Alice Bates is a 28-year-old Australian citizen and an accomplished classically trained musician.  Alice is single, born in Australia and has always lived with her parents at Newcastle, Australia.

Alice’s ambition is to pursue a career as a musician however she has found her opportunities in Australia limited and, as she has always wanted to see more of the world, she decides to look for work abroad.  After researching potential opportunities and leveraging her network, Alice was successful in securing a six-month contract with the Hungarian National Philharmonic Orchestra based in Budapest, Hungary.  The Orchestra has advised they may consider a further six-month extension to the contract provided they are satisfied with her performance.  Alice has been granted a 12-month Hungarian working visa and will apply for an extension to the visa if offered further work with the orchestra.  

She left Australia on 1 March 2021 to commence her contract on 1 April 2021.  Alice travelled to Hungary on a one-way ticket and has left sufficient funds with her mother to pay for a return flight if she decides to return home.  Alice is unsure of her actions if the contract is not extended. At that time, she will make a decision to either apply for another position in Hungary or return to Australia to further her studies.

Although Alice has few contacts in Hungary she has kept in touch with Elena, a Hungarian resident she met when Elena was travelling Australia.  Elena lives in Budapest and has assisted Alice in securing a six-month lease on a one-bedroom apartment close to where the Orchestra plays.  She has also arranged for Alice to open an account with a Hungarian bank to receive her salary.  

Alice has few assets in Australia other than a $10,000 term deposit with the CBC Bank and a motor vehicle valued at $10,000 (which will be garaged at her parent’s house until she decides her future).  Alice intends to purchase a cheap car in Hungary so that she can explore the country when she is not working.

Required

In a professional letter to advise Alice whether at 30 June 2021 she will be assessed as a resident of Australia for income tax purposes.  Also advise Alice how her income will be assessed given both scenarios of her being deemed a resident or a non-resident of Australia for taxation purposes.  Show appropriate referencing to case law, sections of the ITAA 1936 and ITAA 1997 and income tax rulings issued by the Australian Taxation Office.  Ignore any consequences of the Double Tax Agreement between Australia and Hungary.