Taxation Law: Dale's Residency Status in Australia Case Study

This case study examines the tax residency of Dale, who moved from the UK to Australia. It explores whether Dale is considered an Australian resident for the financial years 2017 and 2018. The analysis delves into the Domicile Test, the 183 days Test, and relevant taxation rulings, including TR 98/17, and relevant sections of the ITAA 1997 and Act 1936. The case study applies these laws to Dale's situation, considering his arrival in Australia, his intentions, and his actions, such as committing to a lease agreement. The conclusion determines Dale's residency status, citing legal precedents and commissioner views. The case study ultimately concludes that Dale meets the criteria to be considered an Australian resident for the specified financial years, based on his physical presence and intentions. The assignment references various taxation law principles and case law to support its findings.

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

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Table of Contents
Issue:..................................................................................................................................... 2
Laws:...................................................................................................................................... 2
Application:............................................................................................................................. 3
Conclusion:............................................................................................................................ 4
Reference List:....................................................................................................................... 5

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Issue:
The issue that revolves around the current case study is to understand whether Dale
who has moved from UK to Australia will be regarded as the Australian resident for the
financial year of 2017 and 2018.
Laws:
Domicile Test: The Australian taxation office provides that an Australian resident if their
domicile is broadly the place of permanent home that is in Australia unless it is contented
that the person’s permanent home is out of Australia. The primary rule under the Domicile
Act 1982 is that an individual acquires the domicile of their birth, a domicile of their origin
being the country of their father’s permanent home1. As held in the case of “Bell v Kennedy
(1868)” an individual retains the domicile of their origin unless it is noticed that an individual
obtains the domicile of their own choice or by operation of law.
183 days Test: The 183 days’ test describes that a person that has been physically present
in Australia for six months in a calendar year continuously will be treated as the resident of
Australia. However, the commissioner has stated an exception to the 183 days’ test that an
individual will not be considered as Australia resident unless he intends to take up home
here in Australia having permanent place of abode out of Australia.
As defined under the “Taxation ruling of TR 98/17” person entering Australia as a
migrant, student with studying visa, educational teachers or visitors on holiday will be
regarded as resident under “subsection 6(1) of the ITAA 1997”2. “Section 995-1 of the
Act” defines a person as Australian resident for the purpose of the act 1936.
The status of residency is viewed as the main reason that helps in determining
whether the tax liability of a person in Australia. The liability to tax is ascertained thorough
year by year basis. As held in “Applegate v FC of T (1979)” the actions of an individual
helps in ascertaining the residential status of a person3. The ordinary notion of “resides” is
considered comprehensive to encompass an individual arriving in Australia as the migrant
permanently and a person that is residing for a considerable time period.
1 Coleman, Cynthia and Kerrie Sadiq, Principles Of Taxation Law 2013
2 Sadiq, Kerrie et al, Principles Of Taxation Law 2014
3 Grange, Janet, Geralyn A Jover-Ledesma and Gary L Maydew, 2014 Principles Of
Business Taxation

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The commissioner views in “FC of T v Miller (1946)” is concerned with the period of
physical presence in Australia. The court of law stated that a span of six months is
considerable amount of time whether the behaviour of the person is consistent with residing
in Australia4. On noticing that the behaviour is consistent with living in Australia is
demonstrated over significant time, the persons are treated as resident from the moment
when the behaviour commences.
The “Taxation ruling of TR 98/17” states that time is not considered necessarily a
determinative factor in determining the residency however it is a significant factor when
determining whether the person resides in Australia. The court in “Levene v Inland
Revenue Commission (1928)” in has explained that an individual’s intention and purpose
for stay in Australia helps in determining the residency5.
The “taxation ruling of TR 98/17” defines that social and living arrangements are
considered as the way where a person interacts with the surrounding during their stay in
Australia and might indicate arrangements where they are residing in Australia6. As held in
“Inland Revenue Commission v Lysaght (1928)” the social arrangements reflect purpose
or intention of living such as committing to residential lease.
Application:
The case study opens with situation where Dale arrived in Australia on 3rd April
holding a UK passport to study Engineering. With respect to “Domicile Act 1982” Dale
cannot be regarded as the Australian resident since his permanent residence in Australia
and retains the domicile of his origin. Under Domicile Test Dale cannot be considered as
Australian resident.
Findings from the study suggest that Dale arrived in Australia on 3rd April and from
the date of his arrival Dale has been present in Australia either constantly or in breaks for
more than one of half of the income year. Dale is said to have a constructive residence in
Australia since he has been present for more than one half of income year. Since Dale has
met the criteria of 183 days he will be regarded as Australian resident.
4 Kenny, Paul, Australian Tax 2013 (LexisNexis Butterworths, 2013)
5 Woellner, R. H et al, Australian Taxation Law 2014
6 Woellner, R. H, Australian Taxation Law 2012 (CCH Australia, 2013)

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The “Taxation ruling of TR 98/17” is applied to determine whether he is a resident.
Referring to “subsection 6-1 of the ITAA 1937” Dale arrived in Australia for studying
Engineering, the intention and nature of the behaviour has specified a manner where Dale
has settled his domestic activities.
Referring to “Federal Commissioner of Taxation v Miller (1946)” Dale’s behaviour
is consistent with living in Australia which is demonstrated over significant time and will be
treated as resident from the moment when the behaviour commenced7. Citing the reference
of “Levene v Inland Revenue Commission (1928)” Dale’s behaviour reflected his intention
of residing in Australia when he committed to lease agreement for one year which reflected
continuity in behaviour.
Referring to the judgement of commissioner in “Inland Revenue Commission v
Lysaght (1928)” the social arrangements reflect purpose or intention of living such as
committing to residential lease by Dale. This concludes that Dale is an Australian resident.
Referring to “Taxation ruling of TR 98/17” there cannot be any single factor that are
decisive as the factors are interrelated8. Citing the reference of “Applegate v FC of T
(1979)” the six months behaviour is confined to one income year as Dale intending to reside
till through the financial year of 2017 reflects a character of residing throughout the entire
year. Hence Dale is an Australian resident for financial year of 2018 as well.
Conclusion:
The case study can be concluded by stating that Dale has met the requirement of
183 days to be considered as constructive resident of Australia. The taxation ruling of 98/17
also applies to Dale since he arrived as student for studying in Australia. Therefore, Dale will
be treated as Australian resident for financial year of 2017 and 2018.
7 Krever, Richard E, Australian Taxation Law Cases 2013 (Thomson Reuters, 2013)
8 Morgan, Annette, Colleen Mortimer and Dale Pinto, A Practical Introduction To Australian
Taxation Law (CCH Australia, 2013)

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Reference List:
Coleman, Cynthia and Kerrie Sadiq, Principles Of Taxation Law 2013
Grange, Janet, Geralyn A Jover-Ledesma and Gary L Maydew, 2014 Principles Of Business
Taxation
Kenny, Paul, Australian Tax 2013 (LexisNexis Butterworths, 2013)
Krever, Richard E, Australian Taxation Law Cases 2013 (Thomson Reuters, 2013)
Morgan, Annette, Colleen Mortimer and Dale Pinto, A Practical Introduction To Australian
Taxation Law (CCH Australia, 2013)
Sadiq, Kerrie et al, Principles Of Taxation Law 2014
Woellner, R. H et al, Australian Taxation Law 2014
Woellner, R. H, Australian Taxation Law 2012 (CCH Australia, 2013)