It is Taxation

please answer question as ILAC.

Question 1:

Jon successfully graduated with his Bachelor of Commerce from Unitec in December 2019.

He found work in the audit practice of a major accounting firm in Auckland and started work

in February 2020. He brought an apartment in the city, close to work. Being a keen soccer

player, he remained a member of the university gym and continued playing for the university

soccer club. Through work he joined KiwiSaver and he has medical insurance which his

employer subsidises. He has a bank account and credit card with a New Zealand bank. He

retains these bank accounts, Kiwi Saver and a credit card throughout the period until now.

Jon has always been interested in investment and together with his friends Pop and Dan, has

incorporated a New Zealand company which invests in various forms of property (land and

listed company shares). All three friends own one third of the company and they are all

directors.

In March 2020, his firm offered Jon a secondment to Australia for at least one year. He

accepted the offer and before he moved to Brisbane, he rented out his Auckland city

apartment for a term of six months. Given the short term contract, he struggled to find tenants.

The apartment has been unoccupied for a considerable length of time. He has kept on

advertising for tenants.

In Brisbane, he rents his accommodation. His flat is spacious. In early March 2020, Pop

decided to move to Brisbane, he moved into the same flat as Jon. Jon has joined the local

gym and the social soccer team. He returns to see his parents at Christmas and always

checks up on the New Zealand property investments owned by the company. He also spends

his annual leave time here in New Zealand. When he returns to New Zealand, he either stays

at his parents place, if the Auckland city apartment is tenanted, or at the apartment itself if it

is vacant.

There have been some difficulties with the company, which has necessitated corporate

decision making. Fortunately with both Jon and Pop living in the same flat it has meant theyve

been able to make the decisions there, although they always ring Dan to seek his approval

so it can be said they have jointly agreed on the decision.

The Australian Tax Office (ATO) have advised Jon that they regard him as an Australian tax

resident based on the physical number of days he has been in Australia.

Required:

In light of the above facts, please advise Jon:

a) Whether, in your view, he has retained New Zealand tax residency

under New Zealand domestic legislation.

b) Irrespective of the conclusion you reached in a), assume the New

Zealand Revenue regard Jon as a New Zealand resident by virtue of

having a place of abode in New Zealand. The ATO also maintain he is a

resident in Australia. Using the provisions of the Double Taxation Relief

(Australia) Order 1995 (the treaty), advise him as to his residency status

under the treaty. What aids to interpretation are available to assist you?

What authority do you have for their use?

c) Consider any issues that can arise for the residency of the company,

on the basis that the ATO decides it is now Australian resident, and

how the treaty may resolve them.

d) Jon plans to visit his parents in New Zealand during every Christmas

holiday break despite the COVID-19 pandemic. However, he is worried

whether lock down during his future stay in New Zealand will have an

impact on his tax residency position.

Advise Jon whether the lockdown during his future stay in New Zealand

will impact his tax residency, citing any Inland Revenues publication

regarding the COIVD-19 impact on residency.

Question 1: Tax Residency [29 marks Jon successfully graduated with his Bachelor of Commerce from Unitec in December 2019, He found work in the audit practice of a major accounting firm in Auckland and started work in February 2020. He brought an apartment in the city close to work. Being a keen soccer player, he remained a member of the university and continued playing for the university soccer club. Through work he joined KwSaver and he has medical insurance which his employer subsidises. He has a bank account and credit card with a New Zealand bank. He retains these bank accounts, Kiwi Saver and a credit card throughout the period unti now Jon has always been interested in investment and together with his friends Pop and Dan, has incorporated a New Zealand company which invests in various forms of property (and and listed company shares). Al three friends own one third of the company and they are all directors. In March 2020. his firm offered Jon a secondment to Australia for at least one year. He accepted the offer and before he moved to Brisbane, he rented out his Auckland city apartment for a form of six months. Given the short contract, he struggled to find tenants. The apartment has been unoccupied for a considerable length of time. He has kept on advertising for tenants in Brisbane, herents his accommodation. His fatis spacious. In early March 2020, Pop decided to move to Brisbane, he moved into the same fatas Jon Jon has joined the local gym and the social soccer team. He retums his parents at Christmas and always checks up on the New Zealand property investments owned by the company. He also spends his annual leave time here in New Zealand. When he retums to New Zealand, he either stays at his parents place it the Auckland Citypartment is tenanted, or at the apartment itself is is vacant There have been some difficulties were company, which has necessitated corporate decision making. Fortunately with both on and Popiving in the same fiat it has meant they've been able to make the decisions there, although they always ring Dan to seek his approval so it can be said they have jointly agreed on the decision The Australian Tax Office (ATO) have ed Jon that they regard him as an Australian tax resident based on the physical number of days he has been in Australia Required: In light of the above facts, please advise on # Whether in your view, he has retained New Zealand tax residency under New Zealand domestic legislation [10 marki b) Inspective of the conclusion you reached in all assume the Now [10 mark] Zealand Revenue regard Jon as a New Zealand resident by virtue of having a place of abode in New Zealand. The ATO also maintain he is a resident in Australia Using the provisions of the Double Taxation Role (Australia) Order 1995 (the treaty advise him as to his residency status under the treaty. What is to interpretation are available to assist you? What authority do you have for their use? 15 marks! c) Consider any issues that can arise for the residency of the company on the basis that the ATO decides to Australian resident and how the treaty may resolve them . Jon plans to visit his parents in New Zealand during every Christmas holiday break despite the COVID-19 pandene. However, he is worried whether lock down during his future stay in New Zealand will have an impact on his tax residency position Advise Jon whether the lockdown during his stay in New Zealand wil impact his tax residency, citing any and Revenue's publication regarding the COIVD-19 impact on residency (4 marks