Kit is a permanent resident of Australia. He was born in Chile
and retains his Chilean citizenship. Kit spends most of the year
working off the coast of Indonesia on an oil rig for a United
States company. He was recruited for this job in Australia and
signed a contract with the company here. For the last four years,
Kit’s wife has lived in Australia with their two children. They
purchased a home in Australia three years ago. Kit and his wife
have a joint bank account with Westpac Bank. Kit’s salary is paid
directly into his account. All of the family’s other investments,
including a share portfolio that generates dividend income, remain
in Chile. Kit gets one month off from work every third month and,
on these occasions, he meets with his family either in Australia or
on holidays around South America (usually in Chile where his
parents reside).
Discuss whether Kit is a resident of Australia and how his
salary and investment income would be taxed (10 marks, max. 1000
words).
Case study 2: ordinary income
In 1979, a doctor who lived and worked in Sydney purchased a
20 acre parcel of rural land on the outskirts of the city for
$100,000. Over the years, he used the property as a “hobby
farm†for growing fruit trees and as a “weekend retreat†for
relaxation. Recently, the surrounding area has become more
developed and the property has increased in value. The doctor has
also recently run into financial difficulties as a result of a
malpractice suit and he is considering selling his property.
Advise him as to whether he would be required to include any
amount in his assessable income as a result of the sale (10 marks,
max. 1000 words).
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