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Direct Tax Law and Practice - PDF

   

Added on  2021-05-31

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TAXATION LAWSTUDENT ID:[Pick the date]
Direct Tax Law and Practice - PDF_1

IssueThe central issue based on the given facts is to tender advice to taxpayer (Jacinta) in relationto the payments that she has received during the two tax assessment years namely 2016/17and 2017/18.Tax residency determinationIn the given case, it is apparent that Jacinta has received income from both domestic and alsointernational income sources, hence the subject of tax residency gains relevance. As per s. 6-5(2), in case of Australian tax residents, any income which is obtained from any sourceirrespective of the geographical location of the source would be considered for tax purposesin Australia (Krever, 2016). In sharp contrast, s.6-5(3) highlights that for foreign taxresidents, the income that is earned from sources based in Australia during the givenassessment (Woellner, 2014). This difference in tax treatment leads to the subject of taxresidency assuming importance. The subject of tax residency has been outlined in s.6(1)ITAA 1936 (Reuters, 2017). For individual taxpayers, TR 98/17 highlights the various teststhat are outlined below (Gilders et. al., 2016).Residency Test – This test is applied to ascertain the tax residency of only foreignresident staying in Australia and hence would not be useful in the given case. 183 day Test – This test is applied to ascertain the tax residency of only foreignresident staying in Australia and hence would not be useful in the given case.Domicile Test – This test is applied to ascertain the tax residency of Australianresidents who are staying outside Australia and hence would be useful in the givencase since Jacinta is an Australian resident and shifts to Singapore. Superannuation Test – This test is applied to ascertain the tax residency of thoseAustralian government employees who may be stationed aboard and clearly thiswould be useful for the given taxpayer. Since only the domicile test is applicable, hence this test is discussed in detail so that thesame can be applied for Jacinta.Domicile testIn order to fulfil this test for tax residency, the taxpayer essentially needs to satisfy the twoconditions that are highlighted below (CCH, 2013).
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