Australian Tax Law Case Study: Determining Residency for Tax Purposes

This case study analyzes Australian tax law concerning residency to determine the tax obligations of a foreign individual, Jenny, an accountant who worked in Australia for nine months. The analysis applies four tests under Australian tax law: the domicile test, the superannuation test, the resides test, and the 183-day test. While Jenny does not meet the criteria for residency under the domicile and superannuation tests, she is deemed an Australian resident for tax purposes under both the resides test (due to her extended stay and living arrangements) and the 183-day test (as she resided in Australia for more than 183 days within a year). The study concludes that Jenny is liable to pay income tax to the Australian government, emphasizing that individuals staying in Australia for an extended period are responsible for fulfilling Australian tax obligations. Desklib offers similar solved assignments for students.

TAX LAW
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Table of Contents
Introduction................................................................................................................................3
Australian residence law for tax purposes.................................................................................3
Conclusion..................................................................................................................................4
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Introduction
Tax residence mainly stands for the term “fiscal residency” which deals with the tax payment
related to living and working in abroad. It also explains the way individual is treated related
to taxation. However, this study focuses on analysing the taxation law of Australia related to
a tax payment of foreigners who are working and living in the country.
Australian residence law for tax purposes
Australian tax residency system has four tests according to Australian tax law which helps to
determine whether the individual is the resident of Australia or not. The test includes:
The domicile test
If the permanent address of an individual is Australia, then the individual is recognized as a
resident of Australia for tax purpose. According to this law, it can be said that Jenny, the
accountant is not a resident of Australia for tax purpose.
The superannuation test
This test determines that the government employee who works overseas at an Australian
posts is recognised as an Australian resident for tax purpose. Therefore, it can be said that the
accountant Jenny was not a resident of Australia for tax purpose as she was not holding
Australian government job.
The resides test
Reside test mainly deals with factors that are based on the primary test of Australian tax
residency. According to this test, it is found that the purpose of an individual's presence in
Australia along with business ties and living arrangements are applicable for paying tax to the
Australian government. Therefore, it can be said that Jenny was liable to pay income tax to
the Australian government as per this rule because she hired an apartment and clothes for
nine months. The lady accountant was offered to take a position in Sydney for nine months.
Therefore, it can be said that she was a resident of Australia for tax purpose.
The 183-day test
This test deals with the individual’s residing days in Australia, whether it is half of the
income year or with breaks. According to the case study, it is found that Jenny came to
Australia on 25th April 2018 and lived continuously for three months. She later took an
apartment for further staying in Australia for nine months. It means the lady lived in Australia
from 25th April 2018 to 25th April 2019. Therefore, it can be said that the lady was an
Australian resident and hold the responsibility to pay tax to Australian government. In the
current case, it can be said that the duration of living of Jenny was more than the fixed time
which has made her liable to pay tax in Australia to the Australian Government.
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Conclusion
From the above study, it can be concluded that the lady accountant named Jenny is
recognized as an Australian resident for tax purpose based on 183 day and resides test. It
helps to conclude about Australian taxation law along with foreign resident for bringing
justice to the case. Therefore, it can be said that any individual staying in Australia for more
than fixed time has the responsibility to pay tax to the Government of Australia.
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