Taxation Law Technical Problem: Mr. Lightyear's Residency Status

This assignment provides a letter of advice analyzing Mr. Lightyear's residency status for the years 2017 and 2019 under Australian tax law. It addresses whether Mr. Lightyear qualifies as an Australian resident under section 6(1) of the ITAA 1936 or a foreign resident under section 995-1 of the ITAA 1997. The analysis applies the resides test, domicile test, 183-days test, and superannuation test, considering Mr. Lightyear's employment history, international movements, and family ties. The solution concludes that Mr. Lightyear is a foreign resident based on the application of the residency tests and the evidence presented. The assignment references relevant case law and legislation to support its conclusions. The assignment is well-structured, organized, and adheres to the marking scheme provided in the brief.

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

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Table of Contents
Letter of Advice.........................................................................................................................2
Issues:.........................................................................................................................................2
Rule:...........................................................................................................................................2
Application:................................................................................................................................4
Conclusion:................................................................................................................................5
References:.................................................................................................................................6

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Letter of Advice
Issues:
Whether Mr. Lightyear will be viewed as Australian citizen within “sec 6 (1) ITAA
1936” or a foreign occupant under “sec 995-1, ITAA 1997” for the year ended 2017 and
2019.
Rule:
Residents has been explained in “sec (1), ITAA 1936” which means someone that is
living in Australia and has perpetual home in Australia, except on occasions when the tax
official is satisfied that the perpetual abode of taxpayer is out of Australia (Barkoczy 2016).
The definition of resident is generally carries four different test and the last test is simply
viewed objective. The four alternative test are
1. “Resides Test”
2. “Domicile Test”
3. “183-days Test”
4. “Superannuation Test”
Resides Test:
This test involves the behaviour of a person consistent with that of a resident when
they are present in Australia (Sadiq 2019). The relevant consideration as per this test
includes;
a. Objective or the purpose of presence
b. Employment ties, domestic or business connections.
c. Maintenance and location of assets
d. Societal and living arrangements

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The period of physical existence in Australia and along with the weight given to every
factor would vary with each circumstance and no solitary factor can be considered decisive
(Morgan and Castelyn 2018). In the recent examples of “Iyengar v FCT (2011)” an engineer
that took up the employment in abroad but kept his home in Australia and connection to
which the taxpayer eventually came back was considered as resident in agreement with the
ordinary sense of “sec 6 (1) ITAA 1997”.
Domicile Test:
The domicile Test represents the legal relation with the country through which a
person is able to invoke their laws of country as their own. Commonly, a person’s domicile is
regarded as the place where the permanent home is located, instead of a place where a person
resides. Domicile usually includes the residence of origin or domicile of choice (Morgan,
Mortimer and Pinto 2018). A “domicile of origin” means a person obtains the domicile of his
or her country where they are born. While the domicile of choice represents a country where
a person makes their home with the intent of residing indefinitely.
Similarly, the federal court in allowing the appeal of taxpayer in “Harding v
Commissioner of Taxation (2019)” stated that while evaluating the citizenship of a person,
the term “permanent place of abode” must not be taken into account by reference to
permanence of a taxpayer’s particular home (Robin and Barkoczy 2018). Instead, “permanent
place of abode” must be more broadly considered as whether an individual is residing
permanently in a specific state or nation.
The 183-days:
This test involves whether the person is an Australian tax resident when their physical
existence in Australia is on continuous basis or intermittent basis and it is much more than six
months of the income year (Murray et al. 2018). However, there is an exception that if the

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commissioner is contented that the person has ordinary residence out of Australia with no aim
of living in Australia then they are held as non-resident of Australia.
Superannuation Test:
The superannuation test is generally applied on the individuals that are having the
relation to commonwealth superannuation fund (Woellner et al. 2016).
Application:
The evidences from case of Mr. Lightyear suggest that he has been living in Canada
and working as cardiac surgeon. After having lived seven years he moved to South Africa
with his wife and two children. In 2012, Mr. Lightyear returned to Australia to build a house
but was not permanent in nature. Mr. Lightyear until March 2014 decided to leave Australia
in order to re-join his family. While in January 2017, Mr. Lightyear after receiving an offer to
join University Hospital in Canada left Wollongong property in Australia permanently. To
decide the residency position of Mr. Lightyear subsequent test are conducted.
Resides Test:
Mr. Lightyear despite having the domiciliary home in Australia and also has his
family residing in Australia, these factors cannot be interpreted as significant enough under
the resides test. In addition to this, Mr. Lightyear has not been physically present in Australia
from about January 2017 to November 2018 in Australia as he was found to be living in
South Africa. Therefore, Mr. Lightyear was not present for significant time period of the
income year in Australia. He always had the intention of returning to Canada after making a
short stay in Australia with the purpose of setting up the family. With regard to “sec 6 (1),
ITAA 1936”, Mr. Lightyear is not a resident of Australia for 2017 and 2019.
The Domicile Test:

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Mr. Lightyear did not presented any decisive indication that his choice of home is in
Australia. The situation of Mr. Lightyear indicates that he has the perpetual place of house in
South Africa. While Mr. Lightyear accommodation in South Africa might have been
considered impermanent or momentary in nature as he was looking to move into a larger
property once his wife and children relocated. Referring to the case of “Hardings v
Commissioner of Taxation (2018)” this can be considered entirely constant with the
established purpose and assumption that Mr. Lightyear has his fixed place of dwelling was in
South Africa (Norbury 2019). Further evidence suggest that he left Australia in 2017 with the
permanent intention of not returning ever again adds weight to the conclusion drawn that Mr.
Lightyear is non-resident of Australia within the sense of “section 6 (1), ITAA 1936” for the
year 2017 and 2019.
183-Days Test:
Mr. Lightyear for both the year 2017 and 2019 was not present in Australia on a
constant basis for more than six months of the relevant income year. Therefore, he is not a
resident under this test.
Superannuation Test:
The superannuation test does not apply in the circumstances of Mr. Lightyear.
Conclusion:
The balance can be struck in this case by emphasising that Mr. Lightyear has
demonstrated that he is living in a foreign nation on a permanent basis. Mr. Lightyear has
successfully passed all the four residency test. Therefore, under “sec 995-1, ITAA 1997”, Mr.
Lightyear is a foreign resident for tax purpose.

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References:
Barkoczy, S., 2016. Foundations of taxation law 2016. OUP Catalogue.
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.
Murray, I., Taylor, J., Walpole, M., Burton, M. and Ciro, T., 2018. Understanding Taxation
Law 2019.
Norbury, M., 2019. Mr Harding's residence reconsidered. Taxation in Australia, 53(9), p.497.
Robin and Barkoczy Woellner (stephen & murphy, shirley et al.), 2019. Australian taxation
law select 2019: Legislation and Commentary. OXFORD University Press.
Sadiq, K., 2019. Australian Taxation Law Cases 2019. Thomson Reuters.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation
Law 2016. OUP Catalogue.