Reference no: EM131622381

Required: In grading this 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. Please see marks allocation below. A list of references used to answer all assignment tasks should be attached to the assignment.

In this assignment you are have just decided to start your own tax consulting business. You have been asked to advise a client on the following issues. The document you produce should be clear, logical and provide advice that can be relied upon by the client.

Jack Jones holds a Canadian passport. He has also held a visa which has allowed him to visit and work in Australia. He has held the visa from the 2 December 2012 until the 30th June 2016. During the time he was in Australia Jack had a contract with Peterson Marine Industries Pty Ltd, which was an Australian company. He worked on a sea going oil exploration vessel. Subsequently the vessel was leased to an American company by the name of Samsak Marine. The vessel is being used to carry out exploration work in Canada. Jack accepted employment with Samsak and left Australia on the 1st August 2015 to work in Canada. During this time, he left his estranged wife and his 6-year-old child Riley who lives with his estranged wife.

Jack worked for 9 months for Samsak in Canada. He then decided to terminate his contract and returned to Australia where he resided for the rest of the income tax year until 30 June 2016. During the time Jack was away he reconciled with his wife.

Upon returning to Australia Jack and his wife entered into a business partnership undertaking lawn mowing and horticultural work.

Accommodation for Jack was mixed while he was in Canada. For the first three months, the accommodation provided by Samsak was transitionary in nature and constituted army type barracks. Meals were also provided. For the following three months Jack lived with his sister in the family home that he grew up in (his parents

have passed away). He has not lived there since he left to attend university as an 18-year-old. He is currently 37 years old. For the last three months he was posted to Vancouver where he owns a house that he shared with his wife and child before they came to Australia. While the house is regularly rented out it just happened that the house was vacant during the time he was in Vancouver so he decided to live there.

The Samsak office in America paid Jack's wages into his bank account in Australia after withholding the tax required to be remitted in America. This included American federal and state income taxes. He did not pay any tax in Canada. He was paid a gross salary of the equivalent of AU$250,000 for the 9 months work . The tax withheld in America amounted to the equivalent of AU$75,000.

At the time, he entered into the contract with Samsak he intended to be absent from

Australia for approximately 5 months. He was actually away from Australia for about nine months.

Additional Information:

- Jack received a one-off payment for the equivalent amount of AU$100,000 to work on the vessel in Canada. Jack was able to negotiate to have this money paid into his Canadian bank account with the Bank of Montreal.

- For the year ended 30 June 2016 Jack received a Statement of Income and Expenditure cash receipts from his real estate agent in Canada which showed rental income of AU$30,000 including AU$3,000 related to the month of July 2016. The Statement of Income and Expenditure included allowable deductions totalling AU$10,000.

- As part of his employment contract, the Jack's employer paid Jack a relocation allowance of $5,000 to cover the costs of removal or storage of his household effects upon his moving to Canada.

- During the employment in Canada, Jack earned 300,000 frequent flyer points.

He became a platinum frequent flyer, which provided him access to the

Qantas Club. Membership fees for the club usually costs AU$600 per annum. Jack redeemed the frequent flyer points to acquire a first-class airline ticket and accommodation in London for one week. This benefit was worth AU$7,000..

- Jack obtained tax advice from a taxation accountant specialising in international taxation matters. He paid the accountant AU$2,000 for the advice.

- In January, Jack incurred AU$2000 in registration fees for a conference on Oil Exploration techniques offered by an industry specialist.

- Jack incurred AU$1500 in course fees for a "Certificate in Horticulture", offered by the Australian Horticulture Association. This was an online course. He undertook the course to enable him to commence a lawn mowing business with his wife when he returned to Australia. Jack completed the course December 2015.

- Jack derived AU$2,000 in fees from his lawn mowing clients in June 2016.

Required:

1. In the form of a professional correspondence you are required to advise Jack of his taxation residency status.
2. Assuming that Jack is an Australian resident for taxation purposes calculate his taxable income for the income tax year ended 30 June 2016. (Justify all decisions to include or not include income/deductions basing your justification upon case law and taxation rulings).

3. The response you provide mist be prepared as a single cohesive document.

You are required to provide your advice by referring to:

1. Legislation

2. Relevant case / cases and the facts of each case

3. The case's / cases' relevance to the facts provided above

4. The judgment made in each case / cases.