Updated: Feb 3
If you have a client who has been living overseas but has returned to Australia because of the COVID19 pandemic, you may need to discuss with your client their tax residency status. The classification of a client's tax status always has far reaching consequences.
Unfortunately Australia's tax residency laws are not compatible with global pandemics. There is no general principal in the law to exempt people from taxation, because circumstances may have forced (for health reasons) them back to Australia. The question will be whether the client, having returned to Australia because of health related concerns, has become a resident of Australia, or could continue to regard themselves as non-resident? This might be because they they still have a residence overseas and that they have no intention to stay in Australia permanently, but only on a temporary basis until the corona virus pandemic ends. The answer to this question will be in a proper analysis of how principles of residency may apply to the particular situation of the client. As ever that is a difficult issue, particularly in times of crisis.
As Justice Rich said in Commissioner of Taxation v Miller  HCA23 “In many cases, including most of those which become the subject of litigation….the question of whether a person is a resident of a place, …...depends not on some definite rule of law, but upon the view taken by a tribunal of whether he comes within a field which is very loosely defined. The question is ordinarily one of degree and therefore fact."
The assessment of a client's position can be even more troublesome for an adviser because of the pressures of the moment. It can be difficult to consider a client's position in the cold light of day, dispassionately, without one's judgement being unduly influenced by certain facts over others. A thorough analysis of the principles of residency should yield relevant answers for the client, even if those answers changes over time, as the clients particular facts and circumstances also change.
Below we provide some analysis which should be helpful to you in advising your client.