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In this case study, it is described that Kit is a resident of Australia. In Australia, he works for an American company. His salary is also paid through an account which is opened in a bank of Australia named ‘Westpac Bank’. In this bank, he has a joint account with his wife. Even though he has citizenship in Australia, he also has citizenship of Chile (Apps, 2008). Kit has a permission of dual citizenship that is why he has the citizenship of both Australia and Chile. Kit also purchases a house in Australia. Most of the time in the year, his wife resides there. However, Kit use to stay on the coast of Indonesia and only during holiday time he came to the house of Australia stay there for few days with his wife. Therefore, the main issue which is arising in this case study is whether Kit is an inhabitant or resident of Australia or not (Boxer, 2008). If he considered as a citizen of Australia, then he has to pay the taxes which are related to being a citizen of Australia.
According to the Australian Taxation Law, which is prescribed or approved by the Australian Taxation Office (ATO), the following terms and conditions are verified for checking the ability of a person for becoming a citizen of Australia (Hamilton, Deutsch and Raneri, 2001). The terms and conditions are as follows –
In this case study, Kit is holding a permission of dual citizenship that is the citizenship of Chile and Australia. He has the citizenship of Chile as it was his birth place. His family members still reside there. But he also has the citizenship of Australia because he was a regular employee in Australia (Hogan, 2012). There he employed permanently under an American company. His salary payment is also paid through a bank account which is made in an Australian Bank named as ‘Westpac Bank’. In this bank, he also has a joint account with his wife. That is why Kit must be considered as the citizen of Australia. Along with this, he also owns a house in Australia, which is the other reason for Kit to consider him as a citizen of Australia. According to the Australian Taxation Law if any person has any property such as a house, land, etc. in Australia then he should be considered as a citizen of Australia, and he has to pay all those taxes which are related to being a citizen of Australia according to the taxation law of Australia (Howard, 1985). Though he was an employee of an American business firm, he works in the branch which is set up in Australia. That is why it become the another reason for getting the permission to being a citizen of Australia. As he considered as an Australian Citizen, his income is also considered as an accessible income like any other citizen or inhabitant of Australia. Kit also purchases a house in Australia. Most of the time in the year, his wife resides there. However, Kit use to stay on the coast of Indonesia and only during holiday time he came to the house of Australia stay there for few days with his wife (Jugurnath, Stewart and Brooks, 2007). It also determines the fact that he can receive the citizenship of Australia. Other than this fact, that Chile is the native place of Kit and has kept considerable assets in Chile, yet he has to be considered as a resident of Australia. Kit as an individual also has the citizenship of Chile. Though he is also eligible for the Australian Taxation Law and has to pay all those taxes which are related to being a citizen of Australia according to the taxation law of Australia. Therefore, it can be said that Kit will be considered under double taxation contract as he holds the permission of dual citizenship that is the citizenship of Australia and Chile (Krever and Black, 2007). The principle of the taxation department providing great importance to detect the residency of a person is since the law changes according to the residency of the individual. It is observed that the taxation department of Australia does not charge taxes for all the incomes of the non-residents or charge only for the income the individual generate from Australia. There are three numbers of taxation rules in Australia, which is followed by the Australian Citizen are – State, Federal and Local. According to the rules and regulations of Australian Taxation Law, the resident of Australia has to pay all those taxes which are related to the income of that resident who lives in Australia. The taxes are basically of 2 types, direct tax, and indirect tax (Meagher and Agrawal, 2008). The taxes are never considered as penalties or service charges by the government. This amount of money is paid by the citizens to develop and improve the revenue which is generated for the development of the country and also increases the treasure fund of the country. Therefore, it is the responsibility of the entire citizen to pay tax to the country. For this reason, as Kit is considered as an inhabitant or resident of Australia he should also have the responsibility for fulfilling all these terms and conditions for paying the tax.
Conclusion
According to the terms and conditions of the rules of getting the permission to become a citizen of Australia, Kit has met all of the features of that rules and also paid all those taxes which are related to being a citizen of Australia according to the taxation law of Australia (MODERN TAXATION SYSTEM FORMATION IN RUSSIAN FEDERATION, 2013). For that reason, Kit became the resident of Australia, and his incomes are considered as an accessible income. That is why according to the rules and regulations of Australian Taxation Office Kit have to pay all of the required taxes for his income in Australia.
In this case, the objective of California Copper Syndicate was to purchase or acquire the land which contained copper. Beyond this, the California Copper Syndicate company did not remove copper from that land (Nethercott, Richardson and Devos, 2011). Eventually, they sold the copper containing land to another company. Along with the decision of the court the company has to pay income tax for the dealing of this land because the intention of the company is to gain money by trading the land. It is not capital gain, and it is ordinary income. Hence, the company has to pay income tax according to the Taxation Law.
In this case, a corporate established a business of coal mining. That is why they want to buy a land which is containing coal. Soon after, the coal was removed by the company. After that, they take a decision to sell the land for gaining money to acquire profit. The company subdivided the land for making the deal more profitable (Ratnapala and Crowe, 2012). By the help of this asset, they build roads and other infrastructures (The Inspector-General of Taxation in the taxation system, 2002). The decision of the court is that it would be beneficial for the company if they subdivide the land. Therefore, in this situation the company is not legally responsible for paying tax as they did not sell this land.
In this case, the company paid taxes for a land which is undeveloped and situated at the beach of White Fords. The land was located just beside the beach. Therefore, they can utilize this land for the business related to fishing. After a while, the company sold all of the difficult shares of their business. The new shareholders of that company obtained the land for getting the power regarding the management of the land (The Inspector-General of Taxation in the taxation system, 2002). For increasing the profitability, the new shareholders subdivided the land and traded the land. When the subdivided land was traded, the shareholders oppose to include the share of the profit of the revenue in their ordinary income. On the other hand, the court verdicts were that the shareholders of the company want to take the control on the land for generating income from it (WALLER, 2007). For this reason, the company establish a business of land development plus generates profit by trading the land considered as ordinary income as per the Section 26(a) of ITAA (1983). According to the decision of the company the income is assessed as ordinary income.
The case of Statham & Anor v FC of T 89 ATC 4070 is a simple case related to the income tax of a particular country. During a span of long period, the tax was assessed. In a while, the decision was given that the commissioner will control the income acquired from the land. It is considered as ordinary income. It should be implemented according to the law of Income tax of that particular country.
Through the case of Casimaty v FC of T 97 ATC 5135, it can be described the conditions and situations which are related to the tendency for making their profit shortage. In the reality, the fact is that the person wants to gain some amount of profit by doing business only on a part of the land (Woellner, 2003). But the issue which arises is that whether the profit earned from the trade is assessable for tax or not. According to the Australian Taxation Act Section 25(1) of ITAA (1983), the dealing of the land or the business was assessable and considered as ordinary income.
In this case, the Mona Sand Pty Ltd. company buys a land containing sand after removing the sand from it. At the time of dealing the land, a conflict arises regarding the amount of tax. Therefore, according to the judgment of the court, the land should be used for business or only commercial purpose or should be sold or traded to someone who also utilizes this land for a commercial reason. Therefore, according to the taxation law, it should be considered as ordinary income.
In the case of Crow v FC of T 88 ATC 4620 which is a farmer who has to pay tax for a gaze of land. The farmer shows his wish for buying this land. There was also a dispute or issue which is related to this land. But according to the case study, it is not considered as ordinary income and comes under the subsection 51(1) ) of ITAA (1936). It tends towards the provision of capital gain.
In the case of McCurry & Anor v FC of T 98 ATC 4487, there was a land which is possessed by two brothers. As there are some houses on this land they removed them for renovating and modernizing the land (Woellner, 2013). The disagreement aroused, on whether the brothers had to pay the tax regarding that land. At the end of the judgment of the court, the result was in support of the two brothers. According to the judgment of the court, it is decided that the two brothers did not need to pay any taxes for that particular land.
References
Apps, P. (2008). Comment:‘Taxation reform and income Distribution in Australia’. Australian Economic Review, 19(3), pp.57-59.
Bhatti, M. (2015). Taxation Treatment Of Islamic Finance Products In Australia. Deakin Law Review, 20(2).
Boxer, A. (2008). TAXATION IN AUSTRALIA*. Economic Record, 41(96), pp.639-649.
Hamilton, R., Deutsch, R. and Raneri, J. (2001). Guidebook to Australian international taxation. Australia: LexisNexis Butterworths.
Hogan, L. (2012). Non-renewable resource taxation: policy reform in Australia*. Australian Journal of Agricultural and Resource Economics, 56(2), pp.244-259.
Howard, C. (1985). Australian federal constitutional law. Sydney: Law Book Co.
Jugurnath, B., Stewart, M. and Brooks, R. (2007). Dividend taxation and corporate investment: a comparative study between the classical system and imputation system of dividend taxation in the United States and Australia. Rev Quant Finan Acc, 31(2), pp.209-224.
Krever, R. and Black, C. (2007). Australian taxation law cases 2007. Pyrmont, N.S.W.: Thomson ATP.
Meagher, G. and Agrawal, N. (2008). Taxation Reform and Income Distribution in Australia. Australian Economic Review, 19(3), pp.33-56.
MODERN TAXATION SYSTEM FORMATION IN RUSSIAN FEDERATION. (2013). SISP, (7).
Nethercott, L., Richardson, G. and Devos, K. (2011). Australian taxation study manual. North Ryde, N.S.W.: CCH Australia.
Ratnapala, S. and Crowe, J. (2012). Australian constitutional law. South Melbourne, Vic.: Oxford University Press.
The Inspector-General of Taxation in the taxation system. (2002). [Canberra]: [The Board of Taxation].
WALLER, V. (2007). The Challenge of Institutional Integrity in Responsive Regulation: Field Inspections by the Australian Taxation Office. Law & Policy, 29(1), pp.67-83.
Woellner, R. (2003). Australian taxation law, 2004 /.. Sydney, N.S.W.: CCH Australia.
Woellner, R. (2013). Australian taxation law 2012. North Ryde [N.S.W.]: CCH Australia.
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