The taxpayer was an oil industry engineer. He was born in Sri Lanka in 1962 but emigrated
Question:
The taxpayer was an oil industry engineer. He was born in Sri Lanka in 1962 but emigrated to Australia with his wife and children in 2000. They all became Australian citizens in June 2005. In July 2005, the taxpayer and his wife jointly purchased a home in Winthrop, Western Australia. In May 2009 the taxpayer moved to Kuwait to work as a site engineering manager for Magic Oil Company pursuant to a two-year contract (subsequently extended). He ultimately spent over two and a half years in Kuwait working for Magic Oil Company, returning twice to Australia to visit his family for a period of 15 days and 11 days respectively. His wife visited him in Kuwait three times, staying one month, two months, and one month respectively. The taxpayer-occupied leased accommodation in Kuwait was paid for by Magic Oil Company.
His salary was paid into a bank account in Australian dollars (at his request) and funds were regularly transferred to a joint bank account he held with his wife in Perth, from which regular mortgage repayments on the Winthrop home were made. No tax was payable in Kuwait on the income earned in Kuwait. The taxpayer returned to Perth in December 2011 and resumed living with his wife in their home at Winthrop. The taxpayer’s income tax returns for the 2009/10 and 20010/11 years stated that he was a non-resident for Australian tax purposes and did not include any assessable income. The Commissioner initially assessed the taxpayer in accordance with his returns, however, data matching processes subsequently identified income from foreign source transactions and amended assessments were issued on 22 November 2012 to include foreign source income of $154,125 and $205,517 for 2009/10 and 20010/11years respectively.
The taxpayer objected to the amended assessments, the Commissioner disallowed the objections and the taxpayer sought review. The taxpayer maintained that he was not a resident of Australia during the relevant years. He also contended that the amended assessment issued in respect of the 2009/10 year was out of time, the original assessment having been issued on 4 November 2010. Required: The taxpayer has come to you for advice about whether he is a resident of Australia for tax purposes and whether his salary income from the Middle-East is taxable in Australia.
In your advice to the taxpayer clearly state how the residency and source laws would apply to his situation.
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett