Tax Residency Advisory and Tax Planning for Individuals in Australia

PART 1:
To,
Mr. Elwood and Inda Blues,
Unit 52,
246 Queen Street,
Brisbane, QLD,4000.
Date: 05-09-2018.
Sub: Advisory with respect to Residency Status
Sir,
Hope this letter finds you in good health.
It has been our honour to be your advisor in relation to determination of tax residency for the
Financial Year 2017-18. In this regard, the details that have been shared with us during our past
discussion include the following:
(a) Mr .Elwood and his wife Inda arrived in Australia on 01-07-2017 along with children;
(b) The transfer period is minimum 3 year;
(c) No intention to stay permanently;
(d) House has been purchased in Australia;
(e) Social connection and relation has been established.
Our Advisory
On the basis of details provided here-in-above, our advisory is as under:
In terms of subsection 5 (1) 10(1) and 10(2) of Section 6 under the Income Tax Assessment Act,
1997 of Australian Income Tax Law it shall be pertinent to note that for an individual resident
in Australia for Tax purposes his/her pan world income is taxable while for a non-resident only
Australian sourced income taxable.
Further, under Section 995-1 of Income Tax Assessment Act 1997 the term resident has been
defined which includes any person who is Australian resident under Income Tax Assessment Act
36.
In addition Income Tax Assessment Act 36 provides three tests for determining of residency of a
person. The same has been detailed here-in-below:
(a) Resides Test: Under this test, the Australian Tax Office (ATO)/ Commissioner generally
harps on the dwelling place of individual or one’s settlement or abode. The same has been
dealt in the judgement of Levene v IRC [1928] AC 217, IRC v Lysaght [1928] AC
234http://law.ato.gov.and TR98/17 where in it was held that if one has a habitual abode or
family connection in Australia, his tax residency shall be in Australia.

(b) Domicile Test: Under this test, the office generally considers the location of permanent
house for determining the residency. The relevant case laws detailing the term permanent
includesFCT v Applegate 79 ATC 4307; see also FCT v Jenkins (1982) 12 ATR 745 ;
(c) 183 Days test: Under this test, ATO generally harps on the number of stay day in Australia.
If the day count, exceed half years then the individual is considered a tax resident. Further,
the 183 days test shall hold good unless any of the following conditions are satisfied:-
(i) the house of permanent nature is outside Australia;
(j) there is no intention to take up residence in Australia.
The same has been detailed in Case S19 85 ATC 225;
In the present circumstance, since You and your wife satisfies more than one test. Thus, You
and Your wife shall be considered tax resident of Australia and the provisions of act shall apply
accordingly.
Regards,
Tax Advisor,
Disclaimer: The above advise shall be useful for the person intended to. The same may change with change in circumstance. Further, the firm
shall not be held responsible if any other person act on such advise without proper consent.
PART 2A
1.PAYG(Pay As You Go) is generally collected on the basis of individual estimated tax liability and the tax
so collected will always be differ from the actual tax liability and the taxpayers is required the pay the
extra amount as tax or refund after assessment. In the given case Jake worked for MD & A Architects
and received salary of $ 86,000 and Payg tax withheld amounted to $19.820, salary received will be
shown under income and tax liability will be computed on the basis of income arrived at and from that
tax liability withheld PAYG tax will be deducted to arrive at any additional amount to be paid as tax or
any refund for the same.(BDO, 2017)
2. If the employee travel as a daily routine from his place of work to residence than this is normal
routine work and personal expenses and cannot be claimed under deduction but if the employee travel