preview

A Resident Of Australia And How His Salary And Investment Income Would Be Taxed

Better Essays
Open Document

Case study 1: Residence and source

Discuss whether Kit is a resident of Australia and how his salary and investment income would be taxed (10 marks, max. 1000 words).

Answer-
In order to determine whether Kit is a resident of Australia for taxation purposes, it is important to understand the process of evaluation of residency of the individual. The Australian taxation law has conceived certain methods that can determine whether the income generated by an individual either in Australia or worldwide must be taxed. There are four such circumstances that can help in determining Kit’s residency. Referred to as “Tests” the circumstances are explained below-

 Resides Test- If an individual is a ‘permanent resident’ of Australia, and then he …show more content…

This test also explains that if an individual has made another country his/her home then he/she will not be considered as an Australian resident for tax purposes.
 183 Day Test- this test explains that an individual must be considered as an Australian resident if he/she has stayed continuously or intermittently for more than half a year of his/her income. The only exception to this test is based on the commissioner of The Australian Taxation office, if the commissioner agrees that the individual has his permanent abode in another country and has no interest in taking up permanent residency in Australian.
 Commonwealth Superannuation Test – for an individual to be declared as an Australian resident for tax purposes under this test, he/she has to be a member of a superannuation scheme which is established under the Superannuation act of 1990 and the individual is determined as an employee eligible for the purpose of receiving superannuation guarantee from its employer based on the superannuation act of 1976.
Based on the definition of tests and according to the facts mentioned below, it could be clearly understood that Kit is a resident of Australia for taxation purposed based on his fulfilment of the conditions mentioned in the “Resides Test” and the concluding case studies as evidence of the same.
 His family resides in Australia where he owns a home

Get Access
Related
Get Access