Taxation Law And Practice For Earned Comulative Income

Annual Income of Stephanie

Describe about the Taxation Law and Practice for Earned Comulative.

Stephanie Roger, owner of the Advertising Company Rogan Advertising Pvt. Ltd. in Australia have been assigned advertising task for Olympic 2016 in Brazil for a sport company. During her stay in Brazil for an unstipulated span of time would be paid by Greater Union Advertisers Pvt. Ltd. in her bank account in Brazil. She has her house in Australia given on lease for the time of her stay in Brazil, which would be paid in her joint account in Australia. Considering equal share of lease rent would be divided between her and Ronald, the amount will be assessed on equal dividends. The rent is paid on weekly basis and shall be taken into account on annual basis. In addendum to her aforementioned income, she has worked for two 6 weeks period getting cumulative pay at her bank account in Australia. Hence in the assessment year 2015-16 she has been earning both in Australia and Brazil. Stephanie Roger’s income has been detailed below as per her earning location-wise:

In the bank account Stephanie Roger have in Australia she has earned cumulative:

Earning from house lease: ($450/2)*4*12=$10800

Earning from University: $24000

Cumulative Earning: $10800+$24000=$34800

In the bank account Stephanie Roger have in Brazil she has earned cumulative:

Earning from Greater Union towards advertising for Olympic, 2016: $80,000

Ronald, company secretary and manager of the Advertising Company Rogan Advertising Pvt. Ltd. in Australia, that belonged to his wife have been assigned advertising task for Olympic 2016 in Brazil for a sport company.  The task is from Greater Union Advertisers Pvt. Ltd., a company where his wife Stephanie has been working before taking care of her ailing father. During his stay in Brazil for considerable end of Olympic, 2016, he would be paid by Greater Union Advertisers Pvt. Ltd. in his bank account in Brazil. His house in Australia given on lease for the time of his stay in Brazil would be paid in his joint account in Australia and hence considered that equal earning from the lease would be divided between him and Stephanie. The rent is paid on weekly basis and shall be taken into account on annual basis. In addendum to the aforementioned income, both Ronald and Stephanie had 1 stake each towards earning after all expenses from their own advertising company. However, since the stake has not yet been in a stage for quantifying has not been considered from assessment. (Wilson et al., 2013)

Annual Income of Ronald

In the bank account Ronald have in Australia he has earned cumulative:

Earning from house lease: ($450/2)*4*12=$10800

In the bank account Ronald have in Brazil he has earned cumulative from Greater Union towards advertising for Olympic, 2016: $80,000

Rogan Advertising Pvt. Ltd. is an ownership on stake between Stephanie and her husband Ronald. The profit incurred after all expenses will be shared. The advertising company presently works on the Greater Union’ assignments that is too small to be accounted for by Greater Union. Post Olympic, 2016 the company has strategies to elaborate their client bases. As on the assessment year, Rogan Advertising does not have quantifying figures to be assessed for tax. However, Stephanie and Ronald are paid salary from the company and are to be considered against expenses out of the company’s earning. (S Levy, 2013 )The assessable tax is counted on the earnings made by Stephanie and Ronald, since the company has two as their employees and stakeholders for the assessment year. (Grubert and Altshuler, 2016)   

The Australian Taxation Law 2016 includes income tax, superannuation, fringe benefit tax, federal and state tax, goods and service tax.  The government handed down the budget for 2016-17 to tax and superannuation laws. (Hopkins, 2016)  The key factors of assessable tax for Stephanie and Ronald on the assessment tax would involve the following salient features and invested in related areas would vest in savings of income tax: (Burkhauser et al., 2012)

Tax Integrity with deferred tax liabilities

Indirect Tax concession scheme and international organization concessions

Philanthropy with deductible gift recipients

Superannuation reform packages with lifetime cap for non-concessional superannuation contributions

Broadening the securitised asset measures

Tax transparency code

Ten years enterprise tax plan with redemption of 25% company tax

Establishing tax avoidance task force

Strengthening of transfer pricing rule

Ten years enterprise tax plan with excise refund scheme

Applying goods and service tax for low value sports good and collective investment vehicles

Superannuation Reform packages for balance transfer of maximum of $1.6 million, tax offsets, death benefits, retirement income, personal superannuation contribution,

Diverted profit tax

Administrative tax for global entities

Potential Tax avoidance

Medicare surcharges and private health insurance rebate

Workable approach on fixed trust, abolish mature age tax offsets

Self assessment and farm management deposits

Scrip roll-over and small business concessions

Screen production offsets

Bad debts related to financial investments

Targeting for not-for-profit taxes

Revenue asset and trading stock roll-over

Annual Income of Rogan Advertising

Capital gains tax and loss relief to facilitate superannuation reforms, demerger relief, exemption for incentives related to renewable resources, limiting trade stock exemptions, amalgamation of corporations as in the case of Greater Union’s shared assessments with Roger Advertising, demergers for new clientele, conversion of private limited company into incorporations, entity structure for growing jobs and small business

Working in created establishments in deceased estates

Capping of rebate able amount for health insurance policy

Carbon pricing, clean energy future, fuel tax credits and excise, native title payment, coverage on non-transport gaseous fuels

Company tax and overseas program concessional programs

Securitised assets in leased apartment

Look through treatment for earn out arrangements

Employee share ownership and entrepreneurship

Compensation payment and insurance policies

Farm household support and allowance

First home saver account scheme

Fringe benefit tax for introducing a cap for salary sacrificed meal entertainment and entertainment facility leasing expenses

Fringe benefit change and adjusted taxable income

Fringe benefit tax changes for electronics devices

Functional currency rule

Provision for general purposes financial statement by significant global entities, one such best source of working is with Greater Union Advertisers

Helping recovery of payment from overseas debtors

Increasing access to company losses

The Government of Australia has announced from 1^st July, 2016 the marginal tax rate of 37% will be levied on and above $87,000

The tax rate for residential tax payers are as follows:-

Taxable Income	Tax on Income
0 – $18,200	Nil
$18,201 – $37,000	19c for each $1 over $18,200
$37,001 – $87,000	$3,572+32.5c for each $1 over $37,000
$87,001 – $1,80,000	$19,822+37c for each $1 over $87,000
$1,80,001 & above	$54,232+45c for each $1 over $1,80,000

The tax rate for non-residential tax payers are as follows:-

Taxable Income	Tax on Income
0 – $87,000	32.5c for each $1
$87,001 – $1,80,000	$28,275+37c for each $1 over $87,000
$1,80,001 & above	$62,685+45c for each $1 over $1,80,000

The Federal Income Tax of Brazil taxes an individual from 0% to 27.5% and is bracketed in three segments.  The key factors of assessable tax for Stephanie and Ronald on the assessment tax would involve the following salient features and invested in related areas would vest in savings of income tax: (Tanzi, 2014)

Residency Tax – 183 days stay within 12 months in a calendar year, even a foreign company is considered resident if incorporated in Brazil and drives business locally, as is the case of advertising on sport goods for Olympic, an assignment from Australia. Taxes levied are 25% on earned income and 15% on unearned. (Pabayo et al., 2013)

Individual Income Tax – Ranges from 0% to 27.5% with reduction available on educational expenses, pension plan contribution of 12% of income, donations school fees and medical expenses cumulative of maximum 20%

Corporate Tax – 4% to 17.42%

Social security Tax – For employer 37.3% comprising of 28.8% on social security and 8.5% for severance funds

Tax on the rental income – 15% with some credit allowance (Lustig, Pessino and Scott, 2014)

Capital Gain Tax – 15% with some exceptions and 20% for public stock exchange

Inheritance and the wealth tax – Some states allow death transfer and donations or gifts while in general no taxes are levied

Value added sales and service tax and excise taxes – There is no VAT levied in Brazil

Municipal or the local tax – General 2% comprising of 1.4% assessed value of the property and 0.6% annual urban real estate tax.

Offshore income is tax exempt; hence tax would not be levied on Stephanie and Ronald for Brazil. (Higgins and Pereira, 2014)

The approximation on tax calculated has been based on the fact that investments have not been declared:

Tax Payer	Cumulative Income	Tax Levied (Approx)
Stephanie Roger	$34800+$80000=$114800	$28,275+37c for each $1 on $(114800-87000)=$27,800
Ronald	$10800+$80000=$90800	$28,275+37c for each $1 over $(90800-87000)=$3,800

 

References

Burkhauser, R.V., Feng, S., Jenkins, S.P. and Larrimore, J. (2012) ‘Recent trends in top income shares in the United States: reconciling estimates from March CPS and IRS tax return data’, Review of Economics and Statistics,; https://www.mitpressjournals.org/doi/abs/10.1162/REST_a_00200, vol. 94(2), pp.371-388.

Grubert, H. and Altshuler, R. (2016) ‘Shifting the Burden of Taxation from the Corporate to the Personal Level and Getting the Corporate Tax Rate Down to 15 Percent’, National Tax Journal, ; https://www.aei.org/wp-content/uploads/2016/04/Grubert-Altshuler-Shifting-the-Burden-06-01-16.pdf, vol. 2016.

Higgins, S. and Pereira, C. (2014) ‘he effects of Brazil’s taxation and social spending on the distribution of household income.’, Public Finance Review; https://www.commitmentoequity.org/publications_files/CEQWPNo7%20EffectHighTaxOnIncomeDistBrazil%20Jan%202013.pdf, vol. 42(3), pp.346-367.

Hopkins, B. (2016) The Law of Tax-Exempt Organizations+ Website, 2016 Supplement, John Wiley & Sons,;https://books.google.co.in/books?hl=en&lr=&id=yp_cCwAAQBAJ&oi=fnd&pg=PT9&dq=Income+Tax+Laws+of+Australia+&ots=E5Zsz0gJo_&sig=T1Yiny5W9llpJhINFBqTl6_ld0g#v=onepage&q&f=false.

Lustig, N., Pessino, C. and Scott, J. (2014) ‘The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An overview’, https://lacer.lacea.org/handle/123456789/48666.

Pabayo, R., Chiavegatto Filho, A.D., Lebrão, M.L. and Kawachi, I. (2013) ‘Income inequality and mortality: results from a longitudinal study of older residents of São Paulo, Brazil’, American journal of public health,; https://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2013.301496, vol. 103(9), e43-e49.

Paturot, D., Mellbye, K. and Brys, B. (2013) ‘Average personal income tax rate and tax wedge progression in OECD countries’, ; https://praha.vupsv.cz/fulltext/ul_1543.pdf.

S Levy, N.S. (2013 ) ‘Latin America’s social policy challenge: education, social insurance, redistribution’, The Journal of Economic Perspectives; https://www.ingentaconnect.com/content/aea/jep/2013/00000027/00000002/art00010, vol. 27.2 (2013): 193-218.

Tanzi, V. (2014) ‘Inflation, indexation and interest income taxation’, PSL Quarterly Review; https://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/11493, vol. 29, no. 116.

Wilson, S., Spiesâ€ÂButcher, B., Stebbing, A. and St John, S. (2013) ‘Wageâ€ÂEarners’ Welfare after Economic Reform: Refurbishing, Retrenching or Hollowing Out Social Protection in Australia and New Zealan’, Social Policy & Administration; https://www.researchgate.net/profile/Ben_Spies-Butcher/publication/264373060_Wage-Earners’_Welfare_after_Economic_Reform_Refurbishing_Retrenching_or_Hollowing_Out_Social_Protection_in_Australia_and_New_Zealand/links/5660d47, vol. 47(6), 623-646.