Name: Amir feroz
I.D number: UB30117727
Submitted to : Miss ASHRAF KAZI
The case is whether Basil is a resident of Australia for tax purposes or not? And what are those rules which would be apply in it?
RULING: TAXATION RULING NO. IT 2650, 1991
F.C. of T. v. Applegate (79 ATC 4307; (1979) 9 ATR 899)
F.C. of T. v. Jenkins 82 ATC 4098; (1982) 12 ATR 745
To wants to get a residency in Australia and how much tax paid to the taxation department. There are some rules and regulation issue by Australian government. According to definition of residency and resident of Australia are defined in subsection 6(1) of the income tax Assessment Act 1936.
“A person, other than a company, who resides in Australia include
I. Person whose domicile is Australian unless the Commissioner is happy that will the long lasting place is not Australia.
II. Who’s actually been in Australia, constantly or maybe occasionally, during more than one half income year, unless the commissioner is satisfied his or her mostly live outside of Australia and he or she does not mean to take up residency in Australia.
III. Person who is eligible employee for the purpose of superannuation Act 1976, or spouse, or a child under 16 year of age.” (TAXATION RULING NO. IT 2650, 1991)
These three definitions provide the four tests to identify whether the person is resident or not.
1. residency in normal concept
2. domicile and permanent place of residence
3. 183 days test
4. Superannuation fund test
This ruling is more focusing on first and second test.
In Basil case he is arrived in Australia on 28 august 2013 from his usual domicile in England. He has a working visa for three year in Australia. To be a resident of Australia you should have a domicile and a property to justify that you are a resident. There is an example to solve the basil case is F.C. of T. v. Applegate (79 ATC 4307; (1979) 9 ATR 899). In this case a person has a property outside the Australia and he lives in Australia and has an income from that property he has to pay tax. But Basil is having a domicile of England and he is living in Australia for short period he is not tax payable
There is also another example which can help to solve the Basil case is F.C. of T. v. Jenkins 82 ATC 4098; (1982) 12 ATR 745. In which a person is bank officer went to overseas for three year but came back after 18 months because of illness. According to the law a person should have to pay tax.
By seeing the reference cases Basil is considered to be the resident of Australia for tax purpose because he fulfill the requirement of residency in Australia. He is staying for precise time period, came to take his family and he have also the property on the lease. He is working with the company so he has also superannuation fund. His income is taxable and he is resident of Australia.
I. SALARY AND RENT SUBSIDY
Basil salary is an ordinary income he has to pay tax on it. Salary is calculated under tax slabs which is issue by the commissioner and each year these rates are changes. Basil is taking $12000 salary per month which is assessable under section 6-5 of the ITAA1997. “Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.” (Income tax, 2002). Rent subsidy is liability of Basil’s employer being Fringe Benefit Tax item section 26(e) of ITAA 1997 under this section FBT is always paid by the employer.
II. MOTOR VEHICLE, PHONE ACCOUNT AND HOLIDAY: Motor vehicle is come in FBT if motor vehicle is