Discuss Alex residency and the tax implications

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Question - Alex owns and operates a mobile phone business located in a large shopping centre in Perth, WA. Alex was born in Paris, France. He has a family home there where his two grown-up children live. Alex spends 4 months of the year in Paris with his kids. The rest of the time he lives in a serviced apartment in Perth city. While Alex is in Perth he assists with the running of his small business.

In the business, to promote their products, one of the suppliers Tara Inc. provided Alex with two new iPhone X's this year valued at $1,760 each. Both of the phones were locked so they could only be used on Alex's account and the SIM cards were also locked so the phone could not be used with a different phone number.

Since the phones cannot be used by anyone else, they cannot be converted to cash and Alex assumes they are not ordinary income under s6-5.

Required -

a) Discuss Alex's residency and the tax implications of Alex's business.

b) Is Alex's assumption relating to s6-5 correct? Give reasons.

Reference no: EM132636608

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