Australia: Do I have a permanent place of abode outside Australia?

Last Updated: 29 June 2019
Article by Fletch Heinemann

A person may be a tax resident of Australia even if they are not residing in Australia. This includes where the person's domicile is in Australia, and they do not have a 'permanent place of abode' outside Australia.

The recent decision in Harding v Commissioner of Taxation will, in many cases, help Australian expatriates. However, a part of the decision may also create tax problems in certain circumstances where Australians are living and working overseas.

Firstly, what is domicile?

Domicile is an old common law concept. In Australia, it was modified by the Domicile Act 1982.

At a high level, Australian citizens will generally have an Australian domicile. To abandon an Australian domicile, a person must have an intention to make their home indefinitely in another country.

If an Australian does not consciously relinquish their Australian identity, or there is no new country to which they want to pledge their allegiance, the person will generally continue to have an Australian domicile. To be a non-resident for tax purposes, a person with an Australian domicile will need to establish that their 'permanent place of abode is outside Australia'.

What happened in Harding?

Mr Harding permanently departed Australia in 2009. He started living in an apartment in Bahrain and commuted across the causeway to his permanent position in Saudi Arabia. The plan was that Mr Harding's wife and youngest son would join Mr Harding in Bahrain at the end of 2011, when their second son finished high school in Australia. Until then, Mr Harding's wife would continue to live in the family home on the Sunshine Coast. Mr Harding bought a car in Bahrain for his wife, enrolled his youngest son in school in Bahrain and looked for a family house in Bahrain when she visited. But Mrs Harding never moved to Bahrain, and they subsequently separated, and then divorced. Over those income years, Mr Harding moved apartments in Bahrain as his personal circumstances changed.

The ATO assessed Mr Harding on the basis that he was a tax resident of Australia for the 2011 income year.

For further analysis on the Harding decision, please click here.

What did the Court say in Harding about having a 'permanent place of abode' outside Australia?

At first instance, the Federal Court held that Mr Harding did not have a 'permanent place of abode' outside Australia. This was because he moved between apartments in Bahrain, each apartment was 'temporary accommodation', and therefore none of his apartments were 'permanent'.

Mr Harding successfully appealed that decision. The Full Federal Court concluded that 'permanent place of abode':

  • does not refer to a person's specific house, flat or other dwelling, but
  • requires the identification of a country in which the taxpayer is permanently living.

As Mr Harding permanently based himself in Bahrain, and had abandoned his residence in Australia, the Full Federal Court concluded that his 'permanent place of abode' was outside Australia.


Australians living and working on yachts may find they are unable to identify a particular country where they are permanently living.

This will include where the yacht is their home and is travelling through waters of different countries.


Australians who move overseas permanently to set up new operations may also be at risk – if they start work in one country, with the intention of subsequently moving to another country.

Mr Harding always intended to live in Bahrain permanently and commute to Saudi Arabia. However, hypothetically, if Mr Harding intended to live in Bahrain for an initial six-month period, and then move to Saudi Arabia after that, then Bahrain would not have been the country where he intended to live permanently.

Similarly, an individual undertaking a twelve-month orientation in the head office in Hong Kong, before setting up a new office in southern China, may not meet the threshold of having a 'permanent place of abode' outside Australia for the time spent living and working in Hong Kong.


Australians taking on Asia-Pacific roles, or other regional roles, that require time spent living and working in different countries may also be at risk.

There is now a significant distinction between:

  • establishing a home in one country, and then travelling as required by work, and
  • moving between countries as required by work operations and projects.

This was an issue raised in the recent Administrative Appeals Tribunal decision in Handsley v Commissioner of Taxation [2019] AATA 917, where Mr Handsley had abandoned his residence in Australia but had not established a permanent home in a particular country outside Australia.

How do I deal with these issues?

Australians looking to move permanently overseas should be mindful of these issues and may need to negotiate with their employer so that their salary package does not inadvertently become subject to tax in Australia.

Australians already in a risk category should seek further advice on whether they continue to have an Australian domicile and whether they have established a 'permanent place of abode' outside Australia.

© Cooper Grace Ward Lawyers

Cooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.

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