Resident For Taxation Purposes For The Income Year

The applicable statutory test in Jan’s case is the “183 Days Rule” as described in s 6(a)(ii) of ITAA, 1997 and as applied in the case of Wilkie v IRC (1952) 32 TC 495, as per Barkoczy, (2015). If the stay, in one income year, of a person is for greater than 183 days, then this statutory rule holds person as a resident for the whole income year of. Since Jan had intended to stay in Australia only for five months, from 1 Feb 2018 to 30 Jun 2018 and this calculates to only 150 days, hence application of the 183 day rule to Jan, in conjunction with Taxation Ruling IT 2681, satisfies the fact that Jan cannot be considered as an Australian Resident for taxation purposes for the income year 2018, says Barkoczy, (2013).

Peter’s case relates to s 15-15(25A) read with s 6-5(25(1) which are often used for assessing whether an isolated transaction can be treated as a profit-making scheme for trade or business or it needs to be classified as a CGT event and classified as realisation of income from a capital asset, asserts Barkoczy, (2015). The most often used test of ‘business’ or ‘trade’ is considered as proving the activity as a “sustained activity” or a repetition of transactions. In case of Peter’s selling the land in small lots cannot be considered under this context as the nature of these activities does not imply that Peter had started a business venture. The case of FCT v Whitfords Beach Pty Ltd (1981-82) 150CLR 355 has confirmed this in principle, that any profit, arising from an isolated transaction, cannot be assessed as income under s 6-5(25(1), as per Barkoczy, (2013).

Reference

Barkoczy, S. 2013. Foundations of Taxation Law 2012, 5^th ed. CCH Australia Limited, North Ryde, NSW.

Barkoczy, S. 2015. Australian Tax Case book, 12^th ed. CCH Australia Limited, North Ryde, NSW.