Imagine you are working as a graduate tax accountant at the local tax firm in Frankston, Victoria. You are assisting the senior tax practitioner, Sinclair, attend to a new client, Stanley. Sinclair has requested that you analyse Stanley’s circumstances. The following working papers are available to you in Stanley’s client file.

Client Number: 0012589

Client’s Preferred Name: Stanley

Client Meeting: 2 March 2022

Item 1: Teams Meeting Transcript extract between Sinclair (tax practitioner) and Stanley (client)

Sinclair: Hi Stanley, good to ‘e-meet’ you.

Stanley: You too, I hope all is well?

Sinclair: Yes, keeping busy. I see from the booking notes you are seeking advice on your Australian tax affairs due to your work life overseas since 2017 when you left Australia to work in Mali and then Indonesia.

…

Sinclair: So, tell me a little about yourself.

Stanley: Well, I am a data analyst for ‘AtGlobal’, a consultancy firm that operates across internationally.

Sinclair: How long have you been working overseas?

Stanley: Well, that’s a good question. Definitely over 20 years. Let’s see. I worked from around the year 2000 through to maybe 2007 in Columbia, before moving onto Iceland. I worked in Iceland until around 2014, then was in Mali in 2017 through to 2019 after having returned to Australia. Since then, I have been working in Indonesia.

Sinclair: Ok great, and do you have family?

Stanley: Yes, I have a wife and son. However, they have been in Australia for most of the time. My wife, Peta did live with me when I was in Iceland though. We bought a house in Melbourne in 1998, so when I left the Iceland position, we returned to Australia for a couple of years before I accepted a position in Mali. However, Peta remained in Melbourne due to her mother’s ill-health.

Sinclair: What is your citizenship status?

Stanley: I am an Australian citizen.

Item 2: Timeline compiled by Sinclair

1998: Purchased property in Melbourne

Pre 2000: Australia

2000-2007: Columbia

2008-2014: Iceland

2014-2017: Australia

2017-2019: Mali

2019-2021: Indonesia

Item 3: Notes compiled by Sinclair

Mali (2017-2019)

• Signed employment agreement with ‘AtGlobal’ and moved to Mali in January 2017
• The agreement was established through the Australian manager of ‘AtGlobal’ and stated Stanley’s Melbourne residence as his residential address and the point of hire, as such if he were to cease employment he would return to that point of hire.

Required:

Advise Stanley as to whether he is a resident of Australia for tax purposes for the relevant period, being the income year ending 30 June 2021, by responding to the following question set. You must show a complete analysis and you must refer to relevant legislation, case law and tax rulings. No calculations are required for this task.

• Whilst in Mali, accommodation and a vehicle were provided by ‘AtGlobal’. Both the vehicle and the accommodation were shared with three other employees of the firm.
• Stanley and Peta’s intention were to move permanently overseas, however due to their particular circumstances; they were not able to purchase private accommodation and Peta remained in Australia.
• Stanley opened a bank account in Mali; however, Stanley continued to use his Australian credit card for daily expenses and had his wages paid into his Australian bank account.
• Stanley paying tax in Mali on his employment income during this period.
• During this period Stanley returned to Australia to see his wife and child, and for special occasions such as Christmases and birthdays, for a total of 92 days intermittently in the 2018 income year and 104 days in the 2019 income year.
• During his visits, Stanley also makes use of a sailing boat he owns, which is stored in a boathouse he owns jointly with Peta in Port Arlington, Victoria. He also maintains a membership with the local sailing club.
• Many of Stanley’s belongings remain at the Melbourne property whilst he is overseas.

Indonesia (2019-2021)

• Signed and employment agreement in 2019
• For the 2019 year, Stanley was still located in Mali and would fly into Indonesia to perform his duties
• By the end of 2019, Stanley had relocated to a fully furnished apartment, again provided by ‘AtGlobal’, in Indonesia
• Again, Stanley uses his credit card for daily expenses, and also opens a bank account in Indonesia, however, has his wages paid into his Australian bank account.
• Stanley pays tax in Indonesia on his employment income during this period
• Stanley and Peta are planning on relocating overseas and selling their Melbourne property; however, the ill-health of Peta’s mother is impacting these plans.
• In early 2019, Peta renovated the Melbourne property with the anticipation of selling the property; however, benefits from the improvements made.
• As with the period Stanley was in Mali, during this period Stanley returned to Australia for 79 days in the 2020 income year and 90 days in the 2021 income year.

1. Analyse Stanley’s situation regarding the “resides test” pursuant to section 6(1) ITAA36. (5 marks)

2. Analyse Stanley’s situation regarding the “domicile test” pursuant to section 6(1) ITAA36.

3. Explain whether the 183-day test is relevant to Stanley.

4. Advise Stanley as to whether you consider him to be a resident of Australia for tax purposes for the relevant period and explain the consequences of this assessment?

5. Identify the income classes detailed in Stanley’s facts and circumstances and determine whether they are Australian or foreign sourced. (5 marks)