children in Australia, will generally be considered tax residents of Australia. This is the case even if they spend less than 183 days in Australia. The only exemption is if ‘unusual circumstances’ apply (for example, the Harding litigation).

A quick reminder – If a person is a ‘non-resident’, they are only taxed on Australian-sourced income. In contrast, if a person is a ‘resident’ of Australia, they are taxed on their worldwide income (subject to any applicable double tax agreements). 

In other words, a person’s offshore earnings are only exempt from tax in Australia if they are a non-resident.


The facts

Mr Joubert moved in Australia from South Africa in 2010 to work in the mining industry. The mining industry declined and Mr Joubert took a position at a shipping company for 5 months, and the next 10 months he spent unemployed.

In July 2014, he accepted a position in Singapore as an Operations Director for Singapore, Tokyo, Melbourne and Vancouver. He moved to Singapore shortly after and lived in rented accommodation (which he ultimately lived in for approximately 5 years). Mr Joubert’s family remained in Perth, where his 2 sons attended school.

Mr Joubert was required to visit the company offices in these cities including Melbourne. In the income year ended 30 June 2015, Mr Joubert visited Australia 25 times for a total of 141 days. During most trips, he would also visit his family in Perth (where he spent 98 days). He had some possessions in Perth that he would use while he visited his family. He also had a ‘harmonious relationship’ with his wife and sons.

Mr Joubert did not own property in Australia. His family lived in rental accommodation in Perth, and moved multiple times over the years.

For the income year ended 30 June 2015, Mr Joubert lodged his tax return on the basis that he was a non-resident of Australia for tax purposes (after inquiries from the ATO). This was subject to an ATO review and a notice of assessment issued, objection disallowed, and Mr Joubert requested a review by the Tribunal.

The taxpayer’s contentions were:

  • he was not a resident under the resides test, and
  • he had a permanent place of abode outside of Australia and therefore was not a resident under the domicile test.

The taxpayer would need to succeed on both grounds to not be a resident for tax purposes.


Decision of the AAT

The Tribunal considered the resides test was satisfied, and Mr Joubert was an Australian tax resident for the 2015 income year. On that basis, it was unnecessary to consider the domicile test. The Tribunal considered the following facts material in its decision:

  • Mr Joubert had a good relationship with his wife and children. He would frequently visit them in Australia where possible, including between business trips to Melbourne;
  • Mr Joubert obtained Australian citizenship in November 2015;
  • the passenger cards for Mr Joubert stated that he was an Australian resident departing temporarily;
  • he had no substantial assets in either Singapore or Australia; and
  • Mr Joubert remitted the majority of his income to his family in Perth.

Despite residency being based on individuals (not family groups), the fact that Mr Joubert maintained a family home in Australia and his ‘harmonious’ relationship with his wife and children were a key factor in him satisfying the resides test. Unlike the Harding case, his family in Australia were a significant connection which ultimately meant Mr Joubert was a resident under ordinary concepts.

In its decision, the Tribunal quoted a passage from the original judgment of Derrington J from Harding v FCT [2018] FCA 837 at paragraph 66:

Where a taxpayer maintains a home in Australia to which they regularly return to their spouse and family, it is an unusual case indeed that it can be said that they have ceased to be resident here. That would be particularly so in the case of a person who, for the first time, has ventured to live overseas. [emphasis added]

In the Harding case, both the Federal Court and Full Federal Court agreed that Mr Harding did not satisfy the resides test despite maintaining a home in Australia for his wife and children. Mr Joubert was not successful in arguing that the principles in Harding applied to his situation.


Key takeaways and conclusion

The Tribunal stressed the principle that, it will be a rare circumstance when a taxpayer is not a resident under the resides test where their close family resides in Australia. Home is where the heart is, and usually where the tax residency is!

However, this is not to say that a taxpayer will always be a resident of Australia where their family resides in Australia. Each case must be decided on its own facts. Notably successful cases include Harding and The Engineering Manager and FCT [2014] AATA 969.

The authors have been involved in numerous ATO objections (successfully) where the taxpayer’s close family and substantial assets were situated in Australia yet were not residents of Australia – all hope is not lost.

Australian expats with family in Australia should not lose hope. Each case must be considered independently according to the facts. Just like Harding did not raise new principles that bind future decisions, Joubert was simply a case decided on the facts.

Insight Authors…


Managing Director

Andrew acts for a diverse range of private businesses, high net-wealth individuals and family groups. He specialises in business structuring, tax disputes and complex tax issues. He is passionate about leading by example, getting wins for his clients, solving difficult legal issues and … snowboarding!


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