Taxation And Business Ventures – A Case Study

Part 1

In accordance of the Income Tax Assessment Act 1997, in section 6(1) there are three procedures applied to examine the company’s residential position for taxation. These are the procedures for incorporation, control and central management, and the stakeholders are controlled. If any one of the necessities are fulfilled by, the company then in Australia this company is measured as a tax resident. Again, under the Corporation Act 2001 in Australia when a company is incorporated, then this company mechanically turns into a tax resident of Australia and thus none of the factors is counted. The company is required to continue a business in Australia and the control and central management are exercised to announce that the company has appeared as an occupant of Australia (Braithwaite 2017). The facts that are required to decide the operational actions of the central administration of the country for example as to search for the space for the chief decisions of the company regarding the business is formed or the place where this decision is to be executed which are created by the management. The whole matter is stated in the case of Ors V Commissioner of Taxation and Baywater Investments Ltd., 2016.

In this current case, the endeavour of Elwood Blues that has its base in Singapore but the primary business of goods transportation by ship from Sydney to Africa is continued in Australia. In Singapore, the meetings of the directors are being detained while in Monaco the annual general meeting is carried. Meanwhile the problems that rises from this situation is, the business of the company is continued in Australia but the company’s control and central management which is in Singapore (Burkhauser et al. 2015). The directors are the members those who are considered as the sole stakeholders, while maximum shares are circulated in the exterior of Australia. Here in this situation as the business of the company is continued in Australia, thus, this company is legally responsible to recompense the taxes to the government of Australia. Again, the conclusions that are created by the directors are being applied for the manoeuvres in Australia. The contracts on the place of the company are signed in the country Sydney of Australia. In the case of the Ors V Commissioner of Taxation and Baywater Investments Ltd. of 2016 as the case law is declared in the same scenarios, the company is legally responsible to repay taxes to the Australian government as to continue the business in Australia with all its operational actions (James et al. 2015).

Part 2

In this present report, the assesse recovers the sales profit that is considered as taxable after the decrease of the index cost of attainment. After the deduction of the bad debt that is the loss from the amount of the whole sale is recognised as the net profit. The long-term capital gain asset is the amount that is which is received for over three years as well as one year for shares from the time of acquisitions. The capital gain taxation at the period of sale after receiving the index amount of the procuring year as well as the index worth of the marketing year. (Law et al. 2016) Index factor is the term that defines about the variation between the marketing year index price and the procured year index amount. By multiplying both the factors that is the index factor as well as the purchase, cost the amount which is derived is known as the index price. The assesse will experience an incurred capital loss if the amount that is obtained is lesser than the sales profit and is to be continued forward to subtract from the capital gains revenues (Hargita 2016).

1.According to ITAA under section 8-2 no tax is chargeable as because the personal operational possessions are not preserved as the CGT assets.

2.In this report a land was assimilated on 21/3/1984 for an amount of $20,000 and was vended for about $200,000 on June 2018. The loss that is also known as the bad debt in the current scenario comprised of two instalments of amount $20000 which is to be subtracted from the whole profit of the taxable amount as given in the chart (Duong and Evans 2016).

	Particulars	Amount ($)	Taxable Amount ($)
	Sales Proceeds	200000
	Less Bad Debt	40000
	Net Sales Proceeds	160000
	Acquisition Cost	20000
	Less: Index Cost Of Acquisition	59630.60686
	Taxable amount		100369.3931

3.If the holding span in case of share exceeds one year, then in that case the share is considered as the CGT assets of the income tax act which comes under section 186-5. In this case for a total cost amount of $80000 the share was purchased in the year 1994 in December and was sold in February of 2017 for an amount of $175000.

	particulars	Amount ($)	Taxable Amount ($)
	Sales proceeds	175000
	Acquisition Cost	80000
	Index Cost Of Acquisition	142810.9855
	Taxable Amount		32189.01454

4.In the year 1989 on 31^st December, an asset was purchased for an amount of $5000 and again it was sold on 1 may 2018 with the same amount of $5000. This possession is considered as the long-term capital asset.

	Particulars	Amount ($)	Amount
	Sales Proceeds	15000
	Less: Index Cost Of Acquisition	10235.50725
	Cost of acquisition	5000
	Taxable amount		4764.492754

5.In this case a jewellery was purchased with an amount of $20000 on 29/9/09 and again it was sold for $5000 on July in the year 2017. The asset is considered as the long-term CGT assets. The liability of the tax is given below:

	Particulars	Amount	Amount
	Sale Provide	5000
	Less: Index Cost Of Acquisition	22665.31027
	Acquisition cost	20000
	Taxable Amount		-17665.31027

6.Shares of the XYZ Ltd. was purchased on 31/10/1998 for long-term investment with an amount of $41500 and again it was sold on 1/10/17 for an amount of $45000. The liabilities of the taxes are given below:

	Particulars	Amount	Amount
	Sales Proceeds	45000
	Less: Index Cost Of Acquisition	68615.78171
	Cost OF acquisition	41500
	Taxable Amount		-23615.78171

7.According to the regulations of the Income Tax Assessment Act, 1997 the handover of license is considered as a transfer of the assets of CGT. In this circumstance, the assessee allocations his right to ingress from the Protective clothing (Chalk et al. 2018). Yet, even if this is considered as the asset of the CGT, the indexation is not acceptable, thus; the renew is not to be subtracted and the liability of the tax is given below.

	Particulars	Amount	Amount
	Sales Proceeds	50000
	Less: Cost of Acquisition	25000
	Taxable Amount		25000

In this circumstance, together with the volumes of media campaign and the interest charges is to be subtracted from the income considering the income tax assessment act 1997 under section 8-1. Further, the charge of the campaign is not in relation with the business or serving the assesse to produce income (Burnett 2015). Moreover, the expenditure has significant reason for the survival of the business, as because, without the help of the promotion campaign, the business should have died today (Burnett 2015). Thus, the charge must be a marginal share of the expenditure which is to be deducted.

Particulars	Amount ($)	Amount ($)
Interest on loan	250000
Media Campaign	175000
		425000

References

Braithwaite, V., 2017. Taxing democracy: Understanding tax avoidance and evasion. Routledge.

Burkhauser, R.V., Hahn, M.H. and Wilkins, R., 2015. Measuring top incomes using tax record data: A cautionary tale from Australia. The Journal of Economic Inequality, 13(2), pp.181-205.

Burnett, C., 2015. Intra-Group Debt at the Crossroads: Stand-Alone versus Worldwide Approach.

Chalk, M.N.A., Keen, M.M. and Perry, M.V.J., 2018. The Tax Cuts and Jobs Act: An Appraisal. International Monetary Fund.

Duong, L. and Evans, J., 2016. Gender differences in compensation and earnings management: Evidence from Australian CFOs. Pacific-Basin Finance Journal, 40, pp.17-35.

Hargita, C.S., 2016. Disrupting the Hegemonic Temporality of Superannuation. Australian Feminist Law Journal, 42(2), pp.223-240.

James, S., Sawyer, A. and Wallschutzky, I., 2015. Tax simplification: A review of initiatives in Australia, New Zealand and the United Kingdom. eJournal of Tax Research, 13(1).

Law, C.K., Kõlves, K. and De Leo, D., 2016. Influences of population?level factors on suicides in older adults: a national ecological study from Australia. International journal of geriatric psychiatry, 31(4), pp.384-391.