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Fred, who is a bit of a hippie, arrives in Byron Bay on the East coast of Australia from the UK. He has a ticket to return to the UK in eight months. As he does not have a job to return to in the UK, he decides to try and find a job in Australia. He does find a job and he really enjoys it. One of his new friends tells him he needs to find out if he is classed as an Australian resident for tax purposes as he will be taxed quite differently if he is.

Required:

(a) Advise Fred if he is likely be classified as an Australian resident or not for tax purposes? What are the factors that would be considered? Outline the tax consequences of being a resident or not.

(b) Nemo is a diver from the Caribbean, where he is normally resident. He travels the world identifying rare species of fish and coral. He signs a contract in St. Thomas with the Fish Finder Company to work for the head office in St. Thomas and to visit its various research stations around the world. During the 2014-15 tax year, Nemo earned equivalent to A$15,000 for the time he spent in Australia. He spent two months diving on the Great Barrier Reef and one month on the Ningaloo Reef. Fish Finder Co. paid his salary directly into his St. Thomas bank account.

Required:

Would any part of this $15,000 form part of assessable income in Australia for Nemo? Why or why not?

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