The main motive of the case is to identify whether Kit is an Australian citizen and needs to pay income tax according to the IT ruling 2650 under ITAA 1997. According to the depicted rule income generated from an Australian inhabitant needs to be taxed unless he or she is not present in the country for more than 183 days. Kit was born in Chile, however is currently a permanent occupant in Australia. Kit works as an employee in an Australian firm, which makes him to work in overseas branches. McLaren (2014) stated that Australian authority is used in effective tax in system, which does not double tax citizens and maintain an effective control that are the taxation policy.
Furthermore, the Australian authorities also stated that residents of Australia would only be taxed according to the laid down rules of the Australian taxation system. The income generated in Australia is mainly taxed according to the Australian legislation, where non-residential are not taxed if the does not fall under the minimum stay requirement. Kit on the other hand works for an Australian company and is currently residing in Australia with his family (Westra, Gray and Karageorgou 2015). The case study is mainly identifying as a residential status of Kit for effectively identify its tax liability. Moreover, being a Chilean citizenship cardholder Kit is also liable to be taxed in its home country, which will initiate double taxation. However, Australian authorities have developed an effective residential test model, which could be used in identifying the actual status of Kit. These residential model or test is identified as follows.
The 183-day test mainly depicts a certain rule, which needs to be maintained by the taxpayer to become an Australians occupant. If a person lives in Australia for more than 183 days then it is considered that he or she is citizen of Australia. Furthermore, the valuation of the case study could be understood that Kit has not stated more than 183 days in Australia, as for its job condition he works in Indonesia for the Australian company (Daniel, Williamson and Soebarto 2017). Furthermore, he has a house in Australia where both his wife and children are living for more than 3 years and makes them resident of Australia. Furthermore, the bank account is also in Australia, which is linked with his wife who is currently considered a citizen of Australia. “F .C. of T. v. Applegate (79 ATC 4307; (1979) 9 ATR 899”, mainly depicted that persons residing In Australia for long time is considered to be a resident of the country. Thus, according to the 183-day test it could be evaluated that Kit is mainly a citizen of Australia and needs to pay all the relevant taxes according to the Australian taxation Association (Lo 2014).
Domicile test is mainly used for identifying the status of an individual, according to the Australian authority’s improvised method. The rules depicted in Domicile act 1982 is mainly used to complete the domicile test, as it helps in identifying the accurate residential status of an individual. The act is used in evaluating the each individual residential status, whether they are a citizen of Australia or not (Rebecca, Beckley and Tull 2015). Furthermore, Australian taxation system section 6 of the taxation ruling 2650, states that only individuals that are willing to be an Australian citizen pay taxes. Furthermore, persons are allowed to decide whether to be situated in Australia and pay relevant taxes according to rules 2650. According to case Henderson vs Anderson 1965, that each person has the right to choose their domicile country, where they want to pay taxes and reside. The Henderson case mainly states that individuals control their decisions in choosing their intermediately home. This choice mainly states that identification of domicile condition could effectively help in deriving the income tax levied in certain citizen. Detection of overall residential condition of an individual is essential, as it helps in identifying the tax imposed on its income. On the other hand, Bond and Mercer (2014) argued that due to loopholes in the valuation of tax condition, individuals are able two exempt from tax pay.
Seeing the domicile test and Section 6 one of the it 1936, overall citizenship of Kit could be understood and evaluated. Kit firstly works with Australian company and is been residing in Australia. Furthermore, Kit has a family in Australia who live there with adequate housing facilities. This mail indicates that it wants Australia to be is domicile country. Thus, it could be understood that the domicile test identifies an Australian citizen and makes them obliged towards the Australian taxation law (Zainuddin and Mercer 2014).
The last test is identified as assessment of income tax, which allows expectation of reality relevant to residency conditions. The study many states that it receives a salary in Westpac Bank, which is situated in Australia. In addition, the company in which it works is also an Australian based company. Furthermore, an Australian company pays salary of Kit in Australian dollars in an Australian account. Moreover, Kit resides in Australia with his family and this could be understood that he is an Australian residence and must follow the Australian taxation law. There are certain stock market exposures, which is conducted in Chillies market and needs to be evaluated under the Australian taxation law.
According to “Applegate per Franki J 79 ATC”, Kit is an Australian residence and needs to abide by the taxation law of the country. Income generated in Australia will be taxed over the income tax act; while income received from stock market also needs to be taxed under the Australian taxation system. The treaty of double taxation system is imposed by Australia, as it helps in reducing the burden of double taxation on their citizens to comply with the rules of other countries (Sivam and Karuppannan 2015).
This case mainly depicts that Californian Copper Syndicate is mainly disposing the exploited mineral property and obtained a net income from sale. The company mainly depicted that no tax should be conveyed, as funds received from sale of the mineral composed property, as resources has been fully exploited. The court mainly depicted that any profits that is obtained from sale of land is relatively taxable regardless of its income producing ability. The case of California Copper Syndicate stated the overall unethical ways, which could have been used by the mining companies to substantially minimise its taxes. The court also stated that any additional income, which has been generated from sale of property, is mainly considered under the disposable income tax according to the Australian taxation authority (Snape and De Souza 2016).
According to the case, the business subdivided land and sold separately is considered as one of the assessable amount which is taxed. According to the taxation law in Australia, any property that has been sold for income needs to be taxed under capital gains section. On the other hand, court provided a statement against Scottish Australian Mining Company depicted that any commercial activity while selling the land should be treated, as a realisation of capital assets. The realisation of capital assets needs to be considered under the capital gains section and must be taxed (Johansen 2016).
The case mainly stated that any kind of realisation where property was being subdivided should not be considered under the taxation law. In addition, it also mentioned that the subdivided property is been sold on separate occasion and must not be taxed. However, the court elaborately mentions that property, which is sold wholly or subdivided needs to be taxed if net income is generated from a transaction. In this case the subdivided property income must be obtained by the proceeds to derive the net income or gain. The section 25 (1) stated that income generated from property is taxable amount whether it is subdivided or whole (Becker, Reimer and Rust 2015).
The case mainly stated that the land was not used for the services but was intended for supporting the business. Due to some unforeseen circumstances, the land was not used in the business and sold beforehand. The court stated that under section 25 (1) or 26 (a) any transaction, which is when conducted by selling a property whether it is used or not need to be taxed. The income from Property sale has to be taxes yet provided capital gain for the company regardless of its use. Furthermore, the amount depicted that it was a capital gain and must be treated under the Australian taxation law (Macintosh, Foerster and McDonald 2015).
This case focused on a farmer who was earning low income and started to sell its property part by part. The farmer was forced to sell his land due to low income generated from business. In that case, the return stated that the proceeds from the sale of property should not be taxed. However, the farmer’s net income was generated from sale of land, which needs to be taxed as depicted by the court. It is clearly mentioned that any proceeds or net income generated from sale of land needs to be taxed and needs to be generated from sale of land. The tax mainly needs to be acquired by using the capital gain and under, which it has been sold needs to be tax. The court stated that by using adequate measures it is able to reduce unethical practices conducted by individuals or companies to avoid taxes (Evans, Minas and Lim 2015).
This case mainly stated that the company had no intention to make profit from the investment. However, due to unforeseen circumstances they had to sell the land with generated a net profit. The court mainly provided a case link “FC of T v The Emporium Ltd 87 ATC 4363”, which state that net profit generated from sale of land it is to be taxed under the taxation law. The court also provided to sections 25 (1) or 26 (a), which depicted that any profit obtained from sale of land needs to be taxed. The court also states that even if the transaction or sale is not intentional to make profit, any profits obtained from the transaction are taxed under the capital gain segment (Daley and Coates 2015).
The case mainly depicted the activity of a farmer’s land by subdividing into different parts. The farmer uses a systematic way for subdividing all the relevant land into different parts, which could be easily sold. The court mentioned that any property sale within the Australian boundaries is mainly taxed under the capital gain section. The tax could only be derived from net income has been generated from the proceeds, while capital loss is not taxable under the Australian taxation. This type of method is mainly used by the court it is unethical individuals for retaining more income in the business conduct action (Blöchliger et al. 2015).
According to the case study, two brothers had mainly bought a residential plot, which day intended to sell to different customers and obtain capital gain. However, due to unforeseen circumstances both the brothers was not able to sell its plot and was forced to live in it with their families. However, after one and half years the property was sold for a net profit and was subject to a capital gain. The problem started when the brothers refused to pay tax as the sale of land due to difficult Times. The court ruled out that the land was intended for a commercial activity, which was conducted by the brothers. Any income, which is generated from the land needs to be taxed as the land attuned a net profit and it must come under the taxation law (Becker, Reimer and Rust 2015).
Reference:
Ambrose, M., James, M., Law, A., Osman, P. and White, S., 2013. The evaluation of the 5-star energy efficiency standard for residential buildings. Commonwealth of Australia, Canberra.
Becker, J., Reimer, E. and Rust, A., 2015. Klaus Vogel on Double Taxation Conventions. Kluwer Law International.
Blöchliger, H., Égert, B., Alvarez, B. and Paciorek, A., 2015. The stabilisation properties of immovable property taxation.
Bond, T. and Mercer, D., 2014. Subdivision Policy and Planning for Bushfire Defence: A Natural Hazard Mitigation Strategy for Residential Peri?Urban Regions in Victoria, Australia. Geographical Research, 52(1), pp.6-22.
Daley, J. and Coates, B., 2015. Property taxes. Grattan Institute.
Daniel, L., Williamson, T. and Soebarto, V., 2017. Comfort-based performance assessment methodology for low energy residential buildings in Australia. Building and Environment, 111, pp.169-179.
Evans, C., Minas, J. and Lim, Y., 2015. Taxing personal capital gains in Australia: an alternative way forward.
Johansen, B., 2016. The Islamic law on land tax and rent: the peasants’ loss of property rights as interpreted in the Hanafite legal literature of the Mamluk and Ottoman periods. Routledge.
Lo, A.Y., 2014. The influence of risk perception and attitude on the decisions to adopt residential flood insurance: Evidence from Queensland, Australia. RISK FACTORS, ENVIRONMENTAL IMPACTS AND MANAGEMENT STRATEGIES, p.73.
Macintosh, A., Foerster, A. and McDonald, J., 2015. Policy design, spatial planning and climate change adaptation: a case study from Australia. Journal of Environmental Planning and Management, 58(8), pp.1432-1453.
McLaren, J., 2014. A uniform land tax in Australia: what is the potential for this to be a reality post the Henry Tax Review. Austl. Tax F., 29, p.43.
Rebecca, R., Beckley, L.E. and Tull, M., 2015. The economic value of cyclonic storm-surge risks: A hedonic case study of residential property in Exmouth, Western Australia. In Climate Change in the Asia-Pacific Region (pp. 143-156). Springer International Publishing.
Sivam, A. and Karuppannan, S., 2015. Factors influencing old age person’s residential satisfaction: A case study of south Australia (Doctoral dissertation, TASA).
Snape, J. and De Souza, J., 2016. Environmental taxation law: policy, contexts and practice. Routledge.
Westra, L., Gray, J. and Karageorgou, V. eds., 2015. Ecological Systems Integrity: Governance, Law and Human Rights. Routledge.
Zainuddin, Z. and Mercer, D., 2014. Domestic Residential Garden Food Production in Melbourne, Australia: a fine-grained analysis and pilot study. Australian Geographer, 45(4), pp.465-484.
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