1st Main Test (residency according to ordinary concepts):
à Does the person reside in Australia? s 6(1)(a)
Where a person “resides” is a “question of fact and degree, and the factors to consider”.
Therefore the law in the ITAA is unclear, and you will need to refer to __________law to appreciate the meaning of “reside”. Factors have been established from the UK case law decisions of __________ and __________ that must be “weighed up” in establishing whether a person is a resident of Australia or not.
The factors that have evolved from the above cases are as follows:
Need to refer to the facts of your case, apply the factors to the facts, and weigh up your arguments for and against the person being a resident of Australia.
Resides in Australia
Does not reside in Aust.
Physical presence in Australia
Frequency/regularity of visits
Present habits/mode of life
Maintenance of a home in Australia?
Nationality – only for borderline cases
Weigh up facts and degree
Your conclusion ____________________________________
Domicile test: s 6(1)(a)(i)
“a person … whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside of Australia.”
Does the Harry have an Australian domicile?
What is Domicile? __________________________________________________.
Everyone is attributed a domicile of origin at __________, and this is retained until the person demonstrates __________ __________ __________ __________ (domicile of choice).
Does Harry have an Australian domicile? It appears that Harry has an ____________________ by birth. From the facts we are told that he had never been overseas before leaving for Canada.
Has he changed his domicile by the move to Toronto? Here Harry intends to __________________________________________________. Therefore Harry has ________________________________________domicile.
Has the taxpayer established a ‘permanent place of abode’ (PPA) outside of Australia?
If an individual is domiciled in Australia and does not have a PPA outside of Australia, they will pass the domicile test and be a resident of Australia.
Does Harry have an ‘abode’? As Harry has _____________ ________________________________ _________________________.
Is it ‘permanent’? The Full Federal Court in FC of T v Applegate said that ‘permanent’ did not mean __________ – it has to be something more than __________.
The Commissioner in IT 2650 at para 23 provides some guidelines to assess whether an individual who has left Australia has established a PPA overseas:
Passes test: Has not abandoned Australia
Fails test: Established PPA in Canada
Intended and actual length of the taxpayer’s stay overseas
Duration and continuity of the taxpayer’s presence in the overseas country
The durability of association that the person has with a particular place in Australia
Established a home outside of Australia
Retained a home in Australia
It appears that Harry has/ has not established a PPA outside of Australia, so even though Harry has retained his Australian domicile, he still would/ would not be considered a resident of Australia for tax purposes under the Domicile test.
A person or entity would be an Australian tax resident if actually in Australia during more than half the year of income, unless the person’s usual place of abode is not in Australia and they don’t intend to take up residence here.
· Presence – count up the number of days and if required, hours in the particular income year. Note it needs to be a total of 184 days or more in a leap year.
· Test can only be used to determine residency of someone __________ Australia – NOT a resident who is leaving Case S19
àThis test will apply/not apply to Harry, as he____________________: Case S19.
The individual is a member of a certain Commonwealth Government superannuation scheme or is a spouse of child of such an individual.
à Harry was employed by a private accounting firm – he would not have been a member of such a superannuation scheme as he was not a Commonwealth Government officer.
Your overall conclusion on Harry’s residency status ______________________________________________________________________
Sub issue (4): Where is the source of the salary, royalty and interests payments?
We have now established that all five payments are types of assessable income (either ordinary or statutory income) and that __________ of those payments were derived during the __________income year. Harry was a __________ resident for tax purposes throughout that year.
In accordance with section __________ Harry will be assessed on the four payments in Australia if the income is __________ sourced.
There are generally 3 possible places that the income could be seen as coming from:
– Where the ____________________;
– Where the ____________________: C of T (NSW) v Cam & Sons Ltd (1936) 36 SR (NSW) 544; FC of T v French (1957) 98 CLR 398; FC of T Efstathakis 79 ATC 4256
– Where the ____________________. FC of T v Mitchum (1965) 113 CLR 401; Evans v FC of T 81 ATC 4512
Typically where the __________ is relied upon to determine the source of services income – here that is __________. Harry performed the work in __________. He entered into the employment contract in __________. The payment had been received by Harry in __________, it was made from __________ (cheque sent by ex-employer located in __________e). Salary is / is not sourced in Australia as Harry ______________________________.
$10,000 industrial royalty:
Royalties are sourced ______________________________, which is in ____________________. Therefore the royalty income has __________ source: section __________ITAA 36.
Interest income is sourced ____________________, and this is usually taken to be ______________________________: FCT v __________. So the source of the interest payment would be __________, as ________________________________________
$500 unfranked dividend:
The source of dividends is determined by the __________ of the __________ out of which the __________ has been paid (s 44(1) ITAA 1936 or Esquire Nominees Ltd). Company conducts its mining operations in __________ à __________.
ASSESSABLE IN AUSTRALIA?
As Harry is a __________for Australian tax purposes at the time he derived his Australian sourced salary payment, he will be assessed on it in Australia under s 6-5(3) of the ITAA97.
If you are a non-resident for the full year, the following rates apply: ____________________
2. Consider whether your answer in (1) would change if Harry had to return to Australia for two weeks in November 2017 to be with his mother before she passed away.