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    The First Issue Here Is To Determine Whether Fred Is A Resident of Australia For Tax Purposes

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    Vishalinie Raman
    Fred, an executive from the UK, came to Australia to set up a branch of his company and leased a residence in Melbourne for 12 months. To determine if Fred is a tax resident of Australia, his situation is analyzed under the residency tests. Fred likely satisfies the resides test as he was physically present and maintained a home in Australia, though he kept overseas investments and his family in the UK. Fred also meets the 183-day rule as he was in Australia for over 183 days. Therefore, Fred is likely considered a tax resident of Australia and would be taxed on his worldwide income, including rent from his UK property and interest from investments in France.

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    The First Issue Here Is To Determine Whether Fred Is A Resident of Australia For Tax Purposes

    Uploaded by

    Vishalinie Raman
    18 views6 pages
    Fred, an executive from the UK, came to Australia to set up a branch of his company and leased a residence in Melbourne for 12 months. To determine if Fred is a tax resident of Australia, his situation is analyzed under the residency tests. Fred likely satisfies the resides test as he was physically present and maintained a home in Australia, though he kept overseas investments and his family in the UK. Fred also meets the 183-day rule as he was in Australia for over 183 days. Therefore, Fred is likely considered a tax resident of Australia and would be taxed on his worldwide income, including rent from his UK property and interest from investments in France.

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    Fred, an executive from the UK, came to Australia to set up a branch of his company and leased a residence in Melbourne for 12 months. To determine if Fred is a tax resident of Australia, his situation is analyzed under the residency tests. Fred likely satisfies the resides test as he was physically present and maintained a home in Australia, though he kept overseas investments and his family in the UK. Fred also meets the 183-day rule as he was in Australia for over 183 days. Therefore, Fred is likely considered a tax resident of Australia and would be taxed on his worldwide income, including rent from his UK property and interest from investments in France.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views6 pages

    The First Issue Here Is To Determine Whether Fred Is A Resident of Australia For Tax Purposes

    Uploaded by

    Vishalinie Raman
    Fred, an executive from the UK, came to Australia to set up a branch of his company and leased a residence in Melbourne for 12 months. To determine if Fred is a tax resident of Australia, his situation is analyzed under the residency tests. Fred likely satisfies the resides test as he was physically present and maintained a home in Australia, though he kept overseas investments and his family in the UK. Fred also meets the 183-day rule as he was in Australia for over 183 days. Therefore, Fred is likely considered a tax resident of Australia and would be taxed on his worldwide income, including rent from his UK property and interest from investments in France.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 6

    The first issue here is to

    determine whether Fred is a


    resident of Australia for tax
    purposes.
    Fred, an executive of a British corporation specialising in management consultancy, comes to
    Australia to set up a branch of his company. Although the length of his stay is not certain, he leases a
    residence in Melbourne for 12 months. His wife accompanies him on the trip but his teenage sons,
    having just commenced college, stay in London. Fred rents out the family home. Apart from the
    absence of his children, Fred’s daily behaviour is relatively similar to his behaviour before entering
    Australia. As well as the rent on the UK property, Fred earns interest from investments he has in
    France. Because of ill health Fred returns to the UK 11 months after arriving in Australia.
    Discuss residency and source issues.

    SOLUTION:
    The issue is to determine whether Fred is a resident of Australia for tax purposes. The relevant rules
    are the residency tests in s 6(1) of ITAA36. According to Fred’s situation, few test can be applied to
    find out whether he is a tax resident or not.  

    First, the RESIDES TEST.  Under this test, Fred will be a resident if he is taken to “reside” in Australia
    during the applicable period. There is no single test to determine whether Fred “resides” in
    Australia, and it is obligatory in looking at every suitable fact and certain factors in determining
    whether Fred resides in Australia. The Australian Taxation Office identified the factors in TR 98/17. 
    The factors supporting Fred being a resident in Australia includes his presence in Australia physically,
    his wife must accompany him on the trip and the home maintenance in Australia.  Nevertheless, it
    could also be argued that Fred is not a residing as a resident in Australia and he has maintained his
    home in London and only rented it out while he was away; his children are in London and he
    maintains overseas investments.  It is likely that, following cases like IRC V LYSAGHT [1928] AC 234
    AND LEVENE V IRC [1928] AC 217, Fred would still be considered as a resident of Australia
    for purposes of tax as he “resides” here during the applicable period. 

    The second test will be on the 183-DAY RULE. Disregarding whether Fred is considered


    to be residing in Australia or not, he will be a resident for the applicable year as he satisfies the 183-
    day rule. He was in Australia for more than 183 days and even though he does not appear in
    wanting to take residence in Australia, his usual place of accommodation is Australia.  

     As for domicile test and superannuation test, these tests are not relevant on the facts of Fred. 

    To conclude this, Fred is likely to be a resident of Australia for purposes of tax as he resides here and
    had been in Australia for over than 183 days. He will be taxed on his income as a
    resident from every source that
    includes the rent from the UK property and the interest from his France investments.  Issues of any
    double taxation may be resolved by the Australia–France DTA or Fred might have to claim a foreign
    income tax offset for overseas paid tax.  
     

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