Australian Tax Residency Criteria And Implications For Taxpayers

Case study of Kit and his dual citizenship

Question:

Discuss about the Taxation, Theory, Practice and Law for Computing Tax.

The undertaken case study has clearly shows that Kit is a resident of Australia and a valid tax payer of the country in spite of he is holding a citizenship of Chilly.  However, Kit is an employee of an American Company (Australian income tax legislation 2013. 2013)., he is employed in the Australian branch of the company. As per the Australian taxation Act if an individual consistent basis employed in Australia the individual must be considered as Australian citizen. Therefore, by this specific criteria Kit should be considered as Australian Citizen. Apart from this, the fact that Kit is planning to reside permanently in Australia is also considered as a significant factor that decide that Kit is an Australian Citizen. Kit has a joint bank account in Australia with his wife  and the account is salary account of Kit as the salary of kit is transferred to bank account of Kit with this bank, which is a significant factor that made Kit a Australian Citizen. Apart from this it is also observed that Kit has a house in Australia, where his wife uses to reside all over the year. In this context, also Kit is considered as a citizen of Australia. Because he has relatives in Australia and as per the Australian taxation Act the residents who have relative in Australia are considers as Australian tax payer citizen. In spite of the fact that Kit has saving and investments in Chilly he must be considered as an Australian citizen. Moreover, the Australian taxation law is applicable on Kit and he should  pay the assessable tax for the financial year as per Australian Resident.

At the time of computing tax optimum importance use to be given to detecting the residency of the tax payers. Furthermore, an individual requires to understand the fact, whether he or she is an Australian citizen or not. However, in case of detecting the residency of the tax payers in Australia the tax payer must provide the tax as per the income they earn from the country (Bently, L., Ng, C. and D’Agostino, P. 2010). . In this context the earning position of the individual is not considered and the taxation department of Australia levied taxes on the individual if the individual is considered as an Australian Citizen. The residents of Australia are  considered as the tax payer and has to pay tax  though the individual is working in an overseas company. however, for the non-residents of Australia there are different set of rules, in case of no-resident  tae taxation procedures are differ and taxation for different incomes are treated differently. There are  mainly two diverse types of taxes, which are direct tax and indirect tax. The features are mandatory overhead as well as these overhead basically explored for the Government issues only. According to the   taxation law Kit is considered as the citizen of Australia he has to pay applicable tax. The taxation rate   for the resident of Australia is greater than the  no residents of the country. In order to detect the citizenship of the country there are some criteria which have to fulfil as per the taxation law of Australia, which are as follows:

• The frequency of visiting to country by the person
• Degree of family connection in Australia a person is considered as Australian citizen
• The person must be considered an Australian citizen in case of the person visit the country frequently
• In case of the individual employed in this country is regular basis
• In case of the person has any property in this country
• In case of any bank account of the individual in this country
• If the person declare that he or she want to settle in this country

Taxation rules for Australian residents vs non-residents

According to the above mentioned criteria Kit is clearly considered as an Australian Citizen and accountable for paying tax as per the taxation rule of the country for the resident of the country. Kit has dual citizenship as she is the citizen of Chilly she is also considered as an Australian citizen and has to pay tax accordingly.

Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159

In this particular case, the core objective or purpose of a business was to acquire a land, which is   contained copper. However, this firm never remover the copper from the land. Subsequently, the firm traded the property to other firm as well as anticipated that the company will provide share of the firm. The court provide verdict that the land was for the purpose of generating income in near future as by any medium the intention of the firm was to generate income or revenue by sale of the land. Due to this reason, this was general incident for the tax payers company in tax characteristic.

Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188

In this particular case, a firm establish a business of coal mining in the property that was procured by a firm. The coal was removed from the land after a certain period of time as well as afterwards the firm decided to trade the land as well as to make the trade more profitable the firm subdivided the property as well as build roads as well as other infrastructure on the land (Pattenden, K. 2006).. The court verdict that the revenue or profit gets by trading the property were not measured due to the reason the firm was not in a real estate business of trading the property as well as the company merely want to take optimum benefit of the land (Navailles, S., Lagière, M., Guthrie, M. and Deurwaerdère, P. 2013).. Thus, for the consequence the income was capital in characteristic.

FC of T v Whit fords Beach Pty Ltd (1982) 150 CLR

In this specific case, the tax payer was a company, which was added for the purpose of getting a field of undeveloped property at the beach of Whit fords (Mariotti, M. 2015). The land was on the frontage of the beach and the land can be used for the fishing reason. Following to some years as a most good order the entire difficult shares of the company was sold. In addition to that the latest shareholders purchased the property and trade the property for the purpose of generating profit and increasing the profitability. The latest shareholders parted the land and the trade the property as per the different house in much improved profit. When the portion of land was trade the latest shareholder was disagree to add the profitability share income in the regular revenue; alternatively the court provide verdict that the shareholders of the company obtain the manager of the property for improving the profitability by trading the land (Mathews, R. 1982). Moreover, for this purpose the firms set a business of land development and generate revenue by trading the land as considered ordinary income (LARRIMORE, J. 2011). The verdict of the court was that at the time of procuring the share of the company the key objectives of the shareholders is to improve the income from the land (Ingles, D. 2001). Thus the company y developed the property and traded it. So the intension of the investment is business investment and the sale of the property is an ordinary income.

Determining tax residency for Australian taxpayers

Statham & Anor v FC of T 89 ATC 4070

The case is related to the income tax. The income tax was estimated as well as adjusted in the wrong and invalid way, then decisions was taken that the commissioner would adjust income of estates.

Casimaty v FC of T 97 ATC 5135

The scenario explains the whole case and there is missing in the intention of the profit generating. Therefore, the actual fact is the intention of the person is to generate profits by selling the definite portion of the land( Haslett, T. and Sarah, R.2006).. The deviation was arises due to statement that the profit generated from the sell whether is taxable is not.

Moana Sand Pty Ltd v FC of T 88 ATC 4897

In the following case study, the organization was operating its business of sand and digging out the sand from the land and the organization does not want to handover the land to another organization till the cost of the land rises (Gunter, S. 2013). The main reason behind it is the increase in the returns from the investment in land. The expectation of raising price of the land, the organization kept the land for long period. The conflict increased regarding the taxable amount. However, the court sates that the land should used only for the commercial purpose (CORTESE, C. 2006). The land can also be given to anyone for commercial purpose.

Crow v FC of T 88 ATC 4620

The determined case provides the case that are related to the farmer and thus it also helps in the deeming the tax payers. Thus it also helps in watching the tended purchases for the stretching of the land and thus the collision is created regarding the specified land (Carragher, N., Shakeshaft, A. and Doran, C. 2012).. Thus the ending of the deal also helps was also resolute for the enhancement of the proposal for the case of the farmer.

McCurry & Anor v FC of T 98 ATC 4487

The definition of the land case determines the land owned by the two brothers. Thus the few houses are created for the particular land for the creation of the renovation in the land and thus it also helps in the situation of the land with the renovation of the lands that needed to be removed. Hence the conflicts also determine the tax regarding the payment of the taxes about the particular land (Andrlík, B. 2014). Thus it also provides the judgement of the court when it helps in pulling the brothers to the court for the prearrangement of the cases of the brothers and thus it also helps in the tax payments exemptions for the case of the land.

References

Australian income tax legislation 2013. (2013). North Ryde, N.S.W.: CCH Australia.

Bently, L., Ng, C. and D’Agostino, P. (2010). The Common Law of Intellectual Property. Oxford: Hart Pub.

Andrlík, B. (2014). Measurement of Effectiveness of Personal Income Tax in the Tax System of the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 62(2), pp.307-314.

Carragher, N., Shakeshaft, A. and Doran, C. (2012). Here we go again: cider’s turn to highlight anomalies in Australia’s alcohol taxation system. Australian and New Zealand Journal of Public Health, 37(1), pp.95-96.

Cortese, C. (2006). Taxation and the Australian Superannuation System: An International Comparison. Australian Accounting Review, 16(39), pp.77-85.

Gunter, S. (2013). State Earned Income Tax Credits and Participation in Regular and Informal Work.National Tax Journal, 66(1), pp.33-62.

Haslett, T. and Sarah, R. (2006). Using the Viable Systems Model to Structure a System Dynamics Mapping and Modeling Project for the Australian Taxation Office. Systemic Practice and Action Research, 19(3), pp.273-290.

Ingles, D. (2001). Earned Income Tax Credits: Do They Have Any Role to Play in Australia?. The Australian Economic Review, 34(1), pp.14-32.

Larrimore, J. (2011). Does a Higher Income Have Positive Health Effects? Using the Earned Income Tax Credit to Explore the Income-Health Gradient. Milbank Quarterly, 89(4), pp.694-727.

Mariotti, M. (2015). The Cambridge Economic History of Australia, by Simon Ville and Glenn Withers (Cambridge University Press, Port Melbourne, VIC, 2015), pp. 624. Economic Record, 91(295), pp.544-548.

Mathews, R. (1982). The Redistributional Effects of Personal Income Tax in Australia : A Comment.Economic Analysis and Policy, 12(1), pp.63-64.

Navailles, S., Lagière, M., Guthrie, M. and Deurwaerdère, P. (2013). Serotonin_2c Receptor Constitutive Activity: In vivo Direct and Indirect Evidence and Functional Significance. CNSAMC, 13(2), pp.98-107.

Pattenden, K. (2006). Capital Structure Decisions Under Classical and Imputation Tax Systems: A Natural Test for Tax Effects in Australia. Australian Journal of Management, 31(1), pp.67-92.