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Taxation Law

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TAXATION LAW

WRITTEN GROUP ASSIGNMENT

PART A

ISSUE 1:

Is Andy a resident of Australia for the purpose of income tax?

RULE:

S6 (1) ITAA 36 – definition of “resident”

There are four alternative tests helping to decide whether a person is a resident of Australia or not. An individual needs to satisfy at least one test to prove residency.

(1) Common Law test; (2) Domicile test; (3) 183-day test; (4) Superannuation test

APPLICATION:

(1) Common Law test

According to ordinary concepts of “resident”, an individual should satisfy the “Common Law test”. In this particular case, Andy spends the last three years working in Thailand, having signed a contract with a Canadian company in Australia, which doesn’t fulfill …show more content…

(3) 183-day test

The 183-day test is satisfied when a person who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income.

In the given case, Andy spent most of the year working in Thailand and he only got back to meet his family in Australia one month every three months. Therefore, he does not satisfy this test.

(4) Superannuation test

As there is no sufficient information regarding Andy’s superannuation, the test is not applicable here.

CONCLUSION:

As can be concluded by the above test and analysis, Andy satisfies the Common Law test and Domicile test. Even though the 183-day test is not satisfied and the superannuation test is not applicable, we can still be sure that Andy can be considered as a resident for the purpose of income tax assessment.

ISSUE 2:

How should Andy’s salary and investment income be taxed?

RULE:

S6-5 (2) if you are an Australian resident, your assessable income includes the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

S6-10 (4) if you are an Australian resident, your assessable income includes your statutory income from all sources, whether in or out of Australia.

S4-1 and S4-10 ITAA97:

Income tax = (taxable income * rate) – tax offset

Where taxable income = assessable income – deductions

APPLICATION:

Both the income of

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