Resource And Source Answers | Assessment Answer

ils to satisfy the ‘resides test’ then ‘statutory test’ shall be considered for determining the residential status of individual for the purpose of tax (Zelinsky 2016).

Resides test: As per the provisions under TR 98/17 ITAA 97 subsection 6(1) a person is said to be Australian resident if the individual resides in Australia (Mitchell et al. 2015). In case the resident fails to satisfy this test, he is required to satisfy one of the three conditions of statutory test, which are as follows:

• Domicile test: An individual is an Australian resident if his domicile or place of permanent home is in Australia except the assessing officer is content that the person’s permanent home is outside Australia (Hua, Oliphant and Hu 2016).
• 183- Day test: If an individual resides in Australia for 183 days or more whether or not continuously, the person shall be said to have constructive residential status in Australia.
• Superannuation test: Under this test, government employees of Australia working overseas are required to be treated as resident of Australia.

In the given case, Fred, a management consultant of British corporation comes to Australia to set up his company’s branch and stayed for 11 months though the length of his stay was uncertain. His wife accompanied him during his visit to Australia but his son stayed in London for commencing the college while his daily behavior remained similar to that of his home country. Further, Fred earned rental income from UK property as well as interest on investments made in France.

Since, Fred does not resides in Australia, he failed to satisfy the primary condition under resides test TR98/17 ITAA 97. However, statutory test shall be considered to examine his residential status in Australia for taxation purpose. As Fred’s permanent home is in UK, domicile test shall not be considered as well as superannuation test shall also not apply because Fred is not an Australian government employee (Vieira, Stewart and Beal 2015). Therefore, 183- day test shall be checked to determine his residential status, which requires an individual to stay in Australia exceeding half of income year. Based on a decided case of Levene v IRC (1928) AC 217, Fred would be treated as a resident of Australia for taxation purpose because his stay in Australia was more than six months.

Although the stay of Fred in Australia was uncertain, yet his total stay was more than 183 days and he had leased a residence to stay in Melbourne for 12 months. Further, absence of his son during his stay in Australia and his daily behavior like his home country would not be considered while examining his residential status. Therefore, Fred is an Australian resident for taxation purpose under subsection 6(1) TR 98/17 ITAA 97. 

Reference List

Hua, Y., Oliphant, M. and Hu, E.J., 2016. Development of renewable energy in Australia and China: A comparison of policies and status. Renewable Energy, 85, pp.1044-1051.

Mitchell, C., McLanahan, S., Notterman, D., Hobcraft, J., Brooks-Gunn, J. and Garfinkel, I., 2015. Family Structure Instability, Genetic Sensitivity, and Child Well-Being1. American journal of sociology, 120(4), pp.1195-1225.

Vieira, A.S., Stewart, R.A. and Beal, C.D., 2015. Air source heat pump water heaters in residential buildings in Australia: Identification of key performance parameters. Energy and buildings, 91, pp.148-162.

Zelinsky, E.A., 2016. Defining Residence for Income Tax Purposes: Domicile as Gap-Filler, Citizenship as Proxy and Gap-Filler. Michigan Journal of International Law, 37.