The Federal Court has upheld an ATO decision regarding a US “gap year” worker (Stockton v Commissioner of Taxation [2019] FCA 1679).

Aged 18 at the time of her first arriving in Australia, US citizen Rebekah Stockton spent most of the time between finishing high school studies and starting her tertiary education working various jobs in Australia.

She entered the country on a “Work and Holiday” visa (subclass 462), which entitled her to live and work in Australia for no more than 12 months — a time frame she stuck to and did not apply for an extension.

Stockton, having been in the country for more than 183 days, had hoped to enjoy the tax advantage of resident rates, however the ATO insisted on taxing her as a non-resident — which is why she found herself in front of Justice Logan in the Federal Court earlier this month, arguing that she should have been taxed as an Australian resident for taxation purposes.

The judge in this case stated that he had the benefit of the Harding judgment to consider in his ruminations, having previously reserved his judgement in the present case, stating: “I considered that the interests of justice were best served by deferring the delivery of judgement in this case until the fate of that application was known.” Readmore