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May 01, 2023

Answers:

Answer To Question 1: 

Issues: 

Is Fred an Australian resident under the “sec 995-1 of the ITAA 1997” for the period of his three year stay in Qatar?

Rule: 

As mentioned within the “sec 995-1 ITAA 1997” “Australian resident” implies a person that has home in Australia. In other words, it means that the taxpayer has domicile situated in Australia and has no intention to stay abroad (Deutsch et al., 2016). To consider a person as an Australian resident it is necessary that four alternative residency test is taken into account. These tests are

  1. Resides Test
  2. Domicile and Permanent place of abode test
  3. 183-day test
  4. Commonwealth super test

On meeting any one of the aforementioned test, a person will be declared as an Australian resident and he or she will be considered liable for income tax in Australia.

Resides Test:

The resides test implies that a person is considered as an Australian resident if they reside in Australia. A person is treated Australian citizen when they are found to be living in Australia and makes Australia as their home. As outlined with in the “TR 98/17”, there are certain factors that should be considered when a person is residing in Australia (Gilders et al., 2016). This involves the intention or purpose of presence, present in Australia physically, regularity and frequency of coming to Australia, economic and family ties, maintenance of assets and social living arrangements such as establishing of home.

The court in leading example of “Joachim v FCT (2002)” the taxpayer had retained his home in Australia when he was employed in overseas (Kenny & Devos, 2016). The law court considered the taxpayer as an Australian resident.

Domicile Test:

As per this test, a person is deemed as Australian resident when they are domiciled in Australia unless the tax commissioner has expressed his satisfaction that the taxpayer’s location of permanent home is out of Australia (Kenny et al., 2018). Some important factor that shows permanent location of abode are as follows;

  1. The main intention and the actual length of stay out of Australia
  2. Whether the person has any intention to live in overseas for years and come back to Australia.
  3. Whether the person has established any fixed home out of Australia
  4. The actual duration and the continuity of presence a person has anywhere in Australia. Common examples include bank account, health insurance etc.

As held in “Iyengar v FCT (2012)” the taxpayer was working with a Qatar based company on a fixed term and lived in Dubai and Doha between the years of 2008 and 2009 (Krever, 2016). Even though the taxpayer put forward an argument that his home is situated in Dubai, his wife was living in Australia in a property that was jointly owned by him with his wife along with his two children to complete their schooling. The taxpayer at the time of moving to Qatar left all his belongings such as cars, clothing and sports equipment in Australia (Sadiq, 2016). The taxpayer was treated as Australian resident with respect to his nationality, movement, family and business ties with Australia all through the time he stayed in foreign nation.

183-Day Test: Under this test, a person is held as Australian resident if that person has been living in Australia for greater than six months or more than 183-days of income year (Nethercott, 2018). A person may not be regarded as Australian resident if the tax commissioner is content that the person has fixed home out of Australia and holds no intention to take up residency in Australia.

Commonwealth Superannuation Test: A person is Australian resident under this test if he or she and their family members have commonwealth superannuation fund membership (Sadiq et al., 2018).

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