The ATO has a myriad of rules and regulations when it comes to considering whether tax is payable. It all depends on the particular circumstances of the individual tax payer or the business that wants to claim a concession.
Here are two unusual examples that have recently been tested.
Taxpayer living in serviced apartments overseas not a resident
The Full Federal Court has found that a taxpayer had a “permanent place of abode” in Bahrain, even though he lived in temporary accommodation, and therefore allowed his appeal against a decision that he was a resident of Australia.
This decision confirms that the correct focus of the “permanent place of abode” residency test is whether there has been an abandonment of Australian residence (i.e., to live permanently outside of Australia), rather than whether a person actually lives in permanent accommodation overseas.
In particular, the Full Court considered that the phrase “place of abode” is not a reference to a person’s house or flat or other dwelling but rather the town or country in which a person is physically residing permanently.
Mostly vacant property still an ‘active’ asset
The AAT has held that a block of land next door to a taxpayer’s main residence, which they used to store materials, tools and other equipment for their business, was still an ‘active asset’ for the purpose of the small business CGT concessions.
Editor: The small business CGT concessions can reduce, or completely eliminate, the tax payable on the sale of an ‘active asset’ (basically, a business asset).
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.