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Australian Domicile : Business Employer

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Discuss about the Australian Domicile for Business Employer.



1. The various facts with regards to Fred are summarised below.

Fred does not hold an Australian domicile and hails from England.

The visit to Australia is in regards to setting office for his British employer.

His children did not accompany him to Australia as they were in college but wife has come.

The exact duration of stay is not clear but Fred has stayed for 11 months before returning to England due to illness.

Fred’s lifestyle during his stay in Australia is similar to corresponding lifestyle in country of origin i.e. England.

In order to determine the tax residency, as per TR 98/17 , the following test need to be applied to ascertain Fred’s tax residency for the given year under assessment (Barkoczy, 2015).

Domicile Test – As Fred is not an Australian resident and hails from England, he does not have Australian domicile and thus this test is not relevant for Fred (Coleman, 2011).

Superannuation Test – As Fred is not a Federal government employee, hence this test is not relevant for Fred (Sadiq et. al., 2015).

183 day Test – With regards to this test, Fred manages to satisfy the minimum stay of 183 days in Australia as his tenure of stay is close to 11 months. However, Fred intends to return to England once professional commitment is finished and thus shows no long term commitment towards staying in Australia (Gidlers et. al., 2013). Thus, Fred fails to satisfy this test.

Resides Test – It is evident from the given information that the purpose of visit for Fred is significant as it is not casual employment extending to two three months as 11 months have already passed by and his work is not finished. Also, his social life in Australia is same as that in England. Thus, Fred manages to satisfy this test and would be considered as Australian tax resident (Barkozcy, 2015).

Hence, it can be derived, that for the given tax year Fred would be recognised as an Australian tax resident.

1.    Californian Copper Syndicate Ltd v Harris (Surveyor of Tax) (1904) 5 TC 159

If the intention of the taxpayer is to generate income without performing any activity on the land purchased then that income would be considered as revenue income and would be assessed under Income Tax Act ITAA1936. In this case, Californian Copper Syndicate Ltd acquires a property for copper mining. Company knew about shortage of funds at the time of buying only and hence could not perform the copper mining activity. Then, shareholder of the company decided to lease this land to some other company for performing the copper mining activity. Company found out some other mining company and sold that land for the mining. In respect of this company received the share of that company as consideration (Coleman, 2011).  According to the taxation officer, revenue generated from the transfer of ownership of capital asset intentionally without performing any activity, would be considered as revenue receipt rather than capital receipt. But company was not satisfied with the view of taxation officer and filed the case in the New Zealand court.  The honourable judge gave its decision in favour of taxation officer. Court decided that company acquired copper mining land with the intention of realise it further to earn higher profits. Because company did not perform any mining activity on that land, so the income generated to earn higher profits would be assessed as taxable income and in this case the taxpayer would be liable to pay tax on this income under section 25 (1) of ITAA 1936 (Barkoczy, 2015).

Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188

A land was acquired by the Scottish Australian Mining Company for performing the coal mining activity. For a long time, company performed the coal mining. But due to continuous coal mining, land became depleted in the reserves of coal. Taxpayer decided to sell this land for realisation of capital asset. For this, he divided the land into several size plots for residential purpose as the land without sub-dividing in the plots could not make feasible for residential purpose. Company supplied water pipe line, sewage lines parks, hospital , school ,shopping complex, roads also constructed by the company along with these plots to enhance the market value of these plots. After accomplishing all this, company sold these plots to several potential buyers and got high rate of returns. Tax commissioner ruled that the income received by selling of land would be termed as ordinary income of the company and assessed for the taxation. Court overruled the commissioner view and decided that the intention for the company was not to realise the capital asset for gains. They performed coal mining for so many years and when the land was totally ripe for development then only the company decided to dispose of ripe land. Therefore, marketing of land would not be countable as revenue income and not assessed as taxable. It was mere realisation of capital asset and would not be taxed (Jade, 2016).

3: FC of T v Whitfords Beach Pty Ltd (1982) 150 CLR

In this case, Whit Fords Beach Pty Ltd engaged in acquisition of a beach land for drying the shack of fish in the year 1953. The taxpayer then liquidated this land to some other company. Essential amendment had done in the article of association of the company regarding this liquidation. All the board members agreed for the same. After that company divided the land into sub sections and liquidated the plots to the respective buyers at market value. Company got high returns from this transaction.  Taxation authority was in the opinion that the transaction had been made knowingly for gains at higher rate. Therefore, these gains would be assessable and taxpayer bound to pay tax. As per the company, this transaction took place to overcome from financial loss. The honourable court commented that the transaction is done intentionally for higher gains instead of protecting company from financial loss. Hence, gains received from liquidation of capital asset would be considered as revenue receipt. Company who was the taxpayer would be liable to pay tax and the income would be assessed under taxation act for taxable purpose (CCh, 2014a).


4: Statham &Anor v FC of T 89 ATC 4070

As per this case, Statham & Anor were two trustees who received a land as an estate. Both of them started cattle business on that deceased land. After their father’s death, their families started suffering from financial crises. This financial crisis also influenced their cattle business too. To overcome from financial crises, both trustees decided to liquidate a part of land in the market. This forced trustees to sub-divide the partial land in to plots and market to the potential buyer. According to the concerned tax commissioner, the revenue received would be considered as revenue income and would be assessable under taxation act. But the court decision was completely different from the tax commissioner. Court commented that the prime intention of both the trustees was to do the cattle business on the particular land. Due to financial crises they were forced to sell a partial portion of land in the market. It had proven also that the taxpayer not performed any construction or development activity on that land. Liquidation of capital asset was not done with the intention of higher returns. Therefore, income received from this liquidation would not be considered as revenue receipt (CCh, 2014b).

Casimaty v FC of T 97 ATC 5135

As per this case, a person named Casimaty owned a land. He initially involved in the family business that is farming on that land. But due to some financial loss in the farming business, he was forced to dispose of large area of his land in the market. Casimaty did not have enough money with him to use that money for sub division of this land in to small section. So he borrowed money from the market to do sub division of his land in to small sections. After sub division, Casimaty liquidated this land in to market for earning profit. According to his expectation, he got the required amount from the marketing by disposed of his land to get rid from the debt he had taken from the market for even sub division of that land. Taxation authority commented that the income receipt from the liquidation of land in to market would be counted as taxable income as per law. Court said as per rule, Casimaty was performing farming activity on that land for so many years. He did not have any intention to dispose of this land to earn profit. It was his financial circumstances which pushed him to liquidate his land and get rid from his financial debt. For that, he subdivided the land in to different section by taking loan from outside, which increased his debt. Intention of the taxpayer matters very much. But here, intention of tax payer was totally clear, only to wipe off his debt and again get engaged in the farming business. So the income earned from liquidation of capital asset would not be assessed under income tax act section 25 (1) of ITAA 1936 (CCh, 2014c).

Moana Sand Pty Ltd v FC of T 88 ATC 4897

According to this case, Moana Sand Pty Ltd purchased a land for sand excavation. Company engaged in the sand excavation operation on this land for a long period. Due to sand excavation for so many years, land became exhausted in sand and unsuitable for further sand excavation. Company made a plan to derive the returns from this exhausted land by selling it in the market to the several buyers who wanted a good condition residential house with all amenities in that city.  So, company sub divided the exhausted land in to different but attractive section so that buyer could be attracted immediately towards these town houses. Company also installed water supply and sewage pipe line. After providing amenities, company hand over these town house to the potential buyer in exchange of good returns (Sadiq et. al., 2015). Tax commissioner said that the intention of the taxpayer was to earn higher profit at initial stage so the amount received would be taxable under taxation act. The court agreed with the commissioner’s opinion and ruled that when the sand reserves exhausted and the company started developing land, the business activity got altered from sand mining to land development and hence income is taxable (Gilders et. al, 2013).

Crow v FC of T 88 ATC 4620

As per this case, a person named Crow wanted to purchase a five block land. He borrowed finance from the market and purchased that five block land keeping in mind the future value of this land.  After acquiring five block land, he sub divided that five block land in to fifty new developed blocks for fulfilling market need. For a long time, he was engaged in to development business and result was $ 388,288 as profit. Concerned taxation officer ruled that income received by selling fifty block land would be assessable income. Taxpayer advocated that he had sold that land as he was suffering from financial loss and initially he was engaged in the farming activity. But taxation officer denied this excuse.. Tax tribunal concluded in favour of taxation officer. It was clear that the tax payer borrowed money from market to purchase five block land. He initially knew his financial conditions. For keeping in mind the future returns by this land, he purchased this land by borrowed money. All this is done by the tax payer very systematically as that he could engage in liquidation of land. Therefore, income derived from selling of land considered as ordinary income and would be assessed for taxation. Crow would be liable to pay tax on this revenue receipt (CCh, 2014d).

McCurry &Anor v FC of T 98 ATC 4487

In this case, McCurry & Anor were two business associates, who purchased a land in which some houses had been constructed in an old manner. For obtaining gains from this land, they decided to develop it by constructing some newly designed building. They started construction on the old building and gave the totally new look to his building as per market demand. Meanwhile, they gave advertisement in the newspapers as well as some other advertisement channel. But even after making so many efforts by both business associates, not even a single house could sell. However, they decided to occupy one house for their own residence. After that, within a year all the newly constructed house had been sold at a very high rate of return. Taxation authority claimed the received gains as taxable income. But both associates were not satisfied by the taxation officer’s view. Tax tribunal decided that the intention of buyer was only to make profit at initial stage. In order to implement this, they have done construction work on that old building. Hence, by keeping in mind, the intention of tax payer to indulge in land development at very beginning, income earned by selling of new design house, would be considered as revenue income and would be taxable under taxation act of section 25 (1) of ITAA, 1936 (CCh, 2014e).



Barkoczy, S 2015, Foundation of Taxation Law 2015, 6th eds., CCH Publications, North Ryde

CCh 2016a, FC of T v Whit fords Beach Pty Ltd (1982) 150 CLR, Available online from (Accessed on September 3, 2016)

CCh 2016b, Statham & Anor v FC of T 89 ATC 4070, Available online from (Accessed on September 3, 2016)

CCh 2016c, Casimaty v FC of T 97 ATC 5135, Available online from (Accessed on September 3, 2016)

CCb 2016d, Crow v FC of T 88 ATC 4620, Available online from (Accessed on September 3, 2016)

CCh 2016e, McCurry & Anor v FC of T 98 ATC 4487, Available online from (Accessed on September 3, 2016)

Coleman, C 2011, Australian Tax Analysis, 4th eds., Thomson Reuters (Professional) Australia, Sydney

Gilders, F, Taylor, J, Walpole, M, Burton, M. & Ciro, T 2013, Understanding taxation law 2013, 6th eds.,  LexisNexis/Butterworths

Jade 2016, Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188, Available online from (Accessed on September 3, 2016)

Sadiq, K, Coleman, C, Hanegbi, R, Jogarajan, S, Krever, R, Obst, W, and Ting, A 2015 , Principles of Taxation Law 2015, 7th eds., Thomson Reuters, Pymont


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