AustralianTaxation in FY2016 and FY2017 †MyAssignmenthelp.com

Question: Discuss about the AustralianTaxation in FY2016 and FY2017. Answer: Issue Whether John is a resident of Australia for Australian taxation purpose in FY2016 Whether John is a resident of Australia for Australian taxation purpose in FY2017 Rule There are four test which are applied for the purpose of determining whether a person is resident of Australia for Australian taxation purpose of not. Where any test provides a positive result than the person is considered as an Australian Resident for Taxation purpose. These tests are Ordinary concepts test, 183 days Test, Domicile Test and Superannuation Test The definition of resident is provided under s 6(1) Income Tax Assessment Act 1936 (ITAA). According to the section a person who resides in Australia includes a person who has a domicile in Australia unless it is held by the minister that the person permanent place of abode is not in Australia or the person has been in Australia for a period of more than half a year unless the commissioner holds that the person does not intend to stay in Australia[1]. Ordinary concepts test In the case of Miller v FCT[2] it had been stated by the court that whether a person is a resident or not is analyzed by matter of fact and degree. The meaning of the term reside has not been provided in any legislation and is determined through a dictionary meaning which is to dwell permanently or for a considerable time. Thus as per the test the court takes into consideration the time which the person has spent in Australia, the purpose of the visit, having a residence in Australia, and the persons social ties. As per the test emphasis is put by the commissioner on the intention for stay, location and maintenance of assets, living and social ties. It has been provided by Tax Ruling 98/17 that where an individual resides in Australia as per the dictionary meaning of the words resides the other tests which have been provided through the definition do not require consideration. However where the person is not residing in Australia the consideration of other test has to be done to analyze the residency status of the individual[3]. It has also been provided through the ruling that the length of time or period of physical presence in Australia is not solely decisive while analyzing a person is residing in Australia. However the behavior of an individual with respect to the time spent in Australia may provide a degree of habit, routine or continuity which is consistent with the meaning of the word reside. The commissioners view in relation tolaw is that six months is a considerable time to determine whether a person is a resident of Australia or not for tax purpose. However merely because a person is staying in Australia for a period of 6 months he is not an Australia resident for the purpose of tax as per Tax Ruling 98/17. Under the domicile Test if a person has a permanent place of abode in Australia he is a resident unless the minister has a finding that his permanent place of abode is outside Australia. However it had been ruled in the case of Federal Commissioner of Taxation v Applegate[4] the court held that permanent does not mean forever Under the 183 day test if a person resides in Australia physically, intermittently or continuously for more than half off the income year he is a resident for tax purpose. However where the commissioner is satisfied that the usual place of abode of the individual is outside Australia and there is no intention on the part of the person to take up residence in Australia the person is not a resident for tax purpose[5]. Application Determination of residency for John in FY2016 It has been provided in the scenario that John Came to Australia first on 3rd April 2016. The total period for which he has been in Australia in 2016 includes approximately 2 months in April and May and from June to December 2016. Thus means that he has been in Australia for a period of more than half a year. Thus one of the elements of the ordinary concept test has been satisfied. He has also take a home for residing in Sydney for a six month lease as he liked the place. As per the case of Federal Commissioner of Taxation v Applegate Permanent place of abode does not mean forever. Thus his 6 months lease can be counted as a permanent place of abode in Australia. In addition according to Tax Ruling 98/17 the behavior of an individual with respect to the time spent in Australia may provide a degree of habit, routine or continuity which is consistent with the meaning of the word reside. Thus the continuing nature of John residence in Australia such as extending his course, taking up a part time job and buying a place to stay in Australia makes him a residence as per the resides test or ordinary concept test. Determination of residency for John in FY2017 It has been provided in the scenario that John has also decided to make an application for PhD studies in November which is to be effective from January 2017. This further signifies that he is intending to stay for a longer period in Australia. He already has a place of abode of a permanent nature. It is also provided by the ruling that when behavior is changed by a person and intention to reside is indicated the person is regarded as a resident. In the given situation it is clear that John who had come to Australia on a tourist visa and now holds a student visa for four years there is degree of habit, routine or continuity in his stay and he is also a resident under FY2017 as per the continuity test. As the test of ordinary concept is successfully applied, the application of no other test is required. Conclusions John is a resident of Australia for Tax Purpose for both FY2016 and FY2017. Bibliography Federal Court of Australia in Federal Commissioner of Taxation v Applegate (1978) 9 ATR 899 Income Tax Assessment Act 1936 (Cth) s 6(1) Legal Database (2018) Ato.gov.au https://www.ato.gov.au/law/view/document?Docid=TXR/TR9817/NAT/ATO/00001 Miller v FCT (1946) 73 CLR 93 Sharkey, Nolan. "Coming to Australia: Cross border and Australian income tax complexities with a focus on dual residence and DTAs and those from China, Singapore and Hong Kong-Part 1."Brief42.10 (2015)