Australian Tax Analysis Business Tax Residency

Question: Discuss about the Australian Tax Analysis for Business Tax Residency. Answer: 1. Issue It is known that Fred has come to Australia to set up office for his British employer and is accompanied by his wife while his teenage children attend college in London. His home is England is rented in his absence and he has taken a home on lease in Melbourne. Taking into consideration the above information, Freds tax residency needs to be determined. Rule The underlying tax residency plays a vital role in ascertaining assessable income of a given entity. In this regard, the tax ruling TR 98/17 comes handy as it enlists the various tests that the individual could apply for obtaining the tax residency of Australia in a given year under assessment. The basic details about these tests are highlighted below.(CCH, 2012). Domicile Test To pass the domicile test, the given taxpayer has to adhere with two conditions enumerated below (Woellner, 2014). Taxpayer needs to be Australian domicile holder in accordance with Domicile Act 1982. Permanent abode or residence of taxpayer must be in Australia and in this regard the factors outlined in IT 2650 provide immense guidance, 183 Day Test As per the requisite conditions associated with the test, the taxpayer under assessment needs to reside in Australia for a minimum period amounting to 183 days within the assessment year. However, an additional requirement is that the Tax Commissioner must not have doubts with regards to intent of the taxpayer to make Australia as permanent home going forward (Coleman, 2011). Resides Test The test is highly dependent on verdicts of court and other tax rulings for information on its scope and application. Based on these, the pivotal factors are identified as shown below (Nethercott, Richardson Devos, 2016). Underlying significance of the intent of coming to Australia Nature, scope and intensity of ties existing in Australia which includes both personal and professional The taxpayers social arrangement and lifestyle that the person leads in Australia and comparison of the same with the country of origin Superannuation Test This has limited utility since it determines the tax residency status of foreign based Australian government employees based on whether they make payments to atleast one designated superannuation fund (CCH, 2012). Application Based on the facts mentioned above, the application of test is highlighted below. Domicile Test Fred does not have domicile of Australia. Test Failed. 183 Day Test Fred satisfies the 183 day stay obligation but the given information directly or indirectly does not indicate any plan on Freds part to settle in Australia. Test Failed. Resides Test The reason for coming to Australia is significant as it is related to employment for which he has already stayed 11 months and stay is expected to be longer. He leads a life in the company of his wife which is similar to that which he led in England. Thus, this test is satisfied. Superannuation Test Fred is not employed by Federal Government. Test Failed. Conclusion Since Fred manages to satisfy the resides test, thus for the current assessment year, he would be regarded as an Australian tax resident. References CCH 2012, Australian Master Tax Guide 2012, 50th ed., CCH Australia Limited, Sydney Coleman, C 2011, Australian Tax Analysis, 4th ed., Thomson Reuters (Professional) Australia, Sydney: Nethercott, L, Richardson, G Devos, K 2016, Australian Taxation Study Manual 2016, 6th ed., Oxford University Press, Sydney, NSW Woellner, R 2014, Australian taxation law 2014, 7th ed., CCH Australia, North Ryde