Domicile Citizenship - Human Mobility and Territoriality

Question: Discuss about the . Answer: Introduction: The residential status of a person illustrates the procedure of taxing the income. However, the residency test used to determine the residential test is decided by performing a sequence of tests. The current case study of Samantha and her husband is based on the determination of residential test based on both domicile and primary test to determine the residential status (Patel 2016). Both Samantha and her husband had to shift to Singapore to open a new branch of the company where they worked. It should be noted that the first of those test necessitates an individual to have lived in Australia constantly for a span of 183 days. The next test is the domicile test, which provides a person to ascertain a usual place of dwelling. The purpose of this test is to provide an outcome of an individual who has been Australia for more than a period of 183 days being classified as non-resident because of taxation purposes, and anyone who has been abroad country for more than 183 days is classified as a occupant. The regular place of dwelling is in fact where an individual home is situated and someone who spends two years travelling or working in Australia having a place of residency in abroad will not be classified as inhabitant. On the contrary, an individual taking up a job in foreign country for period not less than three years and retains their home in Australia, would be classified as a resident for taxation purpose (Bauder 2013). Under the given case study, Samantha and her husband from January 2013 until their return in July 2015 remained in Singapore to promote new branch, which also consisted of holiday period of six month. Conversely, they would be classed as resident for taxation purpose since they retained their original place of dwelling, which was in Australia. Residency Test according to ordinary concepts: The primary test of residency is known as the resides test. An individual residing in Australia will be considered as an Australian resident for taxation purpose and hence they do not need to apply for any other residency test.Section 995-1 of the ITAA 1936 act defines Australian resident as an individual who is considered as occupant of Australia for the purpose of the act (Pinto, Kendall and Sadiq 2016). The test provides that whether Samantha and her husband live in Australia is a matter of truth and depends upon the factors such as If an individual comes back to the state of origin, the regularity, frequency and span of such stay along with the purpose can be decisive factors (Abdrakhmanova and Nyssanbekova 2013). The only reason behind Samantha and her husband absence from Australia is entirely on overseas job purpose and this may not be regarded, as enough to support the assertion, the person is not a resident of Australia. The place of abode was still preserved in the nation of origin by Samantha and her husband and it was available for their use whiles their stay in Singapore. The extent of assets and bank account were maintained in their country of origin (Long, Campbell and Kelshaw 2016). Both Samantha and her husband were employed in the country of origin and kept their individual effect in Australia The domicile test: The domicile test states that a person is considered to be an Australian resident under the domicile test if the individual has a domicile in Australian unless the commissioner of tax is content on the grounds that permanent place of dwelling is out of Australia. As stated under the Domicile act 1982, an individual attains a residence of their preference in Australia unless an individual is determined to make his or her home for an indefinite period in Australia (Bauder 2013). The domicile test as discussed under the domicile taxation rulings of IT 2650 represents the country where an individual is born provided an individual migrates to another country or adopts the domicile of his or her own choice. Under the given case study both Samantha and her husband satisfies that they are the resident of Australia and does not have any permanent place of residence outside their country of origin i.e. Australia. It is noteworthy to denote that the phase of physical existence or extent of time in Australia is not crucial while determining whether a person resides here (Woellneret al. 2016). Hence, an individual behaviour also plays a vital role over the time spent in Australia, which might highlight the degree of continuity, which is consistent at the time of deciding the residential status of Samantha and her husband. Resumption of residency in Australia and impact on assessable income: An individual residential status is important because it helps an individual to determine his or her liability to pay tax. An important consideration such as leaving Australia for temporary period and not setting up any permanent home in another country would generally constitute an Australian resident for taxation purposes (Long, Campbell and Kelshaw 2016). If an individual remains to be the Australian resident outside Australia hence, under such circumstances an individual is required to file an Australian tax return and must declare all his income earned from the foreign employment including the exempted income. Once the overseas commitment of Samantha and her husband is over they decided to return to come home which not only states that they are coming home to family but also consist of the multifaceted taxation scheme. Thus, there are a number of the significant matters to be taken into the consideration and should be ideally addressed before returning to Australia (Krever 2016). Samantha and her husband on returning to Australia with the purpose of staying permanently will be usually considered as an Australian occupant for taxation purpose from the day of their return (Arthur 2016). This represents that incomes earned from their overseas commitment will be liable for tax from the date it is acquired no matter where such incomes are located. In addition to this, an Australian resident working in overseas country is required to declare all such incomes earned from foreign employment even though the tax was taken out in the country where it was earned. The Australian taxation rulings necessarily provides for reporting of the foreign employment income. Under the current case study, Samantha and her husband during their stay in Singapore opened a bank account and closed her Australian bank account (Saiq2016). In addition to this, it also was learned from the study that Samantha also held investment in both the countries. Under the rulings of maintenance and location of assets, it is stated that a person may have a place of residence and other assets outside Australia and still be considered as resident during the stay. These include the any kind of assets or bank accounts, which additionally weights on the individual to report such income. The Income Tax Assessment Act 1997 states that Samantha is under the obligation of the act to report all such foreign employment income in their Australian tax return under the heads of assessable income (Long, Campbell and Kelshaw 2016). The act requires that an individual is ought to report this even on the circumstances that tax was taken out in the country where an individual has earned the income. It is noteworthy to denote that income from foreign employment is considered as an assessable income by the Australian resident working in overseas state in the form of employee (Cao, Chapple and Sadiq 2014). This may consist of the salary, wages, commissions, bonuses or any form of allowances earned. Hence, such amenities may be paid by the overseas or by the Australian employer. Reference list: Abdrakhmanova, E.S. and Nyssanbekova, L.B., 2013. Treatment of Domicile Concept in International Private Law.Middle-East Journal of Scientific Research,16(12), pp.1690-1693. Arthur, G., 2016. Tax files: Taxation duties of executors.Bulletin (Law Society of South Australia),38(2), p.28. Australian Taxation Law cases 2016 R Krever Barkoczy, S., 2016. Foundations of Taxation Law 2016.OUP Catalogue. Bauder, H., 2013. 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