Question 5

Tom Finn is a New Zealand citizen. He is employed as a senior executive of Kiwi Bank Limited (Kiwi), a financial institution headquartered in New Zealand.

Tom was born in NZ and has worked there throughout his career. He currently lives in Auckland with his wife and two school age children. He is the owner of the family home in Auckland. He also holds investments in New Zealand including a bank term deposit and shares in NZ-based companies listed on the New Zealand Stock Exchange (he receives dividends).

In July 2017, Kiwi opened a branch office in Melbourne. Tom will be primarily responsible for the day to day management and development of the business of the Melbourne branch office. Tom will carry out this role for at least three years.

The new role does not require Tom to move permanently to Australia but will allow him to work at the Melbourne branch office on a fly-in-fly-out basis. He will spend one week in Melbourne and return every second week to the head office in Auckland (where he would continue to work exclusively on matters relating to the Melbourne office). When Tom is working in Auckland he lives with his family.

Kiwi pays all of Tom's travel expenses as well as a salary of NZ$400,000 per annum, which is deposited directly to Tom's personal bank account in Auckland. He was provided with a fully furnished one bedroom apartment in Melbourne as his base whilst in Australia.

Tom really likes living in Melbourne. After three months, he buys an apartment in South Yarra and moves out of the apartment paid for by Kiwi. He thinks it will be a good investment. He joins the local tennis club. He makes a number of friends and goes to local restaurants with them. When he is at home in Auckland, he tells his wife what a great place Melbourne is and how it "feels like a second home".

Required:

Advise Tom whether he will be liable to Australian income tax as a result of the above arrangements. Assume all amounts would be assessable income. Only consider residence and source aspects.