The question below is based on the facts before the AATA (Administrative Appeals Tribunal) in Sully v FCT. At issue before the AATA was the tax liability for the taxpayers 2009 income year. The facts of the case were adapted in drafting the scenario below. In the original case, the taxpayer contended he was a tax resident of the UAE, while the ATO contended he was a tax resident of Australia.

The taxpayer is a marine engineer. He is an Australian citizen. He was borne in and lived in Cairns all his life until January 2016.

In January 2016, he left Australia and commenced working on ocean going vessels based in other parts of the world. He left some personal effects with relatives in Australia and sold his other belongings.

First, he worked on a vessel in Chile for two months, then in the Bahamas and Cuba for a few weeks, briefly returning to Australia to apply for a visa to enter the United States. A condition associated with the work visa to the United States was that the applicant must be able to establish they reside in another country. The taxpayer indicated on his application he resided in Australia.

After obtaining the proper visa, he left Australia in May 2016 for a new job in California. He worked there for less than two months before temporarily returning to Australia to find another overseas job.

In August 2016, he took up a position in Dubai to work on a yacht that belonged to a company owned by a senior government official. His employment agreement indicated that the taxpayer may be sent to work on a variety of vessels in locations all around the world. As part of his employment agreement, his employer provided him with accommodation. The taxpayer shared a two bedroom apartment with another employee of the company in Dubai. The apartment was provided partially furnished. The taxpayer and his co-employee acquired some linen, white goods and other household items together. No one else used the apartment during the taxpayers absences. The taxpayer lived at this address from the time he commenced work until July 2017.

As his employer did not obtain the proper work visas for the taxpayer until February 2017, he was unable to open a back account in the United Arab Emirates (UAE). As a consequence his salary was paid into his Australian bank account until then and he continued to use Australian credit cards for purchases.

During the time that he was employed by the employer in Dubai, he estimated he spent relatively little time in his Dubai apartment, possible as little as 19 days. Most of his time was spent overseas on a variety of yachts. In February 2017, he was promoted to a managerial role and as most of the vessels he worked on then were situated off the coast of New Orleans, he rented an apartment in the city until July 2017. He also retained the use of the apartment in Dubai and returned there on several occasions, but only for a few days in total, as described above.

The taxpayer maintained a relationship with an Australian girlfriend from the date he departed Australia until he ended the relationship in November 2016.

The taxpayer considered the apartment in Dubai to be his permanent home during the period of his absence from Australia. The taxpayer agreed that if his employment ceased he would not stay in the UAE but he would also not return to Australia. His aim, as always, was to work on ocean going vessels.

You are required to:

a. Explain why Test 1: Resident according to the ordinary concepts wont be applicable in determining the taxpayers residency status for Income Tax purposes.

b. On the basis that there is only one test under which the taxpayer may be a resident for Income Tax purposes, discuss the taxpayers residency status for the 2016-2017 income year.