Reference no: EM132067185

Question 1: John was born in Australia. He is a businessman operating an import/export business. He spends over 6 months every year in Vietnam, as this is the country with which most of the business is carried out. His wife travels with him during the 6-month stay overseas. The rest of the time, he spends in Australia every year.

Their children, aged 20 and 32, live in Australia. John owns a home in Australia where he lives for just under 6 months each year and he owns a home in Vietnam where he lives the rest of the time. He holds investments and bank accounts in both countries.

You are required to discuss John's residency status based on the definition of ‘resident' in section 6 of the ITAA 36? Assume there is no double taxation agreement or tax treaty between Australia and Vietnam. Your answer should reference relevant sections of the Income Tax Assessment Acts, relevant case law, or rulings from the Australian Taxation Office. Provide explanations for your answer.

Question 2: Sue was born in Australia and remained in Australia until completing her tertiary studies. Sue then decided to leave Australia for an unspecified period of time to work in one overseas country, Brazil, to gain work experience.

Before leaving, she closed all bank accounts except for a 5-year interest bearing deposit. She had no established home in Australia and no spouse or children in Australia.

After 18 months, she was forced to return to Australia due to an illness.

You are required to:

Name the one test which is most appropriate to her residency status during the 18 months that she was not present in Australia, based on the definition of ‘resident' in section 6 of the ITAA 36 and explain why it is the most relevant test.

By using this test, explain why Sue is a resident or not based on the definition of ‘resident' in section 6 of the ITAA 36.