Determining Residential Status for Income Tax Purposes

This document discusses the criteria for determining residential status for income tax purposes in Australia and concludes that the individual in question is not an Australian resident for the specified income year.

Running head: TAX
Tax
Name of the Student:
Name of the University:
Authors Note:

1
TAX
To,
Jack Johnson,
Ref: Letter of advice.
Respected sir,
Issue:
Issue is to determine whether Jack Johnson is a resident Australian for the year ended on June
30, 2018 for income tax purposes.
Rules and application:
The following specific points are important to take into consideration before commenting on the
residential status of yours in the country for the year ended on June 30, 2018.
 Section 6-5 of Income Tax Assessment Act 1997 (Act) provides the necessary criterions
to be fulfilled by a person in Australia to be considered an Australian resident for the
income tax purposes. S 6-5 provides three statutory tests for individuals to test their
residential status.
 Domicile test [S 6-5 (a) (i)]: Having a permanent place of residency is termed as a
place of domicile. A permanent place of abode is one where a person lives with
his family permanently. In FCT v. Applegate 79 ATC 4307 the importance of
domicile test for determination of residential status has been documented
(Passant, 2013).

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TAX
 183 day test [S 6-5 (a) (ii)]: A person will be considered an Australian resident for
income tax purposes of an income year if he / she has been in the country for
more than one half of the income year, i.e. 183 days or more [Case S19, 85 ATC
225] (Passant, 2013).
Permanent place of abode is defined in the Act as the resident in which an
individual lives with his family permanently. In this case the place of residence of
Jack in Australia is not a permanent place of abode as Jack does not have any intention to
live in Australia. In FCT v. Applegate 79 ATC 4307, the judge has specifically
mentioned that in case taxpayer abandons any permanent place of abode by adopting
residence in other country then the taxpayer will not be considered an Australian resident
for tax purposes. In this case the intention of Jack clearly shows that he has no intention
of living in Australia hence, the residence in Australian cannot be considered permanent
residence of Jack.
 Superannuation test [S 6-5 (a) (iii)]: This test is not relevant in this case hence, not
discussed here.
Conclusion:
As per the details provided in the document it is not clear that exactly how many days Jack has
stayed in Australia in the income year ended on June 30, 2018. However, it can be assumed that
his total stayed has not touched 183 days in the income year as he has only visited in June and
November, 2017.

3
TAX
Since Jack has no intention to stay in Australia hence, neither domicile nor 183 days tests are
satisfied by him. Hence, Jack is not an Australian resident for the income year ending on June
30, 2018.
Regards,
(Name of the student)

4
TAX
References
Passant, J. (2013). Income Tax in Australia: From Appearance to Reality. SSRN Electronic
Journal, 2(4).
Thampapillai, D. (2014). The Income Tax Assessment Act 1936 S23AG and Double Tax
Avoidance Agreements. SSRN Electronic Journal, 3(7), pp.3-13.