Case Study 1 - 2150AFE Taxation Law

Julia Lancaster is a dancer and choreographer who trained in Australia during her childhood years. Since graduating high school Julia has auditioned and accepted contracts for various dance companies throughout the world and as such she has lived in a variety of places. During that time, Julia has never submitted a tax return in Australia to declare income that she has earned in Australia or overseas. She comes to you for help in determining what her tax obligations would have been over that time and whether she would have to pay income tax in Australia. Information about Julia's activities are listed below;

Julia was born in Rockhampton a regional town in Queensland. She attended the local school until the age of 12 when she was offered enrolment in the Queensland Dance Excellence program at Kelvin Grove State High School in Brisbane. Julia moved to Brisbane and completed her high school studies at that school. During high school, she worked casually at a caf in Kelvin Grove and lived with her parents in a unit in the Kelvin Grove urban village. Julia applied for an Australian Tax File number when she started working and had her pay transferred into her Commonwealth Bank account.

Royal Caribbean Cruise Lines

While completing year 12, Julia auditioned to be part of the dance team on Royal Caribbean cruises. She was made an offer to join the cruise ship 'Independence of the Seas' which sails through the Transatlantic area (Northern hemisphere). Julia accepted the offer and left Australia on 18 November 2017. Her contract was for 2.5 years beginning on 1 January 2018. Julia was paid AUD$5,000 per month into her Commonwealth Bank account. All food and accommodation while on the ship was free as part of her contract. With her salary, Julia purchased an apartment in Enoggera and rented it to tenants for $1400 per month from July 2019. Julia returned to Australia for 6 weeks each year to visit family. She moved back to Australia when her contract expired on 10 April 2020.

Moulin Rouge - Paris

Julia auditioned and was offered a contract with The Moulin Rouge in Paris. Julia left Australia on 10 May 2020 and arrived in Paris on 11 May 2020. Julia rented a room in a share house with 5 other Moulin Rouge dancers when she arrived. She started training on 1 June 2020 and was in Paris until the season ended on 20 December 2020. Julia was paid2000 per month into a bank account she opened with BNP Paribas (headquarters in Paris), while working for the Moulin Rouge. Julia socialised with other dancers during her days off and travelled all around France when she was not required to dance. Julia returned to Australia for Christmas. Julia spent two weeks socialising with her family and friends. On the 7, 8 and 9 January 2021 she was invited to take 3 x two hour dance workshops at dance schools in Brisbane and the Gold Coast. Julia was paid $500 in cash for each workshop.

While in Australia, Julia travelled to Sydney on 11 January 2021 and auditioned for the Sydney Dance Company. She then boarded a flight to Paris and arrived on 13 January 2021. The 2021 season for Moulin Rouge opened on 1 February and Julia danced as part of the company until 20 June 2021. Julia left Paris on 28 June 2021 and flew directly to Sydney.

Sydney Dance Company

On 10 July 2021, Julia began working for the Sydney Dance Company as a company dancer. During Julia's employment she rented a room in a friend's house 10 minutes from the city. Training for the Sydney Dance Company was 4 days per week (Monday to Thursday). All performances were on Friday and Saturdays. On Sunday's Julia was an instructor of a dance class at the studios of Brent Street and was paid a fee of $300 per class. She also ran an online contemporary dance class to overseas participants each Monday evening. Participant dancers would purchase a 10 class pass for $130. Julia had 25 students enrolled in the online classes. Julia lived in Sydney until her contract ended on 30 June 2022. Her total remuneration from Sydney Dance Company was $70,000 in the 2022 tax year.

Radio City Rockettes - New York

On 2^nd July 2022, Julia returned to Brisbane and moved in with her parents because her unit in Enoggera was tenanted. Julia auditioned for the Radio City Rockettes during their dancer search in Australia in August 2022. Julia was offered a position with the Rockettes and flew to New York to begin training on 1 September 2022. Julia was paid in US dollars and on a salary of USD$40,000. Julia moved into shared accommodation with other dancers on the outskirts of New York. Julia loved New York, met a lot of new friends, and socialised with them every Friday and Saturday night after her performances. One Saturday night, Julia met Hayden at a local bar. She began a relationship with Hayden after going out on several dates. Hayden was born in the US and is a US citizen. They eventually moved in together in January 2023. Julia and Hayden jointly paid the expenses for the property they lived in. Hayden and Julia flew to Australia in May 2023 so that Hayden could meet Julia's family. While they are in Queensland Hayden proposed to Julia and she accepted his proposal. They plan to get married in late 2024 in the Whitsundays (North Queensland). Julia and Hayden return to New York and work in their normal jobs. In September 2024, they fly to Australia for 3 weeks for their wedding. When they return to the USA in October 2024, they have a small party to celebrate their marriage with their friends who could not travel to Australia for the wedding.

Julia keeps a list of all the money she received since being a teenager. She has never completed a tax return in Australia.

1 July 2015 to 30 June 2016
Caf worker earnings	AUD $5000
1 July 2016 to 30 June 2017
Caf worker earnings	AUD $8000
1 July 2017 to 30 June 2018
Caf worker earnings	AUD $4000
Royal Caribbean	AUD $30000
1 July 2018 to 30 June 2019
Royal Caribbean	AUD $60000
1 July 2019 to 30 June 2020
Royal Caribbean	AUD $45000
Rent - Enoggera	AUD $16800
Moulin Rouge - Paris	2000
1 July 2020 to 30 June 2021
Moulin Rouge - Paris	21750
Rent - Enoggera	AUD $16800
Dance classes - Aus (cash)	AUD $900
1 July 2021 to 30 June 2022
Sydney Dance Company	AUD $70,000
Rent - Enoggera	AUD $16800
Brent St Dance Classes	AUD $15000
Online dance classes	AUD $13000
1 July 2022 to 30 June 2023
Rockettes	USD $40000
Rent - Enoggera	AUD $16800
1 July 2023 to 30 June 2024
Rockettes	USD $40000
Rent - Enoggera	AUD $16800

Required:

Part 1 - 12 marks

This must be completed in ILAC format. Marks will be allocated for issue, law and application, conclusion. If you miss any part of that format, you will not be eligible for the marks for the part that is missing.You should consider at what times (if any) Julia would be considered an Australian resident for tax purposes under s6(1) ITAA36 (Cth). Ensure that you address your answer using ILAC format.HINT - It might be easiest to discuss each work location separately in accordance to the residency tests i.e Kelvin Grove, Royal Caribbean Cruises, Moulin Rouge, Sydney Dance Company and Radio City Rockettes

1. Once you determine residency for each work situation, you should then discuss the source of the income for that period of time. Note, income is separated according to income tax years.

Ensure that you justify your application with the relevant law (case law, legislation, tax rulings). In text referencing of the law is all that is necessary. For case law, the names of the parties is sufficient. For legislation, the section, subsection (and if relevant the item number) is sufficient.

Part 2 - 3 marks

No law is required in Part 2 of the assessment. You need to conduct your own research and provide a discussion that addresses the questions you are asked.

1. From a civilised society perspective, why is it important to the Australian Government that Australian citizens prove on the balance of probabilities that they have a principal place of abode overseas (i.e. Domicile Test). (Hint - research what civilised society means and how taxes of Australian citizens contribute to the efficient operation of a civilised society).