International Taxation Assignment: Determining Michael's Tax Residency

This assignment delves into the realm of international taxation, focusing on the determination of residency status. The analysis centers around a case study involving Michael, where the primary objective is to ascertain whether he qualifies as a resident or a non-resident for tax purposes. The assignment explores various tests and criteria, including the ordinary conceptions of residency, domicile, permanent place of residence, the 183-day rule, and the Commonwealth superannuation fund test. The Income Tax Assessment Act is referenced, particularly Section 6(1), which defines 'resident' and 'resident of Australia.' The analysis considers factors such as physical presence, residential background, nationality, family ties, and commercial and social connections. The conclusion, based on the provided scenario, determines that Michael does not meet the criteria to be considered an Australian resident, as he did not live in Australia for two years, lacks a physical presence, and his family has moved overseas.

Running head: INTERNATIONAL TAXATION
International Taxation
Name of the Student
Name of the University
Authors Note

1INTERNATIONAL TAXATION
Issue
In this paper, the issue to be discussed is whether Michael is a resident or non-resident.
Rule
In case of determining the residential status of a person, there are several tests available
which are usually taken into consideration. The tests are as follows:
1. Habitation as per the ordinary conceptions;
2. The test of domicile and permanent place of residence;
3. The test of 183 days; and
4. The test of Commonwealth superannuation fund.
‘Resident’ and ‘Resident of Australia’ are the two most important terms which are defined by the
Income Tax Assessment Act in Section 6(1). This section provides that a person is regarded to be
an Australian resident if any one of the tests enclosed in the definition of ‘residence’ is fulfilled
(Saad 2014).
For taxation purpose, a person is regarded to be an Australian resident if that person is a resident
as per the ordinary conceptions. There are enormous number of indications are present regarding
whether a taxpayer is ordinarily a resident of Australia or not. These indications include the
duration of physical presence in Australia, the residential background of the person, nationality
and regularity of visits to Australia, the reasons of visiting Australia, and the nature of the family
of a person, commercial and social connections.
For deciding the residential status of a person, there is a summary of various rules
available which is provided by the Income Tax Rulings IT 2681 and TR 98/17 (Jones 2018).
According to the provision of thumb, the Commissioner generally assumes that if the expected

2INTERNATIONAL TAXATION
visit of an individual to Australia is more than two years, that individual will usually be
considered as a citizen during the stay (Cesna Sulphur Co Ltd vs. Nicholson 85 ATC225).
Analysis
In this given scenario, Michael did not live in Australia for two years. He was not
physically present in Australia. As his family also moved to overseas, therefore he has no family
in Australia.
Conclusion
Hence, from the above discussion, it can be concluded that, as Michael failed to fulfill
any of the criteria of the tests mentioned above, therefore, he cannot be considered as an
Australian resident.

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Reference
Jones, D., 2018. Complexity of tax residency attracts review. Taxation in Australia, 53(6), p.296.
Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-
Social and Behavioral Sciences, 109, pp.1069-1075.