Reference no: EM132119639

Question - In June 2016 Tom had signed an agreement in Sydney with XYZ Ltd to act as the company's plantation manager in Brunei until June 2018. At the time of signing the agreement, Tom was advised that it was possible that at the end of his two year contract the company would offer him a one year extension. Tom advised the company, at the time of signing, that he had no definite view of accepting or rejecting the possible extension but would consider it at the end of his two year posting. He rented his house in Sydney for two years.

He arrived in Brunei on 1 July 2016. He and his family resided in a large house they leased near the plantation, which was provided as part of his employment package. His younger daughter Mary, aged 9, accompanied him and his wife to live in Brunei, where she attended boarding school. His older married daughter Anne, aged 23, remained in Australia with her husband.

While in Brunei, Tom and his wife joined the local bridge and golf club. He also rented a holiday apartment at a nearby beach resort for two years. During the time the family was in Brunei, his wife took a part-time job teaching English. In June 2018, Tom was offered a one year extension of his contract, but decided to reject it and returned to Sydney on 10 June 2018. While in Brunei, the rent from his house in Sydney was paid into his interest earning Australian bank account, which he accessed using his Australian credit card. His salary was paid into an interest earning bank account that he had opened in Brunei. He drew upon his Brunei bank account from time to time at local ATMs in Brunei.

On returning to Australia, Tom decided to open an accounting practice as a sole practitioner. His wife assisted him, by acting as the receptionist. Fortunately, he was able to provide a service to a client shortly after beginning business. He billed this client for fees of $8,000 on 27 June 2018, but did not receive the cash payment from his client for these services, until July 2018. This was the only client he billed for the year ended 30 June 2017.

Advise Tom of the Australian taxation issues arising from the above fact situation. Reference should be made to appropriate legislation, case law and rulings. Calculations are not required. Note: Australia does not have an International Double Tax Agreements with Brunei and students are not required to discuss the operation of Brunei taxation law.