Reference no: EM133556114
Joseph Shrestha, the holder of a Nepalese passport and relevant working visa, arrived in Australia from Nepal in January 2016. He started work as an administrator in a Sydney hospital. On 10 July 2019 he travelled back to Nepal for personal reasons and worked in odd jobs until 1 November 2019 when he returned to Sydney and resumed his position at the hospital. While in Nepal he continued to maintain the apartment which he had bought in Sydney and his Australian bank account. He was on "leave without pay" from his job at the hospital.
During the 2019/20 income year Joseph was paid $25,000 for his work in Nepal and $35,000 for his work as an administrator in Australia. Nepalese tax of $3,000 was deducted from his salary. He was paid a bonus of $2,800 from Sydney hospital on 5 July 2019 for his work performed during April to June 2019. He also received $2,000 interest on the savings in his Australian bank account and a fully franked dividend of $700 from his share investments in the Australian company, Coles Group Ltd.
On 1 July 2020 Joseph left Australia indefinitely to take up a full-time position as a senior administrator in a Nepalese hospital.
In the 2020/21 income year, he was paid a salary of $70,000 for his work in the Nepalese hospital.
Tax amounting to $9,000 was deducted from his Nepalese salary. For the 2020/21 tax year, Joseph received interest of $2,400 on his Australian bank account and a fully franked dividend of $900 on his shares.
Upon leaving Australia, Joseph sold all of his furniture and leased the apartment he owns for $600 per week. For the 2020/2021income year he received $23,400 rental income.
Part A.
Determine Joseph's residency for tax purposes for the 2019/20 and the 2020/21 income years using all the residency tests and utilizing relevant case law principles
Calculate Joseph's Australian taxable income and net tax payable/refundable for the 2019/20 and 2020/21 tax years including all possible tax offsets.
You must give reasons for the inclusion or exclusion of all receipts in the assessable income for both income years
Part B
For the 2019/20 tax year only determine whether Joseph is entitled to a foreign income tax offset, and if so calculate the foreign income tax offset amount based on the tax paid in Nepal.