Income Tax imposed on Australian citizens working as expats.

Income tax is imposed based on the basis whether a person is an Australian resident or not. In the
presence of any Double Tax Treaty along with the Australian law, the former one will be taken
with greater preference.
Taxation for residents:
a) Generally, Australian expats are imposed to pay taxes on income earned abroad. If the income
is taxed in the country where the expat has been working in such case the person can claim
foreign income tax offset with Australian authority.
b) Investment in any part of the world by the expat is imposed to income tax under the Australian
law if he/she is the resident of Australia. If a resident buys the share of companies in other
countries for sake of dividends, such income are taxed under the Australian law. Similarly,
incomes derived by the resident from the rent in other countries are also subjected to taxation
under the Australian taxation laws.
c) Capital gain on investment outside Australia is taxed for the resident. If the investment is held
for more than twelve months than in such case fifty percent of the capital gain is deductible
during the tax assessment for the year.
d) The resident of Australia must pay the Medical Levy of two percentage on their income.
Additional payment as levy may be charged if the income exceeds certain thresh hold.
Taxation on non-residents:
a) Non-residents are not imposed the taxation on the income if the source of the income is
outside Australia. Source of income is decisive in order to impose any tax.
b) Non- resident Australian is not taxed from the investment income from other countries.
However, if the income is in form of interest, royalty and dividend earned from Australia then
the Australian tax authority imposes certain withholding tax. The withholding tax may be
deductible based upon the Double Tax Agreement between the countries.
c) Non- residents are liable to pay taxes on capital gains on certain assets like real estate located
inside Australia.
d) A non- resident Australian expat need not pay a Medical Levy.
e) If an expat earns certain amount out of the rental of the property located in Australia then
he/she is imposed of taxes.

Ordinary Concept test

Section 6 of Income Tax assessment Act 1936 defines resident as:
1) A person who reside in the Australia and bears three additional qualities i.e.
a) The person’s domicile must be in Australia or Commissioner must be convinced that the
person’s permanent place of abode is not outside of Australia.
b) The person passes superannuation test and the Commissioner must be convinced that the
person’s permanent place of abode is not outside of Australia.
c) A person must have intention to be the resident of Australia.
Ordinary concept test includes Resident test and domicile test. Let us look at the facts to
determine the residency of Mr. Harding according to the Ordinary Concept test.
When Mr. Harding left Australia in 2009 in pursuit of a job at Saudi Arabia in a company named
TQ Education. He did so with an intention to live in Bahrain indefinitely and he had no intention
to live in Australia then onwards. Mr. Harding owned a house jointly with his wife in
Queensland in a place called Warana. However, The Mr. Harding paced his family in the house
until his second eldest son completes his education. Harding took all his personal belongings
from the house at Warana. This indicates that he had no intention to live in Australia.
Despites of his no intention to live in Australia his actions reveal the characteristics of an
Australian resident. Those actions are as follows:
1. Mr. Harding indicated a terms like ‘resident departing temporarily from Australia’ and
‘resident returning to Australia’ in his passengers card while travelling back and forth from
Australia.
2. He has sufficient financial association with Australia. He used an Australian Bank account for
money transfer, mortgage, school fees and utility payments.
3. He maintained a contract with Australian Health Insurance Company and maintained a
superannuation account in Australia.
4. He looked after the financial obligation of his family.
5. He spent 91 days with his family in Warana, Queensland.
6. Mr. Harding purchased investment property in Australia during 2011.
These facts indicate the continuity of association of Mr. Harding with Australia and sufficient
continuity can suffice residency o an individual.
It seems that Mr. Harding has dual residency, which is the gray area in the case. He chose to live
in Bahrain assuming that his children will join him after two years. However, the plan did not
work as sketched out.
Mr. Harding continued to work and live in Middle East despite of the union of his family. Mr.
Harding had no permanent residency in Bahrain. His living arrangements there were temporary
and the agreement he had with his company was for a year only. Thus, Mr. Harding can be stated
as resident of Australia under Ordinary Concept test. In addition, a domicile of Australia cannot
be proved the resident of any other country unless he/she has established a permanent place to
live in another country (Domicile Act, 1982)