Tribunal varies ATO decision in tax residency case

In the recent decision, Abotomey and Commissioner of Taxation (Taxation and business) [2025] ARTA 719, the Administrative Review Tribunal of Australia has varied an objection decision by the Commissioner of Taxation regarding whether a taxpayer was a resident of Australia within the definition of subsection 6(1) of the ITAA 1936.

The applicant in the case was working and living in China as an executive of an Australian company with Chinese businesses.

The case looked at a number of issues arising under Australian income taxation laws in relation to services he performed as well as services provided by entities in which he held an interest in the financial years ended 30 June 2014 and 30 June 2015.

The applicant held executive positions with a company which had business interests in China. The dispute with the Commissioner of Taxation arose in relation to work performed with those businesses, including while he was located in China.

The ATO treated the applicant as a resident of Australia for taxation purposes in both the relevant years, and sought to include certain amounts received by or from the entities in his assessable income.

The Tax Office also believed that a capital gain applied in relation to a transfer of shares in one of the entities.

The ATO imposed administrative penalties on the Applicant for making false or misleading statements in relation to these items, and assessed amounts of shortfall interest charge.

The applicant disagreed that he was a resident of Australia for taxation purposes in the 2014 year and stated that he was a resident of Australia for only part of the 2015 year.

He also disputed the inclusion of the amounts in his assessable income. He also disagreed that a capital gain had arisen in relation to the share transaction.

Consequently, he did not believe that shortfall interest charge and penalties should be imposed on him or that they should otherwise be remitted.

MTC.