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Fiona, who lives in Melbourne, is a management consultant with Staedler Ltd, an American company specialising in the development of information systems for the publishing industry. In March 2013, Staedler won a tender contract to install a new computer system for EZI Ltd, located in Singapore. As a result, on 1 April 2013, Fiona was posted to Singapore for 1 month to arrange installation of the system.
Due to technical difficulties in the installation, Fiona’s stay was extended by a further 3 months. Initially her salary of $8,000 per month was paid into a bank account in Melbourne. However, from 1 May 2013 her salary was paid into a Singapore bank account.
Upon completion of her work in July 2013. EZI presented Fiona with 2 airline tickets and vouchers for a holiday in London valued at $8,000. These are non-transferable.
EZI also offered Fiona a 3-year consulting job with the company with an annual salary of $100,000 and a car. As an incentive to join EZI, and to compensate for her leaving Staedler and having to move permanently to Singapore, she was offered $40,000. This was to be paid in 2 instalments – $20,000 on joining the firm and $20,000 after one year’s service.
Fiona accepted the offer on 1 September 2013 by signing the contract in Singapore.
Required:
Advise Fiona as to the assessability of the above amounts for the income years ended 30 June 2013 and 2014. Include in your advice the residency status of Fiona.
Support your answer with reference to ATO rulings, case law, and relevant provisions of the tax legislation. Ignore the FBT (fringe benefit tax) provisions.
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