This report assesses the residential position of Dave in Taxation Law based on the resides test, domicile or permanent place of abode test, 183 days test, and superannuation test. It discusses the criteria and factors considered in determining residency status.
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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 Introduction:...............................................................................................................................2 Discussion:.................................................................................................................................2 Resides Test:..............................................................................................................................2 Domicile or Permanent Place of Abode Test:............................................................................4 The 183 days Test:.....................................................................................................................5 Superannuation Test:..................................................................................................................6 Conclusion:................................................................................................................................6 References:.................................................................................................................................7
2TAXATION LAW Introduction: According to the“section 6-5 (2) of the ITAA 1997”, the taxable income of the Australian resident comprises of the ordinary income that are derived from every sources. As per the“section 6-10 (4)”an Australian resident assessable income includes the statutory income from every sources (Woellner et al. 2016). As per the“section 995-1, ITAA 1997” Australian resident is a person that are the resident of Australia within the meaning of“ITAA 1936”. As per the“section 6 (1) ITAA 1936”Australian resident is the person that are residing in Australia or person that has the fixed home in Australia (Barkoczy 2016). The present report would be assessing the residential position of Dave The taxpayer however decided to return to Australia after his mother suffered health issue. Discussion: According to the definition of resident of Australia it comprises of four different test. These includes the resides test, permanent place of abode test and 183 days’ test. There are number of instances that are dealing with the interpretation of the first three tests. While the case laws assist in understanding the definition of terms that are used under“section 6 (1)” (Morgan, Mortimer and Pinto 2018). This is mainly due to the residency of a person that are determined on the case basis and are reliant on the particular facts as well as circumstances of the individual. To ascertain the residential position of Dave and the below listed tests are performed. Resides Test: The resides Test is known as the residence based on the ordinary concepts. The term resides is not stated in the statute and its ordinary meaning is referred as to dwell on permanent basis or for the considerable period of time. Referring to“Miller v FCT (1946)” to determine the residency status of Dave, the question of fact and degree is considered. As
3TAXATION LAW evident Dave worked as the project engineer in Nepal. However, upon the ill health of his mother he decided to return to Australia. As per the resides test there are certain factors that are considered by the courts in determining the residency status (McGregor-Lowndes 2016). This includes the time that is spent physically in Australia. The court of law in“IRC v Laysaght (1928)”held that if the person is the regular visitor in Australia, then the frequency, regularity as well as duration of the visits is a noteworthy factor. As per the“Taxation ruling of IT 2650”factors such as purpose of visits to Australia and abroad as well as the maintenance of residence in Australia for the use of taxpayer is necessary (Braithwaite and Reinhart 2019). Similarly, in“Levene v IRC (1928)”the person’s family, business and social ties are also necessary factors that are considered in determining the residential status. As evident Dave having spent his time in 2007 and 2013 by working as project engineer in Nepal returned to Australia. Though his initial intention was temporarily to reside in Australia but his return to Nepal was uncertain. The taxpayer also bought a property in Phillip Island and also moved into the property initially. Citing“Levene v IRC (1928)”the evidences obtained suggest that Dave purpose of visit is his family and social ties (Sadiq 2018). The purchase of property in Phillip Island and taking up a work in Australia also states his intention of residing in Australia. In the current case of Dave, the taxpayer here Dave transferred a sum of $80,000 from the overseas account to the Australian account that is jointly held with the interest bearing account. The taxpayer also bought an investment property in Victoria and acquired the shares in the Australian company. The taxpayer also maintained his private health insurance in Australia.The behavioural characteristics of Dave, represents that a sufficient amount of time has elapsed and reflects continuity and routine or habit. The purpose of presence reflects his family and employment ties (Robin 2019). The maintenance and location of assets together with the social and living arrangement reflects continuity. Dave from the year 2013
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4TAXATION LAW to 2016 has been physically present in Australia and is meeting the criteria of ordinary concepts test. Domicile or Permanent Place of Abode Test: An individual taxpayer is treated as the Australian resident if a person has the domicileinAustralia,exceptthecommissioneriscontentthatanindividualhasthe permanent place of abode out of Australia under the“section 6 (1) of the ITAA 1997” (Braithwaite and Reinhart 2019).An individual generally obtains the domicile by Birth as the country of his origin or the domicile of a choice where the taxpayer has the intention of making their home for the indefinitely period. According to the“Domicile Act 1982”a person is considered as the resident of Australia given their domicile is in Australia, except the commissioner of taxation is content that the person has the permanent place of residence out of Australia (Robin and Barkoczy 2019). The court of law in“FCT v Applegate (1979)”held that permanent does not represents “forever” and the objectively is assessed every year. An individual’s purpose of staying permanently, instead of being temporary or transitory is considered important but cannot be treated as the only factor in consideration. According to the“taxation ruling of IT 2650”there are factors that must be taken into the consideration in ascertaining whether the person that leaves Australia to live in the overseas nation by acquiring fixed place of residence in overseas ceases being an Australian resident during their absence (Miller and Oats 2016). The factors include the actual or the intended time of stay in overseas nation or whether any fixed place of residence has been established out of the Australia along with the durability of the person’s constant relation with the place within Australia.
5TAXATION LAW As held in the case of“Boer v FC of T (2012)”and“Sully v FC of T (2012)”the taxpayers were treated as the Australian residents all through their stay in the overseas as they did not establish a permanent place of residence out of Australia. During the overseas stay from 2007 to 2013 Dave did not established a permanent place of Domicile. He travelled from one country to another during his overseas stay and regularly returned to Australia to visit his parents. The intended and the actual length of stay in Nepal and Paris was transitory in nature and reflected durability with the Australian associations. The establishing of home in Australia and taking up employment reflects his intention of staying permanently instead of being temporary in nature. Furthermore, Dave also has the original domicile in Australia as he holds the Australian passport. With respect to the“Domicile Act 1986”, Dave from the year 2013 to 2016 has met the criteria of the Domicile test (Coleman and Sadiq 2013). Within the extended meaning of the“section 6 (1) of the ITAA 1936”he will be treated as the Australian resident based on permanent place of abode test. The 183 days Test: An individual that is living in Australia for the total amount of six months of any income year or in other words for more than 183 days in the relevant income year will be treated as the Australian resident. An exception to this case is that an individual will not be treated as the Australian resident if the person established a permanent place of abode out of Australia and does not has any intention of taking up the Australian residency (Kenny 2013). Similarly, in the case of Dave for the income year ending 30 June 2018 Dave has made four trips to Australia and has spent a total of 91 days in Australia. Therefore, Dave cannot be treated as the Australian resident within the provision of 183 days’ test as the taxpayer did not fulfil the criteria of spending more than six months in the relevant income year.
6TAXATION LAW Superannuation Test: This test is applied on the member of the commonwealth superannuation fund that are eligible employee such as the foreign diplomats and includes the member of the family that aredeemedtobetheAustralianresidentfortaxationpurpose(Krever2014).The superannuation test cannot be applied in the situation of Dave as his not the member of commonwealth fund. Conclusion: On a conclusive note Dave has successfully satisfied the criteria of ordinary concepts test and permanent place of abode test. Dave physical presence and intention has coincided for majority of the time when he returned to Australia. Dave purpose of visit in Australia and abroad was transitory as the taxpayer did not established a permanent place of residence out of Australia. The purchase of investment property and maintenance of place of dwelling in Australia for his use signifies that he behavioural characteristics that are consistent with residing here. The taxpayer intentions to stay in the overseas nation was temporary and reflected durability with the Australia. With respect to the meaning stated under“section 6 (1) of the ITAA 1997”will be treated as the Australian resident.
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7TAXATION LAW References: Barkoczy, S., 2016. Foundations of taxation law 2016.OUP Catalogue. Braithwaite, V. and Reinhart, M., 2019.The Taxpayers' Charter: Does the Australian Tax Office comply and who benefits?. Centre for Tax System Integrity (CTSI), Research School of Social Sciences, The Australian National University. Coleman, C. and Sadiq, K. 2013.Principles of taxation law. Kenny, P. 2013.Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths. Krever, R. 2014.Australian taxation law cases 2014. McGregor-Lowndes, M., 2016. Lawyers, reform and regulation in the Australian third sector.Third Sector Review,22(2), p.33. Miller, A. and Oats, L., 2016.Principles of international taxation. Bloomsbury Publishing. Morgan, A., Mortimer, C. and Pinto, D., 2018. A practical introduction to Australian taxation law 2018. Robin and Barkoczy Woellner(Stephen & Murphy, Shirley Et Al.), 2019.Australian Taxation Law Select 2019: Legislation and Commentary. OXFORD University Press. Robin, H., 2019.Australian Taxation Law 2019. OXFORD University Press. Sadiq, K., 2018.Australian Tax Law Cases 2018. Thomson Reuters. Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation Law 2016.OUP Catalogue.