The given case study is associated to determine of income generated from employment in Australian based company with an intention to provide rationale for tax assessment. As per the given scenario, Kit is observed to be a permanent occupant of Australia despite of being born and raised in Chile. He is further seen to maintain his Chilean citizenship despite of holding Australian residency. As stated in the “IT rulings 2650 under ITAA 1997”, the income of Australian inhabitant is derived from various types of sources (Bauder, 2014).
In general, if a person is temporarily residing in Australia along with several awards of inhabitants then their tax is usually considered for taxation according to Australian sources. One of the main examples of this is that the income obtained from working in Australia is taxable in nature. For the purpose of determination of tax liability of Kit is that despite of being a resident in Australia, he cannot be regarded as a citizen of the country due to his Chilean residential status. Hence, the determination of tax needs to be done after performing residential tests (Lancaster, Seear, & Treloar, 2015).
This particular test is referred to as the legal procedure for determination of residential status according to the rulings of “Domicile Act 1982”. Based on the common law, the rules are seen to be acquired with the place of birth of an individual as the place of domicile (Pomeranz, 2013). However, this particular ruling is subjected to few exceptions. Based on the jurisdictions of this law a person is can maintain his place of domicile until and unless he or she decides to acquire a place of abode in their own choice of state. According to “Henderson v. Henderson [1965] 1 All E.R.179”, the main intent of a person for acquiring the domicile of their own choice is seen with state or nation where an individual decides to set up their home indeterminately. Three years ago Kit purchased a house and decided to stay in Australia along with his children and wife. This is seen to primarily satisfy the intention of acquisition of permanent domicile or place of abode by choosing to reside in Australia (Ábrahám et al, 2016).
As noted in “section 6 (1) of the taxation rulings 2650”, during the time of determination of permanent place of abode it is essential to take into consideration the main intent of the individual where he or she chooses to reside (Hemmings & Tuske, 2015). In the given case, as a person is having an Australian domicile of Australia but staying outside Australia, the domicile status shall be based on several foreseen conditions. Despite of Kit’s employment in oil rig of Indonesian coast he was often seen to visit his wife and children. The various types of assumptions assumed under “section 6 (1) of the ITAA 1936” are stated below as follows:
As per the test of 183 days, in case a person is seen to be residing in Australia for a period of no less than half of the income year either in breaks or continuously, he or she will be considered as an Australian occupant(Pástor & Veronesi, 2016). From the various discussions of the case study, after Kit getting deported to Indonesian oil rig, he is seen to visit his family for one month in every quarter of the year. This sum up to 120 days in a year of his total stay outside Australia are within the country. Despite of this, it cannot be ignored that Kit is considered as a permanent resident of Australia and shall be regarded under Australian occupant as he has bought a house for living with his wife and children. According to the rulings of “F .C. of T. v. Applegate (79 ATC 4307; (1979) 9 ATR 899”, whether or not Kit stayed in Australia one cannot overrule his permanent place of abode. The given case study is further able to define the various motives of Kit for building a place of abode in Australia and comply to the rulings of the test of 183 days. Henceforth, the various considerations of test of 183 days and domicile test is understood with permanent residency of Kit in Australia (Bauder, 2014).
The various types of evidences in a particular income year are taken into consideration for knowing about the tax liability of a taxpayer. In case a taxpayer is seen to be in conformity with the ordinary concepts of the domicile tests then he or she shall be assessed for taxation purpose based on the residential status. Based on the different types of discourse from the case study Kit has been subjected to enter into Australian contract by drying his salary from Westpac bank account as this is identified as an Australian source of income. Due to this, the salary drawn by Kit is subjected to tax. Moreover, he has also received the income from dealing in portfolio of shares which is also subjected for taxation (Lancaster et al., 2015).
According to the various legislations of “Applegate per Franki J 79 ATC”, as Kit is an occupant of Australia, he is required to state all the income on from overseas during the lodgement process of income tax with a foreign employment income. It has been further seen that the income of Kit during the year will be held for assessment because of his Australian residency status. Despite of this, Kit can avoid various circumstances of double taxation by claiming of exemptions for share portfolio since Australia is seen to sign treaties with more than 40 plus nations for providing relief associated to instances of double taxation (Smailes & Mcdermott, 2013).
I. Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159
The following case has been able to take into consideration the various issues which are related to the realisation of capital asset for determining whether or not the income gathered from disposal of property which was exploited for minerals is to be considered under ordinary income or capital. The different types of outcomes of the study have been able to state that the capital available to the taxpayer was not adequate to fund the business activities associated to mining (Piketty & Saez, 2013). The various declarations made by the court stated that the taxpayer has obtained profit from the sale of property; hence the income was seen to be taxable in nature. The verdict further shown that the disclosed land is constituted under the act of trading and not as a mere replacement of one form of investment with another (Pomeranz, 2013).
The following case is associated to the issues, which shows the subdivision and the sale of land which is used for determination of selling of land to be considered under ordinary realisation of property or assessable income. The argument placed by the taxpayer showed that it had realised the capital in a beneficial fashion and the profits of the business we are not assessable. Based on the judgement of the court the realisation of asset was considered under capital account and the decision of the court showed that the activity of selling off land needed to be treated as realisation of the capital asset (Besley & Persson, 2013).
The discussions of the case is associated to the question whether the income acquired from sale of subdivided land is to be considered as a capital. As for the argument of the taxpayer the activities of realisation of profit and property is not to be held for tax assessment (Doran, Byrnes, Cobiac, Vandenberg, & Vos, 2013). This is relevant to the income generated from the sale of property according to the statement by “Gibbs CJ, Mason, Murphy and Wilson JJ the taxpayer was assessed under section 25 (1)”. Based on the verdict given by the court, the income generated must be assessed as a taxable income as the taxpayer continued to carry on commercial activity in form of development of the land.
As per the given case, the main concern is seen with net income acquired from sale of subdivided property and to know whether it can be assessed under the rulings of section 25 (1) or 26 (a) as an income. The various statements brought forward by the taxpayer showed that the deceased never entered into the profitable scheme in the first place and the land was not used for commercial purpose (Coleman, 2013). The court gave its decision that the subdivision of land was taken in such a manner that the taxpayer was not indulged in any kind of profit-making venture. Henceforth, the degree of realisation of taxpayer did not take into account any commercial proceedings. It is further worth mentioning that the degree of realisation is directly relevant to considering the nature of realisation is made for the sale of subdivided property.
The given case is associated to address the question of whether disposal of a particular portion of land is to be held assessable under “Section 25 (1) or 25 A”. As per the various types of rulings of the court the subdivision and the sale of portion of the land is not considered to be taxable in either of the sections (Chardon, 2014). Based on the various decision put forward by Federal Court, it has been seen that the taxpayer has no intention of acquiring income from disposal of the property and hands shall be held for assessment in conformity with the first limb of “Section 25 A (1)”. The second limb is not seem to have any kind of consequences as the selling of landed not take place during normal course of business or making of profits (Rothschild & Scheuer, 2016).
The particular case is associated to the rulings under “Section 25 (1) or 26 (a)” for the determination of income of the taxpayer related to value received during selling of land. The various outcomes of the case has been seen under the 25 (1) and 26 (a) which is applicable in considering the income of the taxpayer for a sum of $370,000 which was received by taxpayer as a result of sale of property. With regards to the case as per “FC of T v The Emporium Ltd 87 ATC 4363 the court passed its verdict by stating under section 25 (1)”, the profit is not seem to constitute any taxable income and is considered as an ordinary income for the taxpayer (Piketty & Saez, 2013b).
The aforementioned case aims to address the issue of determination of taxable income under “Subsection 25 (1) or sec 26 (a) of the ITAA 1936” as a result of sale of property near Hobart. The court has accredited that the outcome of the burden of debt had posed obligations on the taxpayer to dispose the land, although the profits made from the business activities of the land development is taxable in nature. In addition to this, court stated that the transactions were recurring and had all the features of consistent business activities for land development (Huizinga et al., 2014).
The given case is associated to deal with the question of whether income received from property disposal was to be held for taxation purposes as per Section 25 (1). The taxpayer where observed to borrow bank credit for the purpose of building a house on the land. The several types of outcomes of the case showed that the venture was formed to execute business activities and produce an expected level of income. As per the rulings of the court, the taxpayer had intentions to enter in commercial undertakings by indulging with activities associated to development of the land (Abdulkarimli, 2015).
References
Abdulkarimli, O. (2015). Taxation of E-commerce. Baku State University Law Review, 1, 99–109.
Ábrahám, Á., Koehne, S., & Pavoni, N. (2016). Optimal income taxation when asset taxation is limited. Journal of Public Economics, 136, 14–29. https://doi.org/10.1016/j.jpubeco.2016.02.003
Bauder, H. (2014). Domicile citizenship, human mobility and territoriality. Progress in Human Geography, 38(1), 91–106. https://doi.org/10.1177/0309132513502281
Besley, T., & Persson, T. (2013). Taxation and Development. Handbook of Public Economics, 5, 51–110. https://doi.org/10.1016/B978-0-444-53759-1.00002-9
Chardon, T. (2014). Taxation and superannuation literacy in Australia: what do people know (or think they know)? JASSA The Fínsia Journal of Applied Finance, (1), 42–48.
Coleman, D. Y. (2013). Taxation. Kenya Country Review, 121–122. Retrieved from https://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,uid&db=buh&AN=87855587&site=ehost-live&scope=site
Doran, C. M., Byrnes, J. M., Cobiac, L. J., Vandenberg, B., & Vos, T. (2013). Estimated impacts of alternative Australian alcohol taxation structures on consumption, public health and government revenues. Medical Journal of Australia, 199(9), 619–622. https://doi.org/10.5694/mja13.10605
Hemmings, P., & Tuske, A. (2015). Improving Taxes and Transfers in Australia. OECD Publishing, OECD Economics Department Working Papers: 1199, 2015, (1199). Retrieved from https://search.proquest.com/docview/1684397069?accountid=17248
Huizinga, H., Voget, J., & Wagner, W. (2014). International taxation and cross-border banking. American Economic Journal: Economic Policy, 6(2), 94–125. https://doi.org/10.1257/pol.6.2.94
Lancaster, K., Seear, K., & Treloar, C. (2015). Laws prohibiting peer distribution of injecting equipment in Australia: A critical analysis of their effects. International Journal of Drug Policy, 26(12), 1198–1206. https://doi.org/10.1016/j.drugpo.2015.05.014
Pástor, L., & Veronesi, P. (2016). Income inequality and asset prices under redistributive taxation. Journal of Monetary Economics, 81, 1–20. https://doi.org/10.1016/j.jmoneco.2016.03.004
Piketty, T., & Saez, E. (2013a). A Theory of Optimal Capital Taxation. Econometrica, 81(5), 1851–1886. https://doi.org/10.3982/ECTA10712
Piketty, T., & Saez, E. (2013b). Optimal labor income taxation. Handbook of Public Economics, 5, 392–474. https://doi.org/10.1016/B978-0-444-53759-1.00007-8
Pomeranz, D. (2013). No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax. NBER Working Paper Series, w19199(8), 2539–2569. https://doi.org/10.1257/aer.20130393
Rothschild, C., & Scheuer, F. (2016). Optimal taxation with rent-seeking. Review of Economic Studies, 83(3), 1225–1262. https://doi.org/10.1093/restud/rdw017
SMAILES, A., & MCDERMOTT, P. M. (2013). The Uniformity Of Taxation Penalties In Australia. Monash University Law Review, 39(1), 213–245. Retrieved from https://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=90278272&lang=es&site=ehost-live
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