PACC6006 Taxation Law

Case Study 2015

Required:Complete assignment task and limit your written response to750 words. In grading the task examiners will focus on your referencing to case law, appropriate sections of the ITAA 1936 and ITAA 1997 and income tax rulings issued by the Australian Taxation Office. A list of references used to answer the assignment task should be attached to the assignment.

Mary-Anne Mayfield is a 25 year-old Australian citizen who has recently completed a Masters degree in Accounting at the University of Swansea, Australia. She is single, born in Australia and has always lived with her parents at Pelican Flat, NSW.

Mary-Annes ambition is to pursue a career as a university academic however she has found her opportunities in Australia limited by the fact she does not have a PHD. After canvassing many international Universities she was successful in securing a six month teaching contract with the University of Great Britain based in Coventry, England. The University has advised they may consider a further 12 month extension to the contract provided they are satisfied with her performance. Mary-Anne has been granted a 12 month UK working visa and will apply for an extension to the visa if offered further work at the University. She left Australia on 1 March 2015 to commence her contract on 1 April 2015. Mary-Anne travelled to the UK on a one-way ticket and has left sufficient funds with her mother to pay for a return flight if she decides to return home. Mary-Anne is unsure of her actions if the UK contract is not extended. At that time she will make a decision to either apply for another teaching position in the UK or to commence PHD studies either in Australia or the UK.

Although Mary-Anne has few contacts in the UK she has keep in touch with Wendy, a UK resident she met on a recent holiday to Bali. Wendy lives near Coventry and has assisted Mary-Anne in securing a six-month lease on a one-bedroom apartment close to the University. She has also arranged for Mary-Anne to open an account with a UK bank to receive her University salary. Mary-Anne has few assets in Australia other than a $10,000 term deposit with the Bank of Blacksmiths and a motor vehicle valued at $15,000 (which will be garaged at her parents house until she decides her future). Mary-Anne intends to purchase a cheap car in the UK for transport.

Required

In the form of a professional correspondence (not exceeding 750 words) advise Mary-Anne whether at 30 June 2015 she will be classed as a resident of Australia for income tax purposes. Also advise Mary-Anne how her income will be assessed given both scenarios of her being deemed a resident and a non-resident. Calculations are not required. Ignore any consequences of the Double Tax Agreement between Australia and the UK.