Reference no: EM132307404

Part A

James Cookie is a ship's officer employed by Sails International Inc, a company incorporated in Bermuda that owns cruise boats and operates passenger cruises in the Pacific Ocean.

James owns a house in Sydney which was formerly his family home but his estranged wife and children now live in Singapore. James rents the house to his cousin and family. The house is let fully furnished; the furniture belongs to James. Whenever he is in Sydney, James stays in the house and has his own room in which are stored his personal belongings. In the current income year James spent 80 days in the house. The remainder of the time was spent on a cruise ship except for 20 days spent visiting his children in Singapore.

The ship on which James serves visits a variety of ports, mainly in the South Pacific. James's employment contract was negotiated and signed in Hong Kong.

Required 1: For Taxation purposes, is James a resident of Australia? What is the source of his salary from Sails International?

Required 2: If James sold his house, would he be entitled to the main residence exemption in Subdiv 118-B?

Part B

Refer to the decisions in FCT v Rowe (1997) 35 ATR 432; 97 ATC 4317 and FCT v Stone(2005) 59 ATR 50; 2005 ATC 4234:

(a) In your own words, briefly outline the facts and issues in each case.

(b) Explain why the government grants to the taxpayer in Stone were income but the grant in Rowe's case was not.