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May 01, 2023



The given case of fct v. Applegate is associated with a taxpayer who was a member of legal profession in “sydney solicitors”. In june 1972, mr. Applegate was deported to a villa in new hebrides for managing and establishment of a new branch. In this regard, he went to sydney in the villa with his wife for brief two periods of taxation year. Therefore, he decided to remain there for the rest of the assessment year. On the decision of departing from sydney, the taxpayer decided to give up the tenancy of the flat which he had been staying with his wife. It is worth noting that mr. Applegate did not have any assets in australia but retained the membership in australia as a result of hospital’s contribution fund. After arriving in australia, he along with his wife decided to spend the initial two weeks in a hotel and booked a lease for house in villa. The term for lease during the beginning of the stay was identified as 12 months with a choice to further renew it for 12 months. In this regard, in the new hebrides region, the respondent was also admitted as a solicitor. This attributed to mr. Applegate obtaining a residency permit for a period of 12 months which was renewed for two years consecutively. During july 1973, the taxpayer arrived at sydney for his treatment due to illness. After returning from his treatment in the villa in september 1973, the firm had already decided for a replacement. As a result of follow off related to the international business, the branch office in the villa got closed in 1975. The intention of the taxpayer and the firm was to wait for his return in the office at sydney. However, the there was no mention of the specific period and it was only anticipated for a substantial period of time. The discourse of the report enumerates the issue of how on 30 june 1972, the taxpayer claimed that the salary earned by him in villa was exempt from taxation section under 23(r) as the income resulting was by a non-resident pertaining to sources wholly out of australia.

Legal Issues

Based on the facts of the given case, between 8 november 1971 to 30 june 1972, the income received by the taxpayer was able to derive relevant income from various types of sources outside australia. The taxpayer was domiciled in australia during this period. In this regard, the main issue to be decided relates to whether or not, between 8 november 1971 to 30 june 1972 the taxpayer was a non-resident.

Legislative Application And Issues

The legislative application for the identified issue is based on deciding whether or not mr. Applegate was considered as resident as per sec. “25(1) and sec 23 (r) of itaa 1936”. In addition to this, the applicable legislation can be also seen with “sec. 6(1) of itaa 1936”. The following issue was considered to be taken into account in the plea from the review board and the decision was given to supreme court of nsw. Based on seeking for leave appeal to the fct, the “sec 196 of itaa” Has been also taken into account for the final ruling. In addition to this, the legal applications are directly seen to be in accordance with sec. 6(1), 23(r) and 25 of itaa 1936, which includes relevant principles to be applied in determining the circumstances when an individual owns a permanent place of abode outside the premises of australia. Additionally, this act is also applicable for deciding relevant principles to be applied in identifying when and in what circumstances and individual can cease to be considered as a resident of australia as per the meaning of that. Lastly, principal according to this section is also applicable in deciding in what circumstances and when the income derived by the resident is outside the sources of australia and can be claimed for exemption from income tax.

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