Taxation Law

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Author Note

1TAXATION LAW
1.
To Harry,
Issue
Whether Harry can be treated as a resident for the purpose of taxation in Australia.
Whether his income that has been earned from America can be assessed as an exemption
under section 23AG of the ITAA 36. Determination of his source of income.
Rule
Section 995.1 of the Income Tax Assessment Act 1936 (Cth) – an individual will be
treated as a resident in Australia if he can be pointed as a resident under the ordinary
concepts.
Resides Test – under this section the resides test has been provided for the determination
of the residency of a taxpayer in Australia for a particular income year. This test renders an
individual taxpayer to be considered as a resident in Australia if under the normal concepts he
is considered as the same. This test needs an individual to reside in Australia during an
income year for the purpose of being rendered as a resident in Australia. This test is
applicable to a person who has been visiting Australia. For the purpose of this test the
physical presence is required to established. The same can be illustrated with the case of FC
of T v. Applegate 79 ATC 4307.
Section 6 of the Income Tax Assessment Act 1936 (Cth) – there are three tests under this
section for the purpose of determination of the residency of a person in Australia. These tests
includes the domicile tests, the 183 day test and the Superannuation Test.
Domicile Test – this test requires a person to have a domicile in Australia. To avail
recognition as a resident under this test, the person should have a permanent place of abode

2TAXATION LAW
located not outside Australia. This test is applicable in case of person who has their origin in
Australia. This has been provided in the TR IT 2650. This test can further be illustrated with
the case of Bell v. Kennedy [1868] L.R.1 Sc.& Div. 307.
183 Day Test – any individual who has satisfied the previously mentioned two tests is
required to be residing in Australia for a period, which is not less than 183 days. This has
been provided under TR 98/17. This can be discussed with the case of FCT v Applegate
(1979) 9 ATR 899.
Superannuation Test – Government employees covered by the Superannuation Act 1976
are also considered as a resident along with their family.
Section 23AG of the Income Tax Assessment Act 1936 (Cth) – this provides an exemption
towards a resident individual while assessing their income that they have earned from
employment engaged in another foreign country for a period exceeding 90 days.
Application
In the present situation, Harry has a British origin who has migrated to Australia for his
employment in the Megabytes Pty Ltd. This requires the application of the resides test to the
assessment of his residency. The migrated to Australia with his family and has the intention
of residing there permanently. He stayed in Australia between 2009 and June 2015. Harry has
been residing in Australia during this period and he had moved in to Australia with his
family. Hence, he will be treated as a resident by virtue of the resides test in Australia as
under this section the resides test has been provided for the determination of the residency of
a taxpayer in Australia for a particular income year. This test renders an individual taxpayer
to be considered as a resident in Australia if under the normal concepts he is considered as
the same. The same can be illustrated with the case of Harding v Commissioner of Taxation
[2018] FCA 837. The application of the other test relating to residency will not be required.