Evaluating Dale's Australian Tax Residency Status: A Detailed Report

This report analyzes the Australian tax residency status of an individual named Dale for the financial years 2017 and 2018. It examines the relevant provisions of Australian tax law, including the 'resides' test and specific rules for foreign students. The report considers Dale's visa status, length of stay in Australia, employment, and other factors to determine whether he is considered an Australian resident for tax purposes in each year. The analysis concludes that Dale is not a resident for tax purposes in 2017 but is considered a resident in 2018 due to meeting the residency requirements, specifically the duration of his stay and his enrollment in a course lasting more than six months.

Residential Status
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Residential status of Dale in financial year 2017
To find that you are liable to tax first thing is needed to understand whether you are the
resident of that country or non-resident. Every country has their different rules for checking
the residential status. It is not necessary for you to being an permanent citizen of that country
to be a resident (ATO, Are you an australian resident for tax purpose, 2016). In Australia, the
rules are made for checking the residential status of a person, firm, company, etc. it is not
necessary that you have visa of Australia so you can be treated as a resident of the country.
There are different rules are made for different situation to find the residential status.
Dale is studying mechanical engineering at Monash University. He completed high school in
France and then a bachelor of engineering in Germany. Most of his family members are in
France, some are in Germany. He holds a UK passport, and currently undertakes a
postgraduate degree in Australia based on a three year student visa.His first arrival in
Australia is on 3 April 2017 and he came on student visa and he spent some of the months in
country. In the month of May he also visited New Zealand. In July 2017, he took a rented
apartment in Australia and entered into a one year lease.
Provisions for foreign students studying in Australia have different rules for residential status
in comparison to the resident. You will be treated as a resident of Australia if you are an
overseas student and pursuing a course in Australia having duration of more than six
months.If you came on the tourist visa and most of that you are travelling and working then
you will be treated as non-resident of the country or foreign resident (ATO, Residency test,
2016).
Dale came in Australia on 3rd April 2017 and spent most of his time in travelling and he
comes on a tourist visa. In July 2017, he rented an apartment to complete his professional
degree. He reside in Australia for 89 days in financial year 2017 which is less than the period
of six months. Therefore he will not be treated as a resident of the Australia for taxation
purpose in financial year 2017. He does not live in Australia for 183 days and different tax
rules will be applied on Dale in financial year 2017.
Residential Status of Dale in financial year 2018
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The Courts used the definition of resides to determine that whether the person is an
Australian resident for taxation purpose. The reside term is not defined in the provision of
income tax assessment act. Residential status of individual is described in Taxation Ruling
TR 98/17 (ATO, Work out yoru residency status for tax purpses, 2017). The ruling outlines
the circumstances where the individual is considered to be resident of the country or not.
People entering in Australia have different reasons such as:
 Migrants
 Academics teaching or studying in Australia
 Students studying in Australia
 Tourists, and
 People those have pre-arranged employment contracts
Your domestic and economic affairs also affect your residential status. It is highly depends on
your activities and behaviour. The rule for the student studying in Australia remains same as
the course lasts for six months or more, and then you will be treated as Australian Resident
for tax purpose. This means:
 You have to pay tax on the income earned at the time you are residing in Australia.
 Benefits will be available for you that is available for the Australian citizens that
means deduction benefit can be availed by you and tax offsets is also available to you.
The Australian residents have to give all the information regarding the income you have
earned in the country or outside the country. The overseas students resides in Australia on a
temporary visa that means they are the temporary residents of the Australia and certain
exemptions are available to the students studying in Australia (ATO, Residency-the resides
test, 2017).
Dale got a job in August 2017 in an engineering firm and he came in Australia in a student
visa of 3 years. The duration of his professional degree is 3 years that means he will live in
Australia for 3 years. The financial year starts from July and end in June. He lives in country
for more than six months in financial year 2018 and he will be treated as Australian resident
for taxation purpose in financial year 2018.The earnings earned by him from the part time job
will be liable to tax and he has to pay tax on the taxable income. The provisions of Australian
resident will be applied on him and he has to file income tax return for the financial year
2018.
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Bibliography
ATO. (2016). Are you an australian resident for tax purpose. Retrieved December 2016
ATO. (2018). Foreign income exemption for temporary resients. Retrieved March 2018
ATO. (2016). Residency test. Retrieved august 2016
ATO. (2017). Residency-the resides test. Retrieved April 2017
ATO. (2018). Studying in Australia. Retrieved March 2018
ATO. (2017). Work out yoru residency status for tax purpses. Retrieved June 2017
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