Taxation Law: Jenny's Residency, Income Assessment, and Tax Liability

This report analyzes a taxation law case study involving an individual named Jenny. The primary focus is determining Jenny's residency status in Australia and assessing her income for tax purposes. The report delves into the relevant tests for residency, including the ordinary residence test, the 183-day rule, and the domicile test, applying them to Jenny's specific circumstances across two fiscal years. The analysis considers her initial stay in motels and subsequent apartment rental. The report also examines whether a lump sum payment of $400,000 and an annual salary of $100,000 constitute assessable income, referencing relevant sections of the ITAA 1997 and case law. The conclusion summarizes Jenny's tax liability based on the residency and income assessments.

Running head: TAXATION LAW
Taxation Law
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Introduction:....................................................................................................................................3
Question 1: Identifying whether Jenny is resident of Australia or not............................................3
Question 2: Discussing whether both the $400,000 and the $100,000 receipts are assessable
income..............................................................................................................................................9
Conclusion:....................................................................................................................................11
References:....................................................................................................................................12

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Introduction:
The evaluation of case of Jenny mainly helps in determining her Residential condition in
Australia, as she started from April 2016 and was expected to stay there for more than 9
months. However, the stay arrangements were firstly in motels, whereas after 3 months she
rented a place in Australia for continuing her work as demanded by the company. This mainly
indicates that there were two income tax years that needs to be evaluated for Jenny to determine
whether she is liable to pay tax in Australia. The determination o the lump sum amount is also
conducted in the assessment, which could help in deriving the assessable income of the
individual.
Question 1: Identifying whether Jenny is resident of Australia or not
There are relevant issues that needs to be evaluated before considering whether Jenny's a
resident of Australia or not, which directly in identifies whether she is liable to pay income tax in
Australia. It is also identified that Jenny has teeth onto different fiscal years on which her
residential condition in Australia needs to be evaluated. Under section 995-1 of ITAA 1997
Australian residents is considered the individuals who resides in Australia and earns relative
income in the country1. There are different types of rules that need to be considered while testing
me residential status of an individual. Under Residency test section 6(1) of ITAA 1936, relevant
test that needs to be used for identifying residential condition of an individual are depicted.
There are relevant facts that need to be identified from the evaluation of Jenny’s case study.
These factors are depicted as follows.
 Jenny was originally working in Hong Kong
1 "Residency - The Resides Test." Ato.gov.au. N. p., 2017. Web. 11 Sept. 2017.

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 She is single and has no dependent
 She lives with our parents in Hong Kong as assumed
 She is temporary travel to Australia for 3 months
 She has entered Australia on 25th April 2016
 She is travelling from one City to another and staying in hotels and have no permanent
residence
 She accepts off for the 9 month job in Sydney
 From July she leases an apartment near your workplace
 Current home base is Sydney
 She should all the relevant personal belongings to Australia
 Limit travel is being conducted once a week where she goes out of Sydney
Residential Test of first three months or for fiscal year 2015-2016
Ordinary residence test:-
This is the primary stress that is conducted by individuals to identify its condition in
Australia and determine whether he/she is liable to pay income tax in Australia. If any individual
reside in Australia then he/she is considered to be an Australian resident and no further test are
needed to be conducted. In the current situation Jenny is not considered to be a resident of
Australia, as she was residing in Singapore before entering into Australia. The first three months
Jenny was only travelling from one place to another and living in motel, which indicated no
residential condition2. Therefore, the first three months cannot be considered to be a residential
phase, where Jenny needs not to pay any kind of tax to the Australian government.
2 "Australian Tax Residency: A Rare Win For The Taxpayer` |
Mytaxresidency.Com." Mytaxresidency.com. N. p., 2015. Web. 11 Sept. 2017.

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183-day rule:
The 183 day rule family States that if an individual is present in Australia for more than
half then come here weather continuously in breaks, then he/she is considered to be a resident of
Australia. Once the person is a resident of Australia then he is liable to pay the income tax for
that current year to the Australian government. This 183 day test is mainly conducted to identify
for an individual who frequently come to Australia for business purposes and calculate the
income that is being generated from this stay in Australia. The first three months of journey in
Australia was mainly spent in motels all around Different cities. this mainly reduces the chance
of journey for being the residence of Australia in the fiscal year 2015-20163. Therefore, the 183
day test does not identify residential condition of journey in Australia for the physically 2015-
2016.
Domicile Test:
The third test is mainly identified as domicile test, where an individual needs to have
adequate place in Australia for identifying him/ her as a resident country. Any kind of property
that is being owned by an individual in Australia who is travelling outside for business purposes
need to conduct a domicile test. This test directly allows the individual to identify whether he/
she is liable to pay relevant tax in Australia for the income generated in the fiscal year. in the
current condition Jenny does not have any kind of fixed living place in Australia for the first 3
months, which directly nullifies the domicile test4.
3 Knoch, Ute, Tim McNamara, and Cathie Elder. "Submission to the Australian Government
Department of Immigration and Border Protection on the discussion paper ‘Strengthening the
test for the Australian Citizenship’." (2017).

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Superannuation Test:
The last test that is used by Australian government is the superannuation test, which is
mainly used to identify the relevant taxes of individual work for the Australian government in
abroad. The superannuation test is calculated based on the income generated from individuals
working in Australian government. These identified superannuation incomes are then used for
pinpointing the relevant individuals who are liable to pay tax in Australia. However, Jenny does
not come under any kind employee of Australian government working in abroad. Hence,
superannuation test is also not considered for determining the residential status of journey for the
first 3 months5.
Therefore, it could be identified from the evaluation of the first three months, which is
the fiscal year of 2015-2016 journey is not a resident in Australia, as maximum of holidays in
the country is spent in hotels without any kind of residential test been qualified.
The second residential test is mainly conducted for the fiscal year 2016-2017, where
adequate presidential condition of Jenny needs to be identified for detecting the viability of her
paying the income tax. The following test could be identified as the relevant residential test that
needs to be conducted for Jenny to identify her current residential condition.
Residential Test of next nine months or for fiscal year 2016-2017
Ordinary residence test:
4 Graham, Melissa, et al. "Women’s reproductive choices in Australia: Mapping federal and
state/territory policy instruments governing choice." Gender issues 33.4 (2016): 335-349.
5 Wei, Bingying. "The Determination of Chinese Graduate Entrepreneurship in Australia."
(2016).

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The first of the test is the ordinary residential test could be conducted to identify the
relevant residential status of Jenny. However, Jenny is not a permanent resident of Australia, as
she staying in the country due to official reasons. Therefore, the ordinary residential touch cannot
be conducted to determine whether journey is a resident in the country or not. Hence, other
residential calculating test needs to be conducted on Jenny to identify her current residential
condition6. The Australian taxation office in the TR 98/17 directly States the overall factors that
needs to be identified to determine residential condition of an individual. There are relevant
cases such as IRC v Lysaght [1928] AC 234 and Levene v IRC[1928] AC 217 that could be used
in identifying the relevant residential condition of journey in Australia. These cases directly help
in directing the relevant residential test that needs to be conducted for data mining Jenny’s
current residential position.
183-day rule:
The 183 day rule mainly states that an individual needs to stay in the country for
continuous of 183 days, which could enable him/her to be liable for paying tax in
Australia. However, Jenny is currently involved in a 9 month contract in Australia, which is
relatively more than 183 days. This mainly makes Jenny resident of Australia where she is liable
to pay income tax to the Australian government. In addition, relevant cases such as Dempsey and
Commissioner of Taxation (2014) AATA 335 and the Engineering Manager and Commissioner
of Taxation (2014) AATA 969 could be used in identifying the actual position of Jenny in
Australia. Furthermore, the 183 day test also has some exemption that needs to be evaluated
before considering the residential position of an individual. Is the tax pay has an unusual please
6 McMillan, Kate. "‘Affective integration’and access to the rights of permanent residency: New
Zealanders resident in Australia post-2001." Ethnicities 17.1 (2017): 103-127.

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of adobe outside Australia he is exempted from the 183 day test. in addition if he did do does not
intend to take up residence in Australia he is also exempted from the 183 day test 7. However,
there is no relevant information about journey that she is taking up residence in Australia or not,
as for the job requirement she needs to stay for 9 months in a specific position in Australia.
Therefore, under the 183 day test Jenny is considered to be a resident of Australia and needs to
pay the relevant taxes to the Australian authorities.
Domicile Test:
As depicted in the domicile test Individual needs to have a relevant residence in Australia
for the domicile test, as intention to stay in Australia is been portrayed by the interview. Jenny
has rented a place for 9 months near her office, which directly satisfies the domicile test as it
provides relevant information regarding her Residency condition8.
Superannuation Test:
Jenny does not fall under the superannuation test, as she is not working for the Australian
government on payroll outside the Australian premises.
Therefore, from the evaluation of Jenny's residential condition it could be identified that
for the first year she is not liable to pay any tax to the Australian government, as she is staying
7 Jagroep, Sherani R. "222. An Evaluation of Physicians for Reproductive Health's Adolescent
Reproductive and Sexual Health (ARSH) E-Learning Course With Feedback From Learners and
Residency Coordinators." Journal of Adolescent Health 56.2 (2015): S113-S114.
8 Knoch, Ute. "Research in language assessment." Language Teaching 50.1 (2017): 138-142.

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only for 3 months, which does not comply with any kind of rules that is laid down by the
Australian tax office. However, the next 9 months contract that is being conducted on 1st July
will mainly satisfy two of the residential test, which is 183 day test and domicile test9. This
satisfaction of the two residential tests mainly indicates that Jenny becomes the relevant
residence of Australia where she needs to pay tax to the Australian government.
Question 2: Discussing whether both the $400,000 and the $100,000 receipts are assessable
income
The evaluation of the main issue whether the receipt of the lump sum amount and annual
salary amount was considered to be under the assessable income. However, under s 6-5 of
ITAA97 relevant income is identified under ordinary income, which could be used in identifying
the actual Income Tax that needs to be paid by an individual. Moreover, under FCTv
Woite(1982) 13 ATR 579 the relevant receipt that is conducted by Individual could be identified
with the help of the above case. URL salary of 100,000 is clearly assessable in under the
ordinary income tax. The annual salary is a regular income that needs to be considered by
individuals, as an assessable income under the Income Tax Act depicted by the Australian
government10.
9 Sanders, Mia. "457 visas and citizenship test reveal Australia's barbed wire borders." Green
Left Weekly 1134 (2017): 7.
10 McNamara, Tim, Kamran Khan, and Kellie Frost. "Language tests for residency and
citizenship and the conferring of individuality." Challenges for language education and policy:
Making space for people (2015): 11-22.

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However, the receipt of 400,000 is mainly identified, as the main issue that needs to be
identified whether it comes under assessable income or not. The receipt could be compared with
the decisions that have been made in previous cases such as Woite and Jarrold v Boustead (1963)
41 TC 701. Moreover, some services provided then it is considered under ordinary income, as
depicted in Brent v FCT (1971) 125 CLR 418.Therefore on the overall fact that needs to be
considered whether the income is assessable not could be identified from the above cases. the
amount is mainly paid for the services that needs to be conveyed in near future, thus establishing
an ordinary income. Under section 6.30, 6.180 and 6.220 relevant measures that could be used by
individuals for identifying their assessable income11.
Moreover the taxpayer has not given up any kind of valuable rights for accepting the
contract, which directly make the pain about something of ordinary income that is received by
the individual. Therefore, the lump sum amount of Payment that is being conducted payment that
is being conducted please be considered under Income Tax amount. Hence, the income of
$400,000 is mainly considered to be statutory income under section 15-2. Moreover, the Smith v
FCT(1987) 19 ATR 274 mainly helps in identifying the relevant suggestion, which could be used
in Finding the relevant test that identifies viability of the assessable income. Therefore, under
11 McKinley, Danette W., et al. "Changes in certification requirements and examinee
characteristics are likely to influence the validity of the evidence associated with interpretations
made based on test data. We examined whether changes in Educational Commission for Foreign
Medical Graduates (ECFMG) certification requirements over time were associated with changes
in internal medicine (IM) residency program director ratings and..." Advances in Health Sciences
Education 19.1 (2014): 129-142.

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section 6-5 relevant assessable income could be identified for both annual salary and lump sum
amount12.
Conclusion:
The use of Domicile test and 183-day test is mainly used in identifying the residual
condition of Jenny for the second fiscal year. On the other hand, relevant case study is been used
in deriving the needs to add the lump sum amount as the assessable income of the individual.
12 Zanardo, Nikki, Guido J. Parra, and Luciana M. Möller. "Site fidelity, residency, and
abundance of bottlenose dolphins (Tursiops sp.) in Adelaide's coastal waters, South
Australia." Marine Mammal Science 32.4 (2016): 1381-1401.

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References:
"Australian Tax Residency: A Rare Win For The Taxpayer` |
Mytaxresidency.Com." Mytaxresidency.com. N. p., 2015. Web. 11 Sept. 2017.
"Residency - The Resides Test." Ato.gov.au. N. p., 2017. Web. 11 Sept. 2017.
Graham, Melissa, et al. "Women’s reproductive choices in Australia: Mapping federal and
state/territory policy instruments governing choice." Gender issues 33.4 (2016): 335-349.
Jagroep, Sherani R. "222. An Evaluation of Physicians for Reproductive Health's Adolescent
Reproductive and Sexual Health (ARSH) E-Learning Course With Feedback From Learners and
Residency Coordinators." Journal of Adolescent Health 56.2 (2015): S113-S114.
Knoch, Ute, Tim McNamara, and Cathie Elder. "Submission to the Australian Government
Department of Immigration and Border Protection on the discussion paper ‘Strengthening the
test for the Australian Citizenship’." (2017).
Knoch, Ute. "Research in language assessment." Language Teaching 50.1 (2017): 138-142.
McKinley, Danette W., et al. "Changes in certification requirements and examinee characteristics
are likely to influence the validity of the evidence associated with interpretations made based on
test data. We examined whether changes in Educational Commission for Foreign Medical
Graduates (ECFMG) certification requirements over time were associated with changes in
internal medicine (IM) residency program director ratings and..." Advances in Health Sciences
Education 19.1 (2014): 129-142.

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McMillan, Kate. "‘Affective integration’and access to the rights of permanent residency: New
Zealanders resident in Australia post-2001." Ethnicities 17.1 (2017): 103-127.
McNamara, Tim, Kamran Khan, and Kellie Frost. "Language tests for residency and citizenship
and the conferring of individuality." Challenges for language education and policy: Making
space for people (2015): 11-22.
Sanders, Mia. "457 visas and citizenship test reveal Australia's barbed wire borders." Green Left
Weekly 1134 (2017): 7.
Wei, Bingying. "The Determination of Chinese Graduate Entrepreneurship in Australia." (2016).
Zanardo, Nikki, Guido J. Parra, and Luciana M. Möller. "Site fidelity, residency, and abundance
of bottlenose dolphins (Tursiops sp.) in Adelaide's coastal waters, South Australia." Marine
Mammal Science 32.4 (2016): 1381-1401.