Question

Which of the following statements is most correct? 1) In FCT v Applegate 79 ATC 4307 it was held that the taxpayer had not established a permanent place of abode outside Australia because the taxpayer ultimately intended to return to Australia. 2) In FCT v Applegate 79 ATC 4307 it was held that the use of the word ‘permanent’ in section 6 ITAA 36’s definition of ‘resident’ meant everlasting. 3) In FCT v Jenkins 82 ATC 4098 it was held that the taxpayer did not have a permanent place of abode outside Australia because the taxpayer ultimately intended to return to Australia after three years. 4) Xing is a student from China who comes to Australia at the beginning of the tax year, to study for a three year Business degree and ultimately take up employment in Australia. Xing will be likely to be an Australian tax resident while studying in Australia. 5) Xing is a student from China who comes to Australia at the beginning of the tax year, to study for a three year Business degree and ultimately take up employment in Australia. Xing is not likely to be an Australian tax resident while studying in Australia under the Domicile test.

Answer 1

Option 4 is most correct.

Under the Australian Income Tax act, if a student is studying in Australia for more than six months then for tax purpose, that student is considered as a resident and has to pay taxes.