Taxation Law: Letter of Advice

This article provides a letter of advice regarding residential status for taxation purposes under Taxation Law. It explains the criteria for determining residency status and analyzes the case of Jack, who has a permanent place of residence outside Australia. The article discusses the Resides Test, Domicile Test, 183-Day Test, and Superannuation Test to determine Jack's residency status. It concludes that Jack cannot be considered an Australian resident based on these tests. The article also includes references to relevant tax laws and rulings.

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Part A:........................................................................................................................................2
Letter of Advice.........................................................................................................................2
Part B:.........................................................................................................................................6
Net Income of Partnership:....................................................................................................6
Distribution Statement:..........................................................................................................6
References:.................................................................................................................................7

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Part A:
Letter of Advice
To Jack
From: Roma Tax Consultancy
Date: 6th May 2019
Dear Jack
The letter seeks to explain your residential status by taking into account the facts and
details surrounding your residential status for taxation purpose. The letter seeks to refer to the
“Taxation Ruling of IT 2650” and it is associated to the ascertainment of residential status
for taxation purpose that has the permanent place of abode outside Australia (Woellner et al.
2016). According to this ruling an individual is regarded as the Australian resident for
taxation purpose that has the fixed place of residence out of Australia and ceases to be the
Australian resident all through their stay in foreign country.
The term resident under “subsection 6 (1), ITAA 1936” explains that a person is
regarded as Australian if they are having an Australian domicile, except when it is understood
by the taxation commissioner is satisfied that the taxpayer has the fixed dwelling out of
Australia (Barkoczy 2016). It also comprises of those individuals that are physically present
on a continuous basis in Australia for at least six months during the income year only when
the commissioner is content that the taxpayer has permanent dwelling place outside Australia
and does not has the intention of residing in Australia.
The letter also seeks to highlight that to determine your residency status there are
four test that are considered relevant in your case. This includes;

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a. Resides Test
b. The Domicile Test
c. The 183-Day Test
d. Superannuation Test
Resides Test:
The reside test is the primary test in ascertaining whether the person is living in
Australia and are treated resident under the common law test. An individual is regarded as the
Australian resident if a person is residing in Australia notwithstanding of their citizenship or
nationality or their permanent place of home (Freudenberg et al. 2017). An individual is only
regarded as the Australian occupant when their behaviour reflect that they are consistent with
residing in Australia and they are regarded as Australian occupant when their behaviour
commences. According to the commissioner in “Dempsey v FCT (2014)” the law court
explained that the taxpayer was the non-resident of Australia based on the intention that the
taxpayer wanted to live in Australia in spite his wife and children were in Australia returned
on periodical basis to visit them.
Jack in case your present situation, during the month of June in 2017 you left
Australia to work in Saudi Arabia. You further demonstrated your intention to live and work
in Middle East on the permanent basis. You sold all the belongings that you held in Australia
and moved to single room apartment in Bahrain. As evident Jack, in spite of the fact that you
have retained your home in Australia and your wife and children lives in Australia this factor
cannot be considered alone sufficient (Miller and Oats 2016). Later, you also came back to
Bahrain after a relatively short span in Australia and you were also not present physically in
Australia for a significant period of time during the income year. With respect to the reside
test you cannot be considered as the Australian resident.

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Domicile Test:
According to the Domicile Act 1982, domicile is regarded as the legal conception to
find out residency position of a taxpayer. The common law rules explain that the person is an
Australian resident if they are by birth in Australia or acquire the Australian domicile by
choice as he or she’s permanent home. Nevertheless, a person is regarded as the Australian if
they retain the domicile of their origin in the country of their choice. The decision in
“Applegate v FCT (1979)” the taxpayer moved with his family to New Hebrides and lived
for the indefinite period (Robin 2019). But the taxpayer returned when he fell ill. The law
court found that despite the taxpayer has retained the Australian domicile he has set up the
permanent place of abode out of Australia. The taxpayer was considered as the non-resident
of Australia since his permanent place of dwelling was out of Australia.
In light of the above test, Jack, you have conclusively portrayed that choice of your
domicile is in Australia, however your circumstances suggest that you have adopted the
stable place of abode in Bahrain. Your intention of living with your family cannot be
considered very much conclusive and following your separation with your wife your actions
portray that you intend to remain absent from Australia for an indefinite time (Robin and
Barkoczy 2019). Additionally, the word permanent in your situation seems to be less than
perpetual and your permanent place of dwelling is in Bahrain. As a result, with respect to the
Domicile Test you cannot be considered as the Australian resident since your permanent
place of residence outside Australia and at present you have no intention of coming back to
Australia.
The 183-day Test:
According to the 183-day test an individual is only considered as the occupant of
Australia provided that the person has actually been present physically in Australia for more

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than six months and will be held as the Australian occupant except the taxpayer carries the
intent of permanently residing in overseas nation. Under the 183-day test, during the income
year of 2017-18 commencing from the month June you were not present physically in
Australia for a at least 183-days or one half of income year (Robin 2019). Based on your
evidence, you have set up permanent residence outside of Australia and consequently you are
not an Australian dweller inside the definition of “section 6 (1), ITAA 1936”.
Superannuation Test:
Superannuation test is treated as the objectivity test and needs the membership of
specified superannuation arrangement. The test is applicable to those that are members of
commonwealth super fund. You have exhibited that you are not the member of
commonwealth super fund and this test is irrelevant in your case.
In relation to circumstances, you did not meet any of the residency test criteria. As a
result, you will not be held as Australian resident under the definition of “section 6 (1), ITAA
1936”. We anticipate that the letter has served your purpose and we look forward to hear
from you soon.
Thank You

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Part B:
Net Income of Partnership:

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Distribution Statement:

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References:
Barkoczy, S., 2016. Foundations of taxation law 2016. OUP Catalogue.
Freudenberg, B., Chardon, T., Brimble, M. and Isle, M.B., 2017. Tax literacy of Australian
small businesses. J. Austl. Tax'n, 19, p.21.
Miller, A. and Oats, L., 2016. Principles of international taxation. Bloomsbury Publishing.
Robin & 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.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation
Law 2016. OUP Catalogue.