Issues of Taxation Law Case Study 2022

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Table of Contents
Part A:........................................................................................................................................2
Issue:......................................................................................................................................2
Rules:......................................................................................................................................2
Application:............................................................................................................................2
Conclusion:............................................................................................................................4
Part B..........................................................................................................................................5
References:...............................................................................................................................15

TAXATION LAW2
Part A:
Issue:
The first issue concerning the case is to determine whether Rachel is a resident of
Australia for the part of whole of the income year.
Rules:
The relevant rules that are involved in the determination of residency test is “sec 6 (1)
ITAA 1997”.
Application:
The application of residency test to the situation of Racheal
Ordinary resident test:
Rachel will not be considered a resident under the ordinary resident test because she
was not present for a significant time period of 2019 in Australia and has the intention of
returning Canada with the objective of setting up her family. There is not any solitary test for
ascertaining whether Racheal “resides” in Australia and it becomes necessary to look into all
the relevant factors as well as other relevant factors to ascertain whether Rachel is living in
Australia1. The ATO in “TR 98/17” has identified certain factors such as even though Rachel
has maintained a residential home in Australia for her husband and child but this cannot be
considered as relevant in supporting her to be resident2. Following the cases such as “Levene
v IRC (1928)” under the “resides test” Rachel is not a resident of Australia.
Domicile Test:
1 DEUTSCH, ROBERT ET AL, Australian Tax Handbook 2018 (THOMSON REUTERS AUSTRALIA, 2018)
2 Levene v IRC (1928)

TAXATION LAW3
As per this test a person is a resident if they have domicile in Australia unless it is
found that the taxpayer has permanent place of residence outside Australia. In “Harding v
FCT (2019)” the term permanent place of abode implies that it is not the sort of dwelling
where someone lives in is relevant rather the place or nation where they reside in3.
Rachael while in Canada from 1st July 20198 onwards stayed with her parents in her
childhood home. However when Racheal is working, she stays in a hotel and spends
approximately 20 nights when travel in a month. Citing “Harding v FCT (2019)” from 1st
July onwards till 31st December 2018 she will be considered as Australian resident because
her permanent place of abode is in Australia where her husband and child lives in4.
Racheal on 1st January 2019 left Australia to live in Canada. She also bought a house
and settled back in Canada. Rachel has conclusively demonstrated that her domicile of choice
is out of Australia and her permanent place of residence is in Canada. Her only single visit to
Australia in last twelve months adds weight to the conclusion drawn.
The 183-days test:
Racheal was only present for a single month. Hence she is not a resident under this test.
Superannuation Test:
This test is irrelevant to Racheal facts
Conclusion:
In conclusion, it is likely that Racheal will be treated as Australian resident under “sec
6 (1) ITAA 1997” only from the period of 1st July 2019 to 31st December 2018 because she
3 Harding v FCT (2019)
4 Grange, Janet, Geralyn A Jover-Ledesma and Gary L Maydew, 2014 Principles Of Business Taxation