How do you determine residency as a “global citizen”?

As global employment becomes increasing fluid with individuals undertaking internal assignments, establishing the residency status of an individual becomes more complex and critical. Quy and Commissioner of Taxation [2025] ARTA 174 (“Quy v COT 2025”) is a case on point that demonstrates the underlying principles of the residency tests when determining tax residency status.

Background facts

Some relevant facts of the case are as follows:

• Mr Quy was originally born in Vietnam and migrated to Australia where he became an Australian citizen.
• Then in 1998, Mr Quy, his wife and his 3 children moved to Dubai where they resided for 12 years. They retained an Australia property which was rented out as an investment property during their years in Dubai. In 2009, Mr Quy and his family relocated back to Australia.
• Around 2015, Mr Quy accepted an international assignment from his Australian employer. This was a permanent full-time position based in Dubai. The international assignment was expected to be for a period of 24 months but could be extended or terminated.
• Mr Quy and his wife then travelled to Dubai for the assignment. Their 3 children stayed in Australia to complete their studies. Mrs Quy would subsequently split her time between Australia and Dubai but generally her stays in Dubai were shorter.
• Mr Quy had retained properties in Australia. One was where his children resided. The other two properties were leased out.
• Mr Quy had not taken any furniture and household items when he relocated to Dubai and had retained multiple vehicles in Australia. The vehicles continued to be registered under his name, who was also responsible for ongoing registration and insurance costs.
• Mr Quy had also retained his family private health insurance policy in Australia.
• Mr Quy also maintained Australian bank accounts.
• During Mr Quy’s international assignment he held UAE Dubai Residency Permits entitling him to live and work in Dubai. He stayed in an employer provided apartment. A portion of his salary and wages was paid into a Dubai bank account and the remainder was paid into his Australian bank account.
• Between the time of his initial arrival in Dubai in September 2015 and the end of 2020, Mr Quy returned to Australia on 12 occasions, for periods ranging from five days to 35 days.
• Mr Quy had lodged income tax returns which included all of his earnings from his employment in Dubai. Subsequently, he had obtained tax advice to the effect that he was not a resident of Australia for tax purposes during the relevant years where he was residing in Dubai and therefore should not have been taxed on his gross earnings from his work in Dubai. Mr Quy then lodged an objection to the Commissioner for incorrect assessments for the relevant years.
• The Commissioner disallowed the objections, deciding that Mr Quy was a resident of Australia for each of the relevant years because he satisfied the primary ‘resides test’ according to the ordinary meaning of that term, and he also satisfied the domicile test.
• The initial Tribunal decision affirmed the Commissioner’s decision that Mr Quy was a resident of Australia under ordinary concepts as well as the domicile test for the relevant years. Mr Quy then appealed to the Federal Court, which found that the Tribunal had erred in the application of the law and remitted the matter back to the Tribunal for determination.

Residency test

The statutory test to consider when an individual is a “resident” or “resident of Australia” is set out in subsection 6(1) of the Income Tax Assessment Act 1936, which provides:

1. a) a person, other than a company, who resides in Australia and includes a person:

(i) whose domicile is in Australia, unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia;

(ii) who has actually been in Australia, continuously or intermittently, during more than one‑half of the year of income, unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and that the person does not intend to take up residence in Australia; or

(iii) who is:

(A) a member of the superannuation scheme established by deed under the Superannuation Act 1990; or

(B) an eligible employee for the purposes of the Superannuation Act 1976; or

(C) the spouse, or a child under 16, of a person covered by sub‑subparagraph (A) or (B)

The Tribunal (2025) decision discusses the relevant underlying principles for each of the tests.

Ordinary concepts test

There is no further statutory definition of the term ‘resides’; however a number of case authorities describe a well-established ordinary meaning that a person resided where they ‘lived’ or ‘keep house and do business’. This generally refers to where the person is physically residing.

However, the intention of the person, as well as their physical presence, may be relevant to the determination of residence. This includes any intention of the person to return to that place and treat it as their home. The frequency of return trips back to Australia and the nature of these trips may also provide insight as to the intention of the person.

The continuity of association and personal connections to Australia are also a significant factor when determining a person’s residency status. Family ties, maintenance of assets and societal connections can all indicate an expectation of returning to that place and an enduring continuity of association with Australia.

In Quy v COT 2025, it was undisputed that he physically was not present in Australia. His visits back to Australia were also not frequent or for a considerably significant amount of time. While he had significant family ties in Australia (as his wife and children resided there), the Tribunal noted that while the maintenance of close family, including  a spouse, in a location can be strongly indicative of residence in that location, it is not conclusive. Mr Quy had severed social and personal connections to Australia, maintaining mostly what was needed to provide for his family who remained in Australia. The Tribunal acknowledged that the limited time Mr Quy spent in Australia during the relevant period suggests that he would not have had much time for significant involvement in social or community activities here. Furthermore, the maintenance of investments and other financial affairs in Australia has been viewed by courts as not necessarily indicating a continuing intention to maintain residency in Australia, particularly where they reflect ongoing responsibilities to support dependents in Australia.

The Tribunal found, on these facts, that Mr Quy did not ‘reside’ in Australia under the ordinary concepts test.

Domicile test

Where a person is not a resident of Australia according to ordinary concepts, they may nevertheless be regarded as a resident, where their domicile is in Australia, unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia.

The following principles were affirmed by judicial precedent:

• The test assumes the person is not physically present, but is still domiciled, in Australia during the relevant year of income.
• What has to be ‘definitely abandoned’ is ‘residence’ in Australia and not “Australia”.
• ‘place of abode’ usually refers to the dwelling where a person lives, but could include a town, country or state in which a person is physically residing ‘permanently.’
• ‘permanent’ does not require the person to have formed an intention to live or reside or have a place of abode outside Australia ‘indefinitely’ without any definite intention of ever returning to Australia.

A number of the factors considered under the ordinary concepts test are also relevant under the domicile test but is focused on whether the person has established a permanent place of abode outside of Australia.

While the act of purchasing property would be an indication of intention to establish a permanent place of abode, accommodation that is rented, on a yearly basis, does not necessarily preclude it from being regarded as a permanent place of abode.

Maintaining connections with Australia may also be inconsistent with “abandoning” residence in Australia and making a “permanent” home elsewhere. Frequency of return trips to Australia and the nature of the trips may further indicate intention. Additionally, maintaining assets and personal belongings may also indicate an intention to return to Australia, and therefore have not abandoned residence.

The Tribunal stated that “the question of whether a person has a permanent place of abode outside Australia goes beyond whether they can demonstrate that they were living, working and socialising in another place, even for an extended period of time. They must demonstrate that they have abandoned their residence in Australia and established a place where they are residing permanently (rather than on a temporary basis, even if not indefinitely).”

In determining whether the Tribunal was satisfied that Mr Quy had a permanent place of abode in Dubai, there was a number of factors that were considered. Firstly, the fact his accommodation was rented did not preclude it from being a permanent place of abode, however the lease and utilities for the property were under this name of his employer was relevant. While the furnishing of the apartment had seemed to be a significant factor in the Commissioner’s argument, the Tribunal found the furnishing was not insubstantial and there was not significant weight on whether the furnishings were expensive, exclusive or sourced from an affordable retail operator. The Tribunal accepted that Mr Quy had taken personal belongings that were consistent with what would be required to live in Dubai long term, but not necessarily permanently. Additionally, he had established social and personal connections in Dubai by way of social and recreational activities and religious networks though due to the lack of evidence, it was not sufficient for the Tribunal to be satisfied that Mr Quy had established a place of abode in Dubai based on these factors alone.

The Tribunal found that while he had not treated Australia as his physical home, Mr. Quy had maintained connections with  Australia which when objectively viewed were inconsistent with abandoning residence in Australia and making Dubai a permanent home. While some of these connections were to support his dependent children and wife, others were maintained in a way that was found to be personal. In particular, the Tribunal noted Mr Quy had left a motorcycle in Australia, maintained his Australian driver’s licences and rode the motorcycle when in Australia, and left two guitars he was restoring. It was found that Mr Quy was unable to satisfy that he had a ‘permanent place of abode’ outside Australia and therefore was a residence under the domicile test.

Conclusion

As demonstrated by Quy v COT 2025, a person does not necessarily cease to be a resident of Australia because they are physically absent from the country. The test is whether the person has retained a continuity of association with Australia, together with the intention to return and continue to treat Australia as ‘home’.

If you’re looking for tax advice on your personal residency situation, please reach out to us through phone or email.

——-