Discuss about the Revenue Generation for Federal Government.
The Australian taxation can be classified as the main source of revenue generation and are collected by the Federal Government. The person paying the taxes are those holding the citizenship of the country? Capital gain taxes, Fringe Benefit taxes, Payroll taxes, Excise taxes, corporate taxes etc are main source of revenue generation. The current case study is to derive whether Fred can be called as a citizen of Australia with regard to the scenario present.
According to the case study, Fred visited Australia to set up his business or any branch of the company he was employed or self employed. The person does not decide the stay period in Australia; he therefore also leases a stay in Melbourne for quite some time. To gain the citizenship of Australia it is very much necessary to have a visa which is valid in the eyes of law for an unrestricted time. This type of visa can be named as Permanent Residence Visa. Permanent Residence Visa gives the authority to live in a country for indefinite period and can be obtained in various ways. This is for sure that Fred has obtained a valid visa because of his visit to Australia, but if he has a Permanent visa; that is a question (Press, 2012)
The most important requests for determining the residential status of Australia are for a moment summed below:
It is very important to stay in any nation for 12 months to become a permanent resident there. Fred in this case study was forced to go to UK due to worse health conditions. The 12 month does not include the temporary absences for any holiday or for any work. Therefore, it can be said he was unable to satisfy the taxability criteria .Therefore, Fred cannot be said as a resident of Australia and should not be taxable under Australian laws (Cheng, 2013)
Fred was said to be an UK resident, and to have a citizenship of another country he need to stay permanently for some months. People can have dual citizenship after being granted for both of the countries. In this particular case study, Fred has some kind of Investment in France and he was entitled to receive some amount of interest generated from it. According to a rule it was necessary to pay tax in both the domestic and foreign government. Fred has disclosed his income generating from France so he was entitled to pay tax in UK and France. As Fred did not stay in Australia for even 12 months due to his illness, it was quite evitable that Fred was not eligible to have a citizenship of Australia with no obligation to pay tax to the Australian authorities (travel.state.gov)
So we can conclude that Fred was not awarded the nationality as he was no there for continuous 12 months. He was also entitling for pay tax to the French Government for his interest on investments. He was therefore not taxable according to Australian laws.
The case stated that whether the realization of capital asset would result in ordinary income or assessable proceeds of income. The average set down in Californian Copper Syndicate Case has consistently guided the choices of the Court in deals and the evaluation of related advantages to charge. The said case separates between increases rising on special of Investment being ordered as business Income quantifiable to charge and not assessable to compel and at last the following observation was done that the Appellant company was being created to take certain mineral fields and it was also said to do to generate profit for the company and to generate huge amount of profit to the company (Manyam, 2011).
The case states that William J was said to be the taxpayer and he acquired coal assests in New South Wales from a company, which was related to him. After acquiring it, he merely has done any type of coal mining, or maybe he has done for a shorter period. After the acquisition, the land was sold early. After that, he also purchased another land where he did coal mining until the mine became obsolete. The Court said that the profits that have been generated would not be classified as business Income as the Company was not in the subject of running or administrating areas of land. Therefore it was concluded that the fundamental or main motive of the company was coal mining and not just mere buying selling of land (Bitomsky, 2011).
In this case, the company has purchased a land with the thought that the shareholders of the company can enjoy fishing on the beach. After some time, the owner of the shares was selling the shares of the company to different corporations and by this action the company’s article needed amendment. The land at the end was sold generating huge profits. The High Court declared the income chargeable to section 25(1) of ITAA (1936) while others also concluded that it can be regarded as Income under section 26 (a) of the ITAA Act (1936) leading as profit from any enterprise. The taxpayer just called it as enhancement in the area. The actions of the taxpayers were just of realizing of a capital asset or even the intention was much broader than that according to the Court (SMith, 1993).
In the said cases, the citizens obtained some amount of area parcels for taming and lashing a rural being. However, the said area was accredited by the method for sub-division after the failure of the citizen by Trustees. The said area was sold by posting it with the land geniuses. It was detained that the Owners were not leading any profit making business or area improvement business. Thus, the practice of proposal of an area by deal would not result timely evolve salary period leading to attraction of section 25(1) of ITAA Act. Further, it was likewise not an era advantage exercise rising out of an aid making any plan (Cahill, 2015)
The taxpayer was being gifted a land from his father and after receiving it the taxpayer started doing all the production activities like cropping, raising of beef sheep etc. None of the activities was revenue driven and the assesse was generating losses. The case is as just similar to Statham Case. He had to therefore sell all the lands to pay off the debts. By doing this, the IT Department concluded it as Income chargeable to section 25(1) of Income tax Assessment Act. The income was said as the income generated from selling and dividing of land . It is just as similar in case of Crow v FCT 88 case where it would just be said as growth of land (Smith, 2003).
The company in this case has acquired an land with the intention of selling sand and generating business income from the same .They also have the idea of keeping the land with them till the price of land rise up. The Memorandum of Association stated that the land was involved in buying land so that the business of selling sand would continue reaching heights. The Department therefore stated that the proceeds of sale of land minus the cost incurred to acquire it would count it as assessable income and would be charged to section 25(1) of Income tax Assessment Act (Cassidy, 1994).
In this case, there were various purchases of land from the farmer, there was consequent section, and sale of land was happening one after another, which clearly specifies the business of the development of land. For some time it was used for grazing, farming and doing other agricultural activities. The court could easily make a conclusion that it was just done to develop profit by mere selling and buying. The taxpayer then said that the business was just meant to be a development of land and could be classified as income under section 25(1) of Income tax Assessment Act, that is generating of profit from any scheme. This income can be said as an ordinary income for an individual. The transaction involved in it should be looked at a broader way and with a business point of view. The continuous selling of land termed the business as adding some benefit or developing a land for further use (Bitomsky, 1991).
The tax payers in this case have purchased a land where a house was already built. They then removed the house which already existed and constructed three houses. The taxpayers then started advertising for the houses before the construction and though after doing the marketing they were not successful in selling the houses. Thereafter, they thought of staying there and after around one year they were successful in selling the houses which generated around $150000 profit. Later on, they also purchased another land and subsequently sold them. The IT Department regarded the income as assessable income because the motive was to generate profit but the court and tax payers disagreed and regarded as an ordinary income as it was residential and the tax payers sold them due to financial crisis. It is to be stated that the houses were not to be considered as an investment so it could not be said as assessable income or realization of capital asset. The main motive was to sale the town houses at a profit. (webmartingconsulting.com, 2015)
References
Webmartingconsulting.com . (2015). Business Income. Retrieved 9th September 2016, from https://www.webbmartinconsulting.com.au/single-post/2015/04/01/Property-Subdivision
Bitomsky,G . (1991). The concept of assessable income,has it changed. Retrieved 9 September 2016, from https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1023&context=rlj
Cassidy,J . (1994). The Taxation of Isolated Sales underSection 25(1). Retrieved 9 September 2016, from https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1044&context=rlj
Smith, A. (2003). Property Development Land and Property. Retrieved 9 September 2016, from file:///C:/Users/com/Downloads/d020520030207_prop_development_smith%20(3).pdf
Cahill,G . (2015). Tax and GST issues with small property developments. Retrieved 9 September 2016, from https://www.cgw.com.au/wp-content/uploads/2015/07/Tax-and-GST-issues-with-small-property-developments-Greg-Cahill-May-2015.pdf
Smith, A. (2003). Property Development Land and Property. Retrieved 9 September 2016, from file:///C:/Users/com/Downloads/d020520030207_prop_development_smith%20(3).pdf
Manyam, J. (2011). Taxation of gains.. Retrieved 9 September 2016, from https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1211&context=rlj
Bitomsky,G . (1991). The concept of assessable income,has it changed. Retrieved 9 September 2016, from https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1023&context=rlj
Travel.state.gov. Legal Consideration. Retrieved 9 September 2016 from https://travel.state.gov/content/travel/en/legal-considerations/us-citizenship-laws-policies/citizenship-and-dual-nationality/dual-nationality.html
Australian Citizenship HQ. (2016). Australian Citizenship Eligibility – Australian Citizenship HQ. Retrieved 9 September 2016 from: https://www.australiancitizenshiphq.com.au/australian-citizenship/citizenship-eligibility/.
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