The various consideration of current study has been able to consider the various types of the evaluation which is seen to be covered based on whether resident planning for the establishment of trading of land development needs to be considered for the tax assessment as per Permanent Establishment. As per subsection 6 (1) of the Income Tax Assessment Act 1936 under the permanent establishment, ITAA 1997 and Schedule 1 of the Taxation Administration Act 1953 needs to be applicable (Coffman et al. 2016).
The aforementioned ruling will be conducive in addressing the resident who is seen to be considered for the trading activities in the overseas is seen to be the non-habitant in Australia looking forward for the direction in place as per subsection 6 (1) of the definition. Based on the given case it has been further noted that Taite and Aramis are seen to have British origin who are looking for the establishment of a parent company by utilising the borrowed money with corporate finance and at the same time financing the ssum with the commercial rate as per the fully owned auxiliary company (Daley and Coates 2015).
As per the definition of Permanent Establishment under Subsection 6 (1), the main concept has been seen to based on the tax treaty concept used in Australia. It has been further defined under Taxation Ruling TR 2002/5,Permanent Establishment which has been able to depict the various types of the commercial functions with reference to the place of performing the adequate business activities. As Taite and Aramis has decided to set a parent company in Australia, this place has been seen to be elemental in the consideration of facts and degree. The permanence regard of the Taite and Aramis does not signify everlasting business (Morrissey et al. 2013).
The main nature of the business is temporary and takes consideration of the land disposal and land development. A location through which the person is seen to perform the business is based on the present scenario of the definition stated under subsection 6 (1), which must be enduring but not permanent. The second criteria is seen with concluding the execution place with the stated definition of the PE under subsection 6(1) is identified to be temporary. The main nature of business for Taite and Aramis has been seen to be considered based on the various types of the considerations for the land development is seen to be only five years. As per subsection 6 (1) of the PE, the activities pertaining to trade has been considered based on the current scenario and this is evident in business (Hallsworth 2014).
As held in the Applegate v. FCT 78 ATC 4054 at 4060; (1978), permanent is not referred as everlasting. The permanent phrase has shown the differences which are either provisional or temporary. It has been further determined as the assessment of truth whether temporary permanence prevails. Nevertheless, Taite and Aramis has been seen to operate from a place continuously for period more than 6 months and the place is considered to the temporally permanent (Chapman, McLellan and Tezuka 2016).
As stated in subsection 6 (1) of PE under ITAA 1936 the definition for the permanence has been seen to be based on the several types concepts which is seen to sustained in the previous approach. The permanent establishment definition is further defined under 1946 UK DTA which has been seen to be indicated in UK 1946 Double Tax Agreement.
The main notion of the permanent establishment has been considered based on several types of the consideration for the international and domestic taxation law. In general the determination of the tax treaties in UK is created in 1946. The domestic law of taxation is further seen to be based on the several types of the consideration for the tax treaties of Australia, which has depicted that the permanent position of the business activities are held partially (McIntosh, Trubka and Newman 2015).
2: The tax entities are assumed as the inhabitant of Australia which are held for tax assessment as per Taxation Rulings TR 2004/4 based on the deductions made for thee interest which has occurred before the commencement of the cessation of vital revenue earning activities. As determined with the current study, the various considerations for the business model is seen to be based on the different assumption for the tender relating to successive refinancing for dealing with the subsidiary and loaning including the interest expenses. As stated under Taxation Rulings TR 2004/4, the deductions made in the revenue earnings has been seen to be based on the different types of the consideration taken into account when the income earning capacities have ceased (Valadkhani and Smyth 2017).
Taxation Rulings TR 2004/4 is identified applicable to the income years which has been commenced before or after the issue date. The deductions made in the interest have been further considered based on the present situation of Taite and Aramis as per the borrowings. Referring to the case Steele v. FC of T 99 ATC 4242; (1999) 41 ATR 139 the main motive of the borrowing has been identified in terms of the assessment made from the borrowing funds. The interests are further seen toe n taken into account based on the different types of the considerations for the recurring expenses. The borrowed funds are considered to use the capital asset, but it does not take into account the outgoing interest as per the capital account (Wouters, Fraga and James 2015).
Referring to the case Steele v. FC of T 99 ATC 4242; (1999) 41 ATR 139, the recurring nature of the interest has based on the assessment of th taxable income which has took place after producing the taxable income.
As per Kidston Goldmines Ltd v. Federal Commissioner of Taxation, the various types of the judgements based on the explanation has been seen to based on the explanation to use the theory of funds based on the measurements of the deductions and supporting of the resolution. The main form of the statutory issue has been further seen to be based on the current scenario of considering the outgoing of interest occurred under the criterion of second limb of the section 8-1 of the ITAA 1997. The present case has been considered based on the interest expenditure with the outgoing taxable income. It is vital to consider the remained addresses in the formulation of the differences between the taxation purposes and at the time of borrowing the money or funds (Ley 2017).
As per the principles of FC of T v. Roberts, it has been stated that the different types of the consideration for the refinance has been regarded for the deductions taken from the partnership capital. The case of Texas Company (Australasia) Limited v. FC of T (1940) 63 CLR 382 has stated that the considerations of the borrowed interest funds has been based on the protection of the capital in terms of the existing income producing activities (Deutsch 2014).
As defined under the section 8-1 of the Income Tax Assessment Act 1997 deduction of loss arises from the interest which is at first instance reliable on the satisfaction of the words in context of the above defined section (Barkoczy 2016). As per the taxation rulings of TR 95/2, the expected loss or the outgoing occurred by the taxpayer in attaining the assessable earnings of the taxpayer and the loss arising out of does not comprises of capital in nature. As evident from the current situation of Taite and Aramis highlights that whether or not the taxpayer had occurred any loss from the outgoing of interest since it meets the definition of section 8-1 in terms of the information and materials associated with the loss which was occurred by the taxpayer in the query.
As evident from the case of FC of T v. Smith 92 ATC 4380 interest derived from the borrowing in order to fund the repayment of money which was initial stages advanced by the associates and used as capital in partnership company will taken into the considerations for the purpose of deductions under subsection 51 (1) (Woellner et al. 2016). Interest on borrowing will be considered for deductions to the degree where the capital was put into the use of trade, which was carried on for the purpose of generating or acquiring the assessable income (Snape and De Souza 2016). The current scenario of Taite and Aramis considers whether the interest will be taken into the consideration for deductions in the commercial context during which the business lent the funds.
Citing the reference of the judgement from the federal court FC of T v. Roberts, interest on borrowings by the company must be considered for deductions. It is understood that under the situations where the funds that are borrowed are used for the purpose of refunding or payment of share capital to the shareholders together with the capital, which is repaid, was put into use as working capital in the business activities carried on by the company for the purpose of generating taxable income (Braithwaite 2017). With reference to section 8-1 expenses will be considered for deductions if the necessary aspects of the expenses has sufficient association with the actions that directly results in producing the taxable income of the assessor.
As held in the case of of FC of T v. Riverside Road Pty Ltd 90 ATC 4567 the court summarised the use of principles concerning the deductions under section 51 (1) of the Act (Cao et al. 2015). It is noteworthy to denote that the expenditure should possess sufficient association with the functions that proportionately generates assessable income to meet the statutory criterion for carrying on the business. Necessary attention must be paid in determining the deductibility of loss for Taite and Aramis for the objective surrounding the loss. With reference to section 8-1 the existing scenario successfully fulfils the criterion of the taxpayer (Robin 2017).
4: Capital gains tax is usually defined as the tax that is paid on the capital gain in the annually income while filing tax return. If an individual obtains an empty land with the objective of using it for private use or with the objective of investment, it is generally considered as capital asset and shall be subjected to capital gains tax (Saad 2014.). On the other hand, if an individual uses the same for the business activity or transacting in land it would considered as trading stock. Land is usually taxed as trading at the time determining the tax liability instead of considering as capital asset since Taite and Aramis were involved in the activities of land dealing and obtained the land for resale.
Trade activities comprises of transacting in land or acquiring of land for the purpose of subdivision or developing and selling the same (Petty et al. 2015). It is noteworthy to denote that the acquisition of land is not necessarily required to be repetitive. A single acquisition of land in the present context with the objective of developing, sub dividing and reselling by the assessor would lead the land being held as trading stock. However if the land is used as trading stock, the capital gains will not be applicable. Revenue derived from the land must be held as ordinary income and must not be regarded as capital gains and the cost, which is associated with the land, must be regarded for deductions.
There are certain types of risk that are linked with the plan which are as follows;
It is better to service the loan and make the repayments where the interest are generally low. On the other hand, the taxpayer must understands the constituents which is most likely to result in rise of interest rate during the span of the land development (Almeida, Hankins and Williams 2016.). There are certain instances where the seasoned developers of land have fell in the trap of hike in interest rate when they borrow huge sum of money on the lowered interest rate.
Increase in the cost of construction is another form of trap where a large number of land developers of fallen. This consists of the set of narrowing cost in their budget at the time of staring their plan irrespective of any form of contingency plan in place of probable hike in the cost occurring in the business of land development. The developers are forced to borrow funds and even at times they are compelled to dispose their incomplete projects and bear the loss.
There are large number of developers that understands the differences in the principles that governs the market of property. It is necessary for them to assess the changing level of supply and demand at any time. Social changes in demand resulting from immigration with rising rate of interest results in declining activity of the purchaser and this may lead to falling demand of the customers.
Sensitivity analysis: Sensitivity analysis is understood as the vital method of evaluating the risk involved in a project. Sensitivity analysis helps in determining the impact that has been created on profitability linked with necessary variables (Sadgrove 2016). The purpose of this analysis is to determine the set of changes that will help the evaluator in progressing from state of recognition to the state of results for the variables that are controlled by allocating the probability of each variables.
Risk assessment can be defined as the method of assessing the identified risk and the correlation prevailing between the risks. While conducing risk evaluations a specific situations associated to risk is primarily plotted and this turns out to be the base of subsequent risk control. To generate the answer of over viewing the appropriate actions of risk located turns out to be the next stage involved in analysing and evaluating the risk. The process implemented the risk assessment is largely dependent on the quality of the data and inflow of correct risk with required information for both the quantitative methods and qualitative methods.
References:
Almeida, H., Hankins, K.W. and Williams, R., 2016. Risk management with supply contracts. The Review of Financial Studies.
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Braithwaite, V. ed., 2017. Taxing democracy: Understanding tax avoidance and evasion. Routledge.
Cao, L., Hosking, A., Kouparitsas, M., Mullaly, D., Rimmer, X., Shi, Q., Stark, W. and Wende, S., 2015. Understanding the economy-wide efficiency and incidence of major Australian taxes. Treasury WP, 1.
Chapman, A.J., McLellan, B. and Tezuka, T., 2016. Residential solar PV policy: An analysis of impacts, successes and failures in the Australian case. Renewable Energy, 86, pp.1265-1279.
Coffman, M., Wee, S., Bonham, C. and Salim, G., 2016. A policy analysis of Hawaii’s solar tax credit. Renewable Energy, 85, pp.1036-1043.
Daley, J. and Coates, B., 2015. Property taxes. Grattan Institute.
Deutsch, R.L., 2014. Australian Tax Handbook 2006.
Hallsworth, M., 2014. The use of field experiments to increase tax compliance. Oxford Review of Economic Policy, 30(4), pp.658-679.
Ley, D., 2017. Global China and the making of Vancouver’s residential property market. International Journal of Housing Policy, 17(1), pp.15-34.
McIntosh, J., Trubka, R. and Newman, P., 2015. Tax Increment Financing framework for integrated transit and urban renewal projects in car-dependent cities. Urban Policy and Research, 33(1), pp.37-60.
Morrissey, J., Meyrick, B., Sivaraman, D., Horne, R.E. and Berry, M., 2013. Cost-benefit assessment of energy efficiency investments: Accounting for future resources, savings and risks in the Australian residential sector. Energy Policy, 54, pp.148-159.
Petty, J.W., Titman, S., Keown, A.J., Martin, P., Martin, J.D. and Burrow, M., 2015. Financial management: Principles and applications. Pearson Higher Education AU.
ROBIN, H., 2017. AUSTRALIAN TAXATION LAW 2017. OXFORD University Press.
Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-Social and Behavioral Sciences, 109, pp.1069-1075.
Sadgrove, K., 2016. The complete guide to business risk management. Routledge.
Snape, J. and De Souza, J., 2016. Environmental taxation law: policy, contexts and practice. Routledge.
Valadkhani, A. and Smyth, R., 2017. Self-exciting effects of house prices on unit prices in Australian capital cities. Urban Studies, 54(10), pp.2376-2394.
Woellner, R.H., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation Law Select: Legislation and Commentary 2016. Oxford University Press.
Wouters, C., Fraga, E.S. and James, A.M., 2015. An energy integrated, multi-microgrid, MILP (mixed-integer linear programming) approach for residential distributed energy system planning–A South Australian case-study. Energy, 85, pp.30-44.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download