This document provides a letter of advice regarding residency status in relation to taxation law. It discusses the different tests used to determine residency and provides an analysis of the individual's situation. The document also includes a video transcript and references for further reading.
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Running head: TAXATION LAW Taxation Law Name of the Student Name of the University Authors Note Course ID
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1TAXATION LAW Table of Contents Part A:........................................................................................................................................2 Letter of Advice.....................................................................................................................2 Part B:.........................................................................................................................................5 Net Income of Partnership:....................................................................................................5 Distribution Statement:..........................................................................................................5 Part C: Video Transcript:...........................................................................................................6 References:.................................................................................................................................7
2TAXATION LAW Part A: Letter of Advice To Jack Johnson From: Optic Tax Advisers Date: 29thMay 2019 Dear Jack We seek to your attention towards our letter in response with the recent meeting and conversation over the phone regarding your residency status. We are providing you with the summary of opinion regarding the matters that you have furnished. Definition of Residents: Under the“s6(1), ITA Act 1936”residents are defined as person that is residing in Australia (Clark and Maas 2016). It also takes into the account of those person that meets the domicile, 183-days or the superannuation test. So to basically to judge your residency status we have mainly focused on four test namely; a.Resides test b.Domicile test c.183-day test d.Superannuation test We would like to inform you that a person is a resident if they are meeting one or more of the aforementioned test.
3TAXATION LAW Resides Test: This is first test in Australia and it is also known as common law test. This test is applied when the person is entering or leaving Australia. According to this test an individual is held to be Australian occupant if they are living in Australia (Norbury 2019). The factors generally include the behaviour at the time one is present in Australia, the intention or the objective of presence. The period of physical presence in Australia, employment ties or living arrangements. Jack in your situation we would like to address that you took the decision of moving to Bahrain following the offer of work in Saudi Arabia for twelve-month basis. At time of leaving Australia you the belonging which you had were sold by you. In our opinion, even though you do have the home in Australia but we cannot have considered as satisfactory factor. You were not present during 2017/18 income year for significant part in Australia. You only visited for short period in Australia and under resides test we can say that you are not the Australian occupant. Domicile Test: The second test is the domicile test, a person under this is a resident provided that they have the domicile in Australia except when the official is satisfied that perpetual house of a person is not in Australia (Kenny, Blissenden and Villios 2015). This test is commonly applied when the taxpayer is sent in the overseas country for work purpose. As held in“FCT v Applegate (1979)”the court noticed that the taxpayer had the fixed house place out of Australia. Jack by referring to the aforementioned explanation we noticed that a single bedroom flat was bought by you in Bahrain after you decided to separate from your wife. You did not express that your choice of residence is in Australia. As evident from your situations we
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4TAXATION LAW noticed that your permanent living or abode is in Bahrain. Your two months visit in Australia over the period of twelve months simply adds weight to the above stated conclusion drawn. For that reason, you are not the Australian occupant under this test. 183-day test: An individual that has been actually been in Australia on the regular or intermittent basis for a period of 183 days in the year of the income is an Australian resident (Jones 2018). Jack as per your situation we noticed you came to Australia for two months only and you remained absent for major part of the income year. You have also expressed that your usual place of residence is outside Australia and you have no purpose of living in Australia. So under this test you cannot be held Australian occupant. Superannuation test: This test is practical only to those individuals that are considered eligible for the superannuation schemes for the commonwealth public workers. In the situation of Jack this test is simply irrelevant (Woellner et al. 2016). As noticed above Jack you did not meet any of the residence test. Therefore, we can conclude that you are not the Australian resident under“s6 (1), ITA Act 1936”, for the year 2018/19. We anticipate that aforementioned advice has been helpful in serving your purpose and we soon expect to hear from you again. Yours sincerely Associate Taxation Optic Tax Advisers
5TAXATION LAW
6TAXATION LAW Part B: Net Income of Partnership:
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7TAXATION LAW Distribution Statement: Part C: Video Transcript: In order to ascertain the Jack’s residential status reference to the provision made in “s6 (1), ITA Act 1936”has been made. I have also referred to the several residential test to decide the residency status of Jack and noticed that he is not the Australian for the year 2018/19. For each of the resides test, domicile test and 183-days test jack has exhibited that his permanent place of residence not in Australian. On the other hand, to compute the net income of the partnership reference to sect-90 has been made. The partners net income and interest on capital have been considered for preparing the tax distribution statement.
8TAXATION LAW References: Clark, W. and Maas, R., 2016. Spatial mobility and opportunity in Australia: Residential selection and neighbourhood connections.Urban Studies,53(6), pp.1317-1331. Jones, D., 2018. Complexity of tax residency attracts review.Taxation in Australia,53(6), p.296. Kenny, P., Blissenden,M.and Villios,S.,2015. Residencyand Australiansworking overseas: can be an expensive lesson in tax Law. Norbury, M., 2019. Mr Harding's residence reconsidered.Taxation in Australia,53(9), p.497. Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation Law 2016.OUP Catalogue.