Case Study
John is a 38 year old mining engineer who was born in Queensland. John studied at USQ and spent several years working in mines in central Queensland after graduating. He purchased a house in Mackay in 2010 and lived there with his girlfriend for several years.
In April 2014 he accepted a management role with a global mining company, based in their headquarters in Switzerland. As part of this role he was required to travel to mining construction projects all around the world, as and when directed by his employer. The mining company provided a furnished apartment in Switzerland for it employees, and John shared a two bedroom apartment with a colleague. John stayed in the apartment when he was not travelling to mining projects, and had access to this apartment from April 2014 until August 2015. He estimated that during the year ended 30 June 2015 he had stayed a total of 62 nights in the apartment, as he spent the majority of the year at various mine sites around the world. As John was travelling so much he didn't have many friends in Switzerland or time to join any sporting or social clubs.
Initially John had difficulties opening a bank account in Switzerland, so he asked his employer to pay his salary into his Australian bank account. After a few months he was able to open a bank account in Switzerland.
When John left Australia he came to an agreement with his girlfriend that she would rent his house in Mackay, paying a market rental directly into his Australian bank account. He placed items of furniture and a motorbike in storage in Mackay prior to leaving in April 2014. During the year ended 30 June 2015 he visited Australia on two occasions, for a week over Christmas and for his father's 70th birthday in March 2015.
During the year-ended 30 June 2015 John had the following transactions:
- Salary paid by the mining company AUD$120,000. Of this amount, $20,000 was paid into his Australian bank account and $100,000 was paid into his Swiss bank account.
- The mining company awarded John a bonus for his good service during the year year-ended 30 June 2015. It was paid to John on
15 July 2015.
- Rent of $13,500 paid into his Australian bank account by his girlfriend for the rent of his house in Mackay.
- Interest on his Australian bank account of $250.
- Interest on his Swiss bank account AUD$450, from which $50 withholding tax had been deducted by the Swiss bank prior to
crediting his account.
- John was injured on one of his visits to a mine in Africa. John could not work for three (3) weeks and was paid workers' compensation of $1,000 a week to replace his salary during this time. John also received a one-off amount of $5,000 for the physical injury.
Required:
Discuss with reference to legislation, case law and/or rulings (where relevant) whether John would be considered a resident of Australia for tax purposes for the income year ended 30 June 2015. Based on this conclusion and discussing the source and derivation of income principles, state which amounts would be included in his assessable income for the year. You do not need to consider the consequences of any Double Tax Agreements.