Kit is a permanent resident of Australia. He was born in Chile and retains his Chilean
citizenship....

Question

Kit is a permanent resident of Australia. He was born in Chile and retains his Chilean
citizenship. Kit spends most of the year working off the coast of Indonesia on an oil rig
for a United States company. He was recruited for this job in Australia and signed a
contract with the company here. For the last four years, Kit’s wife has lived in Australia
with their two children. They purchased a home in Australia three years ago. Kit and his
wife have a joint bank account with Westpac Bank. Kit’s salary is paid directly into his
account. All of the family’s other investments, including a share portfolio that generates
dividend income, remain in Chile. Kit gets one month off from work every third month
and, on these occasions, he meets with his family either in Australia or on holidays
around South America (usually in Chile where his parents reside).
Discuss whether Kit is a resident of Australia and how his salary and investment income

David · Accepted Answer

The definition of ' "resident" or "resident of Australia" ' is in subsection 6(1) of the 1936 
Act. The primary test for deciding the residency status of an individual is whether the 
individual resides in Australia according to the ordinary meaning of the word 'resides'. 
Under Australian Taxation Laws, four tests are applied to determine whether an 
individual is Australian resident or not 
1. Resides test 
2.  Domicile  test 
3. 183 day test 
4. Superannuation test
(1) Resides test – The term “resides” is not defined in income Tax legislation. Hence, 
the courts & the authorities rely on normal meaning of resides as to dwell 
permanently (or) for considerable time, to have settlement at a place. There is a need 
to test intention or purpose of presence, family, business or employment ties, 
maintenance & location of assets, social & living arrangements. The nationality does 
not matter for the purpose of resides test and also residential status for the purpose of 
immigration is a different concept as compared to residence for the purpose of 
taxation. 
(2) The Domicile test – The permanent home determines the domicile. In case the 
domicile is in Australia, the person will be considered a resident of Australia. 
Normally the country of birth defines the domicile. But under Domicile Act 1982, 
if a person may decide to set up his home indefinitely in Australia, then his 
domicile is adopted as domicile of choice to Australia. 
(3) 183 days test – If any individual is present in Australia for more than half the 
income year, he is considered resident in Australia. Such 183 days need not be 
continuous. This is concept of constructive residence in Australia.

Kit is a permanent resident of Australia. He was born in Chile and retains his Chilean citizenship. Kit spends most of the year working off the coast of Indonesia on an oil rig for a United States...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment