Advice on tax residency status and tax implications for Jack

PART 1:
Mr. Elwood and Inda Blues,
Unit 52,
246 Queen Street,
Brisbane, QLD,4000.
Date: 12-09-2018.
Sub: Advice on tax Residency status of Mr. Elwood and Inda for 2017-18
Sir,
Hope you are doing great.
In this regard, please note that it has been our privilege to act as your advisor for determining of
tax residency of you and your wife for the Year 2017-18. For the purpose of determination, the
followingdetails have been shared:
(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.
Tax Laws
Let us first analyse the Australian Income Tax Assessment Act, where in under subsection 5 (1)
10(1) and 10(2) of Section 6 it has been stated for an individual resident in Australia his/her
world wide income both ordinary and statutory income shall be taxable in Australia while for a
non-resident only the income earned in Australia shall be taxable.
In terms of Section 6(1)(Anon., n.d.)of Australian Income Tax Assessment Act, 1936 the term
resident and resident of Australia has been defined. The term shall mean a person shall be
considered resident of Australia if he satisfies any of the three tests stated here-in-below
(a) Resides Test: For this test, we look at the person’s permanent dwelling place or for a
considerable period of time. This test has been dealt in depth in the following judgements:
(i) Levene v IRC [1928] AC 217;
(ii) IRC v Lysaght [1928] AC 234;
(iii) TR98/17
Under the said judgement it has been highlighted that if an individual has family connection
in Australia or one has a habitual abode he shall be considered tax resident in Australia.

(b) Domicile Test: For this test, the authorities generally look at the place of birth of individual
along with permanent home. Under the Australian Domicile Act, 1982 a person domicile id
determined at birth and same shall continue until he extinguishes the same. Further, for
determining the permanent place of abode one need to look at place where one sleeps and
stay with his familyThe same has been stated in the following cases:
FCT v Applegate 79 ATC 4307;
FCT v Jenkins (1982) 12 ATR 745 ;
(c) 183 Days test: For this test, the tax authorities generally check for the number of days an
individual stayedin Australia. If such day count, exceed 183 days then the individual is
considered a tax resident. In addition the test shall hold good unless any of the following
conditions are triggered:-
(i) The individual has a house of permanent nature outside Australia;
(ii) There exists no intention among individual to take up residence in Australia.
The same has been detailed in Case S19 85 ATC 225;
On the basis of above, it may be seen, the number of stay days in Australia exceeded 183 days
and there has been an acquisition of permanent abode in Australia. Further the stay period in
Australia exceeds two years. Thus, on the basis of the above it may be concluded that you and
your wife may be considered tax resident of Australia.
Regards,
Tax Advisor,
PART 2A
1. In the present circumstance, Jack has been working with MD & A Architects during the captioned
year. He has received salary form his employer and the same is taxable under the Australian Income Tax
Assessment Act. Further, the employer has deducted PAYG (Pay As You Go) on his income which is
generally deducted on the basis of individual estimated tax liability while the actual tax liability may
differ. Thus, Jack while filing tax return has to pay the difference or claim the refund for the same.
(Powerbuy technologies, 2018)
2. Under the said case , since Jack travelled to and fro his office as a part of daily routine said shall be
treated to be incurred for generating income of a private or domestic nature and accordingly shall be
allowed to be claim as deduction in terms of Section 8-1(2)(b) of Income Tax Assessment Act,
1997.However, if jack had travelled to another workplace and the same was not a part of routine