Mr Nguyen was born in Australia in 1975 and worked as an engineer in Sydney for many years in a reputable city firm. After fifteen years of marriage in 2015 his marriage had broken down. As a part of the divorce, Mr Nguyen kept their primary residence, which had originally been purchased in 1990 for $150,000, while the former spouse kept their rental property and the custody of their 10-year-old son. Mr Nguyen was understandably devastated by the divorce, so to escape it all, he obtained employment in Saudi Arabia as an engineer starting on 5th July 2016. Mr Nguyen had signed an open-ended contract that specified: • He has to work 10 months of the year, six days a week. • He is paid on monthly basis and no tax is withheld as his tax compliance is his responsibility. • He would be provided his own furnished self-contained unit in Saudi Arabia at no cost. • He would be provided four free flights per year from Saudi Arabia to destinations of his choice. These could be back to Australia, or to any other worldwide destination. • He would be paid in USD, which could be deposited into any bank account. Some additional facts are as follows: • Mr Nguyen left Australia to fly to Dubai on 1st July 2016. • As at July 2019 Mr Nguyen is still working for the same engineering firm in Saudi Arabia. He is enjoying himself and has no intention to resign in the near future. • His Saudi Arabian pay is deposited into his Australian bank account. • He did not rent out his Australian house whilst working abroad. • His registered car was always parked in the garage at his house. • He did not change his diving licence address, hand back his gun licence or inform any Australia authorities that he was ceasing Australian tax residence. • He lodged his 2017 as well as 2018 income tax returns through a local tax agent as a non-resident. The only income he declared in his Australian tax return was his Australian sourced interest income. • He came back to Australia and lived in his house every January to see his son and spent the other month of his annual leave travelling around the world. • While he has siblings, he had not spoken to them for 20 years. • He has not established a new personal relationship since his divorce, and he has no other significant family ties. Situation: • Mr Nguyen has just been advised that he is subject to audit by the ATO. They are concerned that he has lodged his income tax returns as a non-resident, although is getting monthly payments into his account and his address with other authorities remains within Australia. • Prior to hearing all of the facts, the ATO have provided Mr Nguyen with an opportunity to change his 2017 and 2018 income tax returns by agreeing he was a resident and lodging amendments. Becoming an Australian resident would result in him paying tax on his worldwide income. • The ATO have promised not to apply any penalties if he amends his income tax return within 28 days. • You need to finalise your advice within the prescribed timeframe. Task: Mr Nguyen has asked you to prepare a letter of advice to determine whether he is a resident of Australia for tax purposes in the 2017 and 2018 income years. He wants your tax advice to decide whether he accept the ATO offer of self-amendment, or whether he enters into audit to defend his current view that he is a foreign resident who does not have to pay tax in Australia on his Saudi Arabian income.

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To Mr Ngugen This letter is to advise you that it will be a good decision ... View the full answer