Taxation Law: Determining Residential Status and Main Residence Exemption

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

1TAXATION LAW
Table of Contents
Part A:........................................................................................................................................2
Answer to requirement 1:...........................................................................................................2
Issues:.....................................................................................................................................2
Rule........................................................................................................................................2
Applications:..........................................................................................................................5
Conclusion:............................................................................................................................5
Answer to requirement2:............................................................................................................6
Part B:.........................................................................................................................................7
FCT v Rowe (1997) 35 ATR 432; 97 ATC 4317.......................................................................7
Issues:.....................................................................................................................................7
Facts:......................................................................................................................................7
FCT v Stone(2005) 59 ATR 50; 2005 ATC 4234......................................................................8
Issues:.....................................................................................................................................8
Facts:......................................................................................................................................8
Answer to B:..............................................................................................................................8
References:...............................................................................................................................10

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Part A:
Answer to requirement 1:
Issues:
The issues here is based on determining the residential status of the taxpayer inside
the denotation of “section 6 (1) of the ITAA 1936”. The issue also contains the assessment of
income from the source nation for taxation purpose.
Rule
The purpose of the “Taxation Ruling of IT 2650” is to offer rules in defining whether
the taxpayer that leaves Australia to live in foreign for instance on impermanent abroad work
jobs ceases to be an Australian resident for the purpose of taxation during their stay in
overseas nation.
The statutory meaning of occupant and inhabitant of Australia is defined under the
“subsection 6 (1) of the ITAA 1936”. According to the definition stated under “section 6 (1)
of the ITAA 1936” a person that resides in Australia and contains those person that has their
residence in Australia except it is understood by the taxation official that the taxpayer has the
permanent place of abode out of Australia (Barkoczy, 2014). The definition also includes
person that has been Australian for greater than six months of the year except the taxation
commissioner is the taxpayer has the permanent place of abode out of Australia and does not
have the intention of residing in Australia.
The above stated definition also provides four relevant tests in ascertaining whether the
taxpayer is regarded as the Australian resident;
 Residence in terms of the ordinary concepts
 The residence and perpetual place of residence test

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 The 183 days test
 The superannuation test
There are certain factors that must be ascertained while determining the residence status
of an individual. This includes;
 The intentional and the real length of time an individual resides in the foreign nation.
 The purpose of the taxpayer to entire return to Australia at certain point of time or
traveling in another country
 The duration of a person’s attendance in the overseas nation or the continuity of stay
in the overseas nation (Grange et al., 2014).
Resides Test:
The ordinary sense of the term reside is referred as to live permanently for a
considerable period of time (Jover-Ledesma, 2014). This implies that to have a settled or
usual abode where a person lives or at the particular place. If a person lives in Australia then
no other test is needed for considerations.
Domicile Test:
Domicile is observed as the legal concept which should be determined based on the
“Domicile Act 1982” and the common law rules that is developed by the court. The primary
common law rule states that a person obtains at birth the domicile of his or her origin (Kenny
et al., 2018). The court in “Henderson v Henderson (1965)” held that an individual usually
preserves the dwelling of their origin until one decides to acquire the domicile of their choice
in another country or acquires the domicile by the act of law (Sadiq et al., 2018). As held in
the leading case of “FCT v Applegate (1979)” the high court in its decision held that the
perpetual does not signifies everlasting or incessantly and the same is measured objectively
every year.