University Taxation Law: Residency and Tax Advice Report

This report provides a comprehensive analysis of Australian taxation law, specifically addressing the residency status of an individual who has moved out of Australia. It includes a letter of advice to a taxpayer, Jack Johnson, detailing the application of various tests to determine residency, including the 'Resides in Australia Test,' 'Domicile Test,' '183-Day Test,' and 'Superannuation Test.' The report references relevant legislation, such as ITAA 1936 and ITAA 1997, and case law, such as IRC v Lysaght (1928) and Applegate v FCT (1979), to support its conclusions. The advice considers factors like time spent in Australia, domicile, and superannuation arrangements. The report concludes that based on the provided facts, the individual is considered a non-resident for tax purposes. The report also includes a distribution statement and references to relevant literature. This assignment is a tax practice assignment for ACC304 Taxation Law, requiring individual research and application of tax resources to synthesize an original piece of work.

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

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Table of Contents
Part A:........................................................................................................................................2
Private and Confidential: Letter of Advice............................................................................2
Part B:.........................................................................................................................................6
Net Income of Partnership:....................................................................................................6
Distribution Statement:..........................................................................................................6
References:.................................................................................................................................7

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Part A:
Private and Confidential: Letter of Advice
To Jack Johnson
From: AMD Tax Consultancy
Date: 6th May 2019
Dear Jack
In order to further our recent meetings, communication and phone discussion, we
have below given out our advice with respect to the numerous matters as requested by you.
Scope
To advice the taxpayer regarding the residency status when an individual moves out
of Australia and ceases to be resident of Australia for tax purpose.
Facts:
The current letter of advice takes into the account the tax laws, cases and rulings
because we understand their application in your situation.
Summary of Advice:
The letter has summarized its belief with regard to every matters that is outlined by
you during our telephone discussion. As an adviser we strongly encourage you to carefully
read this discussion in relation with the advice that is given.
Resident Individuals:
As denoted under the “section 995-1, ITAA 1997” a person is a resident of Australia
for the tax purpose within the meaning of “ITAA 1936”. In the situation of an individual

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instead of a company, “section 6 (1), ITAA 1936” defines a resident as Australian that is
residing in Australia. This includes whether the person has the permanent house in Australia
where he lives excluding when the assessment official is completely satisfied that the
taxpayer has permanent home in the foreign state (Morgan, Mortimer and Pinto 2018). While
under the “section 6 (1), ITAA 1936”, a non-resident includes the person that is not the
Australian resident. Therefore, we believe that residency as one of the means based on which
Australia imposes the authority of charging tax (Morgan and Castelyn 2018). The definition
that is given above comprises of the four different test and last one is completely objective
test. We have applied the four relevant test in your situation to determine whether or not you
cease to be Australian resident for the year 2017/18. This includes
a. Resides in Australia Test
b. Domicile Test
c. 183-Day Test
d. Superannuation Test
Resides in Australia Test:
Whether or not you are living in Australia, it is regarded as the primary test for
determining the residency and it is known as the common law test. The test explains that an
individual for the tax purpose will be held as Australian resident if they are living in
Australia. The court of law has laid down certain necessary factors such as the time one is
spending in Australia is also important in deciding the residency status. The decision made by
law court in “IRC v Lysaght (1928)” explained that if an individual is regarded as the visitor,
the frequency, regularity and the duration of the visit is regarded as the important factor
(Cavenagh et al. 2018). It also comprises of an individual’s main objective of visiting
Australia and abroad.

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In correspondence with our discussion, we understood that for the year 2017/18 you
were not present in Australia as you moved to Bahrain to take up 12-month employment
contract. We noticed that you have also sold all the belongings which you had in Australia.
Although, you are having the residential home in Australia and has your presence of family
here in Australia but these factors cannot be considered significantly sufficient. We have
found that during the income year you were not present for a considerable period in Australia.
Though came once in November and once in April your stay in Australia was relatively short
and you only intended to return to Bahrain. As a result, you are not an Australian resident
under this test.
Domicile Test:
The “Domicile Act 1982” explains that under this test, a person is held to be
Australian resident if their domicile is in Australia only to the extent when the commissioner
is content that a taxpayer has permanent home in overseas state. The test is commonly
applied to those that are shifting to overseas. The “IT ruling 2650” explains numerous
factors such as the duration of stay in foreign state and the intention of residing permanently
or temporarily is considered vital. It also includes the location of established home (Pert,
Chen and Carvosso 2018). As held in “Applegate v FCT (1979)” the court held that
permanent hardly signifies forever and the residential status is assessed objectively every
year.
As per the case facts we noticed that you have expressively established that your
domicile of Choice is out of Australia following your move to Bahrain. You also shifted to
one-bedroom apartment in Bahrain and this circumstances portrays that you have permanent
home in Bahrain. You have not conclusively provided any evidence that you intend to join
your family after when you complete your 12-month contract and your absence from

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Australia is for indefinite time. You only visited twice in the last twelve months and this adds
to the conclusion that you are not an Australian resident under the domicile test.
183-Day Test:
Under this test, when someone is in Australia for six months or for 183 days then the
person is an Australian resident under this test (Morgan, Mortimer and Pinto 2018). We
found you that, during the year you only stayed in Australia for two months. furthermore, you
have also established your home outside Australia and hence you cannot be treated as
Australian resident under this test.
Commonwealth Superannuation Test:
This test is treated as objective test that simply needs the membership of the specified
superannuation arrangement (Pert, Chen and Carvosso 2018). This test is not applicable for
you because you do not have any specified superannuation arrangement.
With regard to the above test, we can say that you are a non-resident of Australia
under “section 6 (1), ITAA 1936” as your permanent home is out of Australia. Therefore,
once you have reviewed the advice and satisfied with our opinion, we will be preparing a
response to ATO based on the points that are raised above. We look forward to hear from you
soon.
Yours sincerely
Associate Taxation
AMD Tax Consultancy

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Part B:
Net Income of Partnership:

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Distribution Statement:
References:
Cavenagh, J., Matley, H., Burke, L., Castles, S., Chesterfield, T., Clare, G., Fitzgerald, C.,
Grant, S., Kluckow, T., Lewis, A. and Norris, A., 2018. Australian legislation concerning
matters of international law 2016. Australian Year Book of International Law, 35, p.353.
Morgan, A. and Castelyn, D., 2018. Taxation Education in Secondary Schools. J.
Australasian Tax Tchrs. Ass'n, 13, p.307.
Morgan, A., Mortimer, C. and Pinto, D., 2018. A practical introduction to Australian
taxation law 2018. Oxford University Press.
Pert, A., Chen, H. and Carvosso, R., 2018. 'Federal Commissioner of Taxation v
Jayasinghe'(2016) 247 FCR 40. Australian Year Book of International Law, 35, p.260.

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