732-303 Taxation Law Assessment Problem 1 Annotated Feedback Sheet General comments: This is not a model or perfect answer.

It is merely a general guide as to the issues that should have been covered in answering this problem. It is only one possible approach to answering the question and is not intended to be overly prescriptive. Students are often curious as to where they have lost marks. Please note that when we mark, we start with 0 and students need to earn the marks. It is not sufficient to merely mention the same facts and authorities that are discussed below. It is also necessary to use the facts and authorities in making your arguments. This is often an aspect of answering hypotheticals which students find difficult initially but will get better at with practice. Please remember that this problem is only worth 5% of your final mark and is intended to provide you with early practice and feedback. A poor mark on this exercise is certainly not an indicator of your final mark and it is important to use this early feedback to improve for Assessment Problem 2 and the final exam. Please do not approach teaching staff to obtain additional feedback or individual guidance in relation to Assessment Problem 1 unless you received a mark lower than 5. Answers will not be second marked. [As a preliminary point, please ensure that you read the instructions carefully. Many students asked questions regarding the proper format for citation and the word count when this information is already included in the instructions. In practice, it is very important that you listen to instructions carefully and follow them closely and you should get into the habit of doing this while at University. Further, the instructions clearly state that answers must be submitted with a coversheet to be marked a number of answers were submitted without a coversheet. These are basic errors that should not be happening at this stage of your tertiary education.] Suggested answer Introduction Jose will be a resident if he satisfies any one of the residency tests in s 6(1) ITAA36. The determination as to residency is done on a year-by-year basis and a taxpayer (TP) may be a resident for part of the year only. [A good answer should start with a brief introduction as to the issues to be covered. This question was relatively unusual in that it only had one issue to advise Jose as to his residency status. Do not try and save on words by skipping the introduction. It leaves your answer without structure and it is important to set out at the start what you are going to do.] Rules & Application [NB: this not a heading that would be used ordinarily in an answer] Ordinary resident test (ORT) Under the primary test of residency in the definition of resident in s 6(1), a TP will be a resident if they reside here. This is a question of fact (Lysaght; Joachim) to be determined based on the TPs individual circumstances. In Levene the court suggested that resides means to dwell permanently or for a considerable period of time. Jose is only here for 12 months which does not seem like a considerable period of time. However, in Levene the court found that the TP resided in the UK even though he was only there for 4 or 5 months each year. Similarly, in Lysaght the court found that a TP who was in the UK for 1 week every month resided there. In Joachim, the TP resided in Australia although he was out of the country for 316 days in the year. The difference between Jose and those cases though is that Joses stay in Australia is for a set period of 12 months while in those cases, there was no set end to the taxpayers arrangements. In TR 98/17, the Commissioner suggests that 6 months would be a considerable period. On balance, Jose could

reside here even though he is only in Australia for a period of 12 months. This is supported by the cases and the Commissioners examples in TR 98/17. [Whether here or at some other point, we expect to see discussion of these key cases on the ORT. It is not sufficient to just mention the cases. You must use the cases in your answer and it must be clear to the marker how you are using the cases in relation to your fact scenario.] The following facts, based on the guidance in TR 98/17 [poorer answers did not state where the factors come from], suggest that Jose resides here: o Jose is physically present in Australia during the tax year; o He came to Australia for a period of 12 months and on the facts, was here for 12 months; o He purchased an apartment in Carlton; o He furnished the apartment in accordance with his taste to make it a home; o He opened an Australian bank account; o He has a large Australian share portfolio; o His wife came to Australia to be with him; and o He has made many friends in Melbourne. [It is important to refer to the specific facts provided in your answer. Do not provide generic answers.] On balance, it would appear that Jose resides here at least from the time he purchased the apartment and definitely from the time his wife is here. [Always remember to reach a conclusion as to whatever question you are deciding.] The period when he stayed in the employers accommodation is temporary and not consistent with residing here. [Again, remember to use all of the facts that you have been given.] 183-day test In TR 98/17, the Commissioner confirms that the ORT is the primary test of residency under the legislation and the statutory tests need not be considered where a taxpayer resides here. Although it would appear that Jose resides here, this is not certain and the 183-day test is considered for completeness. [As mentioned in the lectures, it is important to also consider the statutory tests even where the ORT appears to be satisfied due to the fact that there are generally no clear answers under the ORT. Always remember to consider the alternatives where the particular consequences of a transaction are not straightforward.] Jose has been in Australia since September 2009 which means that he has been in Australia for more than 183 days in the tax year. Under the 183-day test [definition of resident in s 6(1)(a)(ii)] [specific section references indicate to the marker that you have read the legislation; this is particularly important for the assignment where there is sufficient time to look up the legislation], Jose is deemed to be a resident unless the Commissioner is satisfied that his usual place of abode is outside Australia and he does not intend to take up residence in Australia. It would appear on the facts [phrases such as this are useful in ensuring that your answer is related back to the specific facts that you have been provided] that Jose does not intend to take up residence in Australia the facts state that he intends to sell the apartment in Carlton; has no intention of returning to Australia and his wife has only taken an extended break from her job to be in Australia until the end of Joses contract [Again, it is important to use of the facts that have been provided in the question to make your arguments].

 In TR 98/17, the Commissioner suggests that usual place of abode is similar to reside. Based on the above discussion, Joses usual place of abode is in Australia and therefore he satisfies the 183-day test. [Many students seem to be confusing usual place of abode with permanent place of abode.] Domicile and superannuation tests On the facts, Joses domicile is not Australia as he is not an Australian citizen or permanent resident. He is also not a member of a relevant superannuation fund. [It is important to demonstrate that you know why the tests are not relevant. For example, it is not sufficient to say that the domicile test does not apply because Jose is an incoming individual. While that may certainly be the case, that is not the reason the test does not apply.] As such, the domicile and superannuation tests in the definition of resident in s 6(1)(a)(i)&(iii) are not relevant to Jose. [It must be stressed that answering hypothetical problems requires application of the law to the facts. Poor answers tend to restate the residency tests and restate the facts from the question but do not apply the tests to the facts. A good rule of thumb to use is that every sentence in answering a hypothetical problem should be a combination of law and facts the law indicates that it is not just your opinion and your arguments are based on authority while the facts ensure that your answer relates to the specific question that you have been asked.] Conclusion Based on the above analysis, it would appear that Jose is a resident of Australia under the ORT. He is only a resident of Australia for the period when he resides here which is likely to be from December 2009 (when he purchased the apartment). It could be from January 2010 when his wife moved here but the purchase and furnishing of the house is likely to mean that Jose resides here. [Always remember to reach a conclusion and justify why you have reached that conclusion.]

Has the student included any points that are not mentioned above, ie. completely new/separate points, not just additional discussion? Y or N If YES, were those points relevant? Y or N [Many students also considered whether Jose was a temporary resident. This was not considered a relevant additional point as temporary residency only applies to the holders of particular classes of visas. This information was not provided in the facts. Therefore, considering temporary residency was the consideration of an issue that does not arise on the facts. It is important to ensure that your answer relates to the facts provided.] If YES, were the additional points: Excellent Good Adequate

[Please note that marking law answers is an inherently subjective exercise and it will be the case that some markers are more generous than others. We are aware of this and we manage this by rotating markers for all the assessment and you will have four different markers in this subject.]
Comment Mark Perfect 10 Outstanding 9 V Good 8 Good 7 Average 6 Adequate 5 Needs Improvement 4 Needs significant improvement 3 or 2 or 1

The following provides you with an indication as to what is expected for each grade: 80%-100% H1 First-class honours, excellent

Completion of assessment at a very high level, with excellent understanding of the problem or issue. Excellent skills in analysis and argument; thorough and original research. Format, documentation, presentation and quality of communication are impeccable. Work is original, insightful or sophisticated. 75%-79% H2A Second-class honours level A, very good

Completion of assessment at a high level, with very good understanding of the problem or issue. Very good skills in analysis and argument; a high-level research. Format, documentation, presentation and quality of communication are scholarly and professional. 70%-74% H2B Second-class honours level B, good

Completion of assessment at a highly competent level, with good understanding of the problem or issue. Good skills in analysis and argument; solid and reliable research. Format, documentation, presentation and quality of communication are good. 65%-69% H3 Third-class honours, competent

Completion of assessment at a satisfactory level, with demonstrated understanding of problem or issue. Competence in analysis and argument; research, format, documentation, presentation and quality of communication are satisfactory. 50%-64% P Pass, satisfactory

Completion of assessment at a basic level but acceptable level in research, analysis, argumentation, format, presentation and quality of communication. 0%-49% N Fail, not satisfactory