This document provides an analysis of whether Nadine would be considered an Australian resident under section 6(1) of the Income Tax Assessment Act 1936 if she moves to London for three years for employment. It examines the residency tests of resides, domicile, 183-day rule, and superannuation membership. It determines that as Nadine's domicile and permanent home would be in London for three years, she would not satisfy the resides or domicile tests and would therefore not be considered an Australian resident during that time.

1. LAW 511 Taxation Law
Answer:
Answer To Part A
Determining the income and expenses that are assessable income or allowable deductions
Assessable
Particulars
Legislation, Case law, Rulings, Reasoning

2. Item – 2020 Tax Return
No
Wedding Gift
A gain that is classified as a normal gift cannot be classified as earnings. In “Hayes v FCT
(1956)” the bookkeeper got shares in company that was given to him by his former boss.
The shares given to accountant was considered as a gift and not an assessable income
(Sadiq 2019). The engagement gift received by Nadine cannot be characterised as income.
Citing “FCT v Hayes (1956)” the engagement gift is not related to derivation of assessable
earnings and it is not classified as income for Nadine.
Yes
Gross Salary
Nadine reports receiving salary from her employment. Referring to “Dean v FCT (1997)” the
“gross salary” is classified as salary from individual effort and it is chargeable to Nadine as
an ordinary earnings within “sec 6-5 ITAA 1997”.

3. Item 1
Yes
Bonus Received
Nadine also got bonus from her employment. Citing Brent v FCT (1971) the bonus is an
assessable an ordinary earnings within “sec 6-5 ITAA 1997”.
Item 2
No
Winnings from Casino
A gain which is classified as a windfall gain is not an income. In “Evans v FCT (1989)” the
taxpayer placed bets on horses and luckily won (Anderson, Dickfos and Brown 2016). The
gambling winnings was not regarded as income by court and the taxpayer was classified as
a lucky gambler. The gambling winnings is not an assessable income to Nadine.

4. Yes
Interest on bank deposits
Receipt of interest from bank deposit is considered as an assessable income. Accordingly, in
“Riches v Westminster Bank Ltd (1947)” an important principle was given that receiving of
interest is observed as an ordinary income under “sec 6-5”. Nadine earned interest from
bank deposit that amounted to $2,500. Referring to “Riches v Westminster Bank Ltd
(1947)” the interest earned by Nadine is included for assessment purpose as an ordinary
income within “sec 6-5 ITAA 1997”.
Item 10
Yes
Sale of Painting
Meanwhile, where a taxpayer derives receipts from normal business proceeds it amounts to
some ordinary business earnings under “sec 6-5”. In “GP International Pipecoaters v FCT
(1990)” it was stated that receipts from trading transactions are classified as ordinary
income within “sec 6-5”.
The receipts amounting of $20,000 from selling paintings at local market (Murray et al.
2019). Citing “GP International Pipecoaters v FCT (1990)” the receipts from selling painting
is categorized as trading receipts and it is assessable ordinary proceeds within “sec 6-5”.

5. Item 15
Yes
Receipt of Award
When a taxpayer gets any prize or award which has satisfactory relation with revenue
making actions of taxpayer, those receipts are held as ordinary returns under “sec 6-5 ITAA
1997”. In “Kelly v FCT (1985)” the specialized footballer had got award for best player
(Yuen 2022). The law court held the receipt as earnings for the reason that it was connected
to his work and use of abilities. Nadine reports receiving award for her contribution to legal
profession. Citing “Kelly v FCT (1985)” the receipt of award amounting of $1,000 will be
considered as income under ordinary concept and taxable to Nadine within “sec 6-5 ITAA
1997”.
Item 9
Yes
Capital Gain/Loss on Sale of Land
The capital gains or loss forms the part of an individual’s assessable earnings and it is taxed
as statutory earnings within “sec 102-5 of ITAA 1997”. Land, shares in company or trust,
rights and options are considered as CGT asset under “sec 108-5 of ITAA 1997”. Nadine

6. reports selling the subdivided land for $300,000 that had market value of $200,000. The
disposal of subdivided land contributed to “CGT Event A1” within “sec 104-10 (1) ITAA
1997”. The land is classified as CGT asset within “sec 108-5 of ITAA 1997” and the capital
gains derived from selling it amounts to assessable statutory income for Nadine within “sec
102-5 of ITAA 1997”.
Item 18
No
Sale of Sculpture
While under “sec 108-10 (2)&(3) of ITAA 1997”, collectables refers to assets which is
bought largely for personal use and enjoyment purpose (Morgan and Castelyn 2018).
Common examples are paintings, sculptures, antiques etc. Meanwhile under “sec 118-10
(1)”, “capital gains or loss” from “collectable” bought for $500 or less needs to be
disregarded. Nadine sold a rare sculpture for $10,000 that she bought for $300. The
sculpture is classified as collectable within “sec 108-10(2) & (3) of ITAA 1997”. Referring to
“sec 118-10 (1)” the capital gains derived by selling it will not be included in the assessable
income of Nadine since its cost base is lower than $500.

7. Deductible
Particulars
Legislation, Case law, Rulings, Reasoning
Item – 2020 Tax Return
Yes
Safety Boots, protective glasses and evening dress
The taxpayers are allowable to claim deduction for expenditures experienced towards
protective clothing and occupation specific clothing under “sec 8-1”. In “Morris & Ors v FCT
(2002)” the taxpayer was involved outdoor occupation and he was allowed to claim

8. deduction for cost incurred towards sun protection items such as hats, sunglasses and
sunscreens.
The safety boots and protective clothing bought by Nadine is classified as protective
clothing and citing “Morris & Ors v FCT (2002)” it is an allowable deduction to Nadine under
“sec 8-1”. While no deduction is allowable for evening dress because it is a private expense.
D3
No
Reimbursement of Meals and entertainment
Reimbursement is not salary and wages. As noted in “Roads and Traffic Authority of New
South Wales v FCT (1993)”, reimbursement is observed as sum that is made in regard to
real expenditures incurred (Robin 2021). She has been reimbursed the cost of meal and
entertainment. Citing “Roads and Traffic Authority of New South Wales v FCT (1993)” no
deduction is allowed for meals and entertainment expense to Nadine.
Yes

9. Taxi Fares
In “FCT v Wiener (1978)” the travel expense that was incurred by taxpayer to travel
between five different school and back home was an allowable deduction as it amounted to
travel in the course of work. The taxi fares that is incurred for travelling from office to client
premises is categorized as travel at the time of work. Quoting “FCT v Weiner (1978)” the
travel expenditure is an allowable deduction to Nadine.
D3
No
Taxi Fares from Home to Office
Travel between home and office is a private travel expenditure. In “FCT v Lunney (1958)”
the travel made between home and work place is not permitted for deduction within “sec 8-
1”. While the travel expense incurred to travel between home and work place by Nadine is
not an allowable deduction since it is a private expense.
Yes

10. Membership Fees of law society
As mentioned within “sec 26-55 of ITAA 1997” expenditures that is incurred by taxpayer to
trade, occupational or certified association is an allowable deduction. The membership
expense of $530 is an allowable deduction to Nadine as it is related to her profession.
D5
No
Membership fees for real estate institute
While up $42 is allowed as deduction for real estate membership within “sec 26-55” since it
is not related with his income earning profession.
No

11. Rates on Family Home
The rates and electricity on family home is a personal expense and not allowed for tax
deduction under “sec 8-1 (2) of ITAA 1997”.
Yes
Electricity
Citing “Handley v FCT (1981)”,Nadine can deduct a portion of electricity expense that is
attributable to her home office purpose. She can deduct for 4 nights of electricity expenses
that she incurs for every week.
D5
Yes

12. Purchase of Artwork
Meanwhile under “sec 70-15 of ITAA 1997” expense that is experienced towards buying
trading stock is an allowable deduction to business (Payne 2018). The purchase expense
incurred towards purchasing materials for her painting is an allowable deduction within
“sec 70-15”.
D15
Yes
Excess of Opening Stock over Closing
Furthermore, under “sec 70-35 (2) of ITAA 1997” when “closing stock” value is greater than
“opening stock”, the total sum that is in surplus is an allowable deduction. Under “sec 70-35
(2) of ITAA 1997”, Nadine can also deduct the value of opening stock over its closing stock.
D15
Calculation of Taxable Income and Tax Payable
Computation of Tax Liability

13. In the books of Nadine
For the year ended 30th June 2021
Particulars
Amount ($)
Amount ($)
Assessable Income
Bonus received

14. 15000
Gross Salary
155000
Interest on Bank Deposits
2500
Sale of Paintings
20000

15. Receipt of Award
1000
Capital Gain/Loss on Sale of Land
Sales Proceeds
300000

16. Cost Base
200000
Capital Gains on Sale of Land
100000
50% CGT Discount
50000
50000
Total Assessable Income

17. 243500
Allowable Deductions
Safety Boots
250
Protective Glasses
250

18. Taxi Fares
500
Membership Fees of law society
530
Membership fees for real estate institute
42

19. Electricity Expenses
86
Purchase of Artwork
7500
Excess of Opening Stock over Closing
4500
Total Allowable Deductions

20. 13658
Total Taxable Income
229842
Tax on Taxable Income
74095.9
Add: Medicare Levy
4596.84

21. Add: Medicare Levy Surcharge
3447.63
Less: PAYG Withholding
22000
Total Tax Payable
60140.37
Answer To Part B:

22. Issues:
Is Nadine an Australian resident under “sec 6 (1) of ITAA 1936” if she decides to move to
London for a period of three years to take up employment?
Rule:
1: Resides Test: As per this test, a time span of greater than six months continuously will
treat a person as an Australian resident. As noted, the duration, frequency and regularity of
a person’s movement is considered important. Furthermore, family, business and
employment ties are also important factor (Sadiq et al. 2021). In “Levene v IRC (1928)” the
taxpayer sold his home but returned on regular basis to meet relatives. The taxpayer was
held as resident.
2: Domicile Test: A person would be treated as an Australian resident if their domicile is
situated in Australia, except the taxpayer has fixed home out of Australia. A time span of two
years or more will be treated as substantial time for an individual’s stay in foreign nation
(Shome 2021). Common factors such as the intention and actual time period of stay in
foreign nation, establishment of home in foreign nation and continuity of presence in
overseas is important factor. In “FCT v Applegate (1979)” the taxpayer leased a house in
foreign and was not held as resident of Australia.
3: The 183-Day Test: A person will be treated as Australian occupant if they are living in
Australia for more than six months.
4: Superannuation Test: A person is an Australian resident if they have commonwealth fund
membership.
Application:
If Nadine decides to accept the employment in London for the period of three years, she will
be considered as non-resident of Australia because Nadine has expressed her intention to
resident in London till the term of her employment contract. The assertion can be
supported by below given residency test.
Citing the case of “FCT v Applegate (1979)”, if Nadine moves to London for three years, she
will be considered as non-resident of Australia because for three years, her domicile will be
located outside Australia. She should to pay tax on income that is sourced in Australia and
no tax is payable on income sourced from out of Australia.
Conclusion:
On a conclusive note, it can be stated that Nadine is not an Australia resident under the “sec

23. 6 (1) of ITAA 1936” because her permanent location of abode is located outside of Australia
for the period of three years.
References:
Anderson, C., Dickfos, J. and Brown, C., 2016. The Australian Taxation Office-what role does
it play in anti-phoenix activity?. Insolvency Law Journal, 24(2), pp.127-140.
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Morgan, A. and Castelyn, D., 2018. Taxation education in secondary schools. J. Australasian
Tax Tchrs. Ass'n, 13, p.307.
Murray, I., Cianfrini, M., Clements, J. and Wilson-Rogers, N., 2019. Taxation, innovation and
education: Reflections on a flipped lecture room. J. Australasian Tax Tchrs. Ass'n, 14, p.122.
Payne, K., 2018. Taxation: Fix it up or trade up?. Company Director, 34(6), pp.52-53.
Robin, H., 2021. AUSTRALIAN TAXATION LAW 2021. OXFORD University Press.
Sadiq, K., 2019. Australian Taxation Law Cases 2019. Thomson Reuters.
Sadiq, K., Black, C., Hanegbi, R., Krever, R.E., Jogarajan, S., Obst, W. and Ting, A.K.F.,
2021. Principles of Taxation Law 2021 (No. 14th). Thomson Lawbook Co.
Shome, P., 2021. Principles of Taxation. In Taxation History, Theory, Law and
Administration (pp. 53-61). Springer, Cham.
Yuen, K., 2022. Australian Taxation Office wins Singtel TP dispute. International Tax Review.