Australian Income Tax and Practice

Added on - 21 Feb 2021

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AUSTRALIAN INCOME TAXAND PRACTICE
TABLE OF CONTENTSISSUE..............................................................................................................................................1RULES.............................................................................................................................................1APPLICATION...............................................................................................................................4CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6
ISSUEMr. Nguyen is an Australian living in Sydney for many has been working as an engineerin a reputable firm. In 2015 he divorced his wife and kept primary residence purchased for$150000 in 1990, and the spouse was given rental property and custody of their son. He movedto Saudi Arabia for employment starting from 5thJuly 2016 signing an open ended contract. Thecontract specified that the payment would be made in USD than can be deposited in bank ofchoice. In this case Nguyen left on 1stJuly, 2016 and still at July 2019 working with same firm.His salary was being in Australian account and has not rented the house of Australia. Address onlicence has not been changed and the gun licence has also not been handed over. Nguyen has notinformed income tax authorities about the seizure of his Australian tax residence.He has filed returns for year 2017 and 2018 as non-resident of Australia in which incomesourced from Australia were declared. He used to visit Australia in every January and stayedthere for whole month with his son. Now the issues that are arising are that his income is subjectby ATO because he has filed return as non-resident even after getting his salary payment inAustralian account. Address also shows him as an Australian resident that is with authorities. MrNguyen is suggested to amend the returns for 2017 and 2018 by ATO as resident. The laws stateresident is to pay tax on every income accruing to him worldwide. ATO has given assurance ofnot imposing penalties if return is amended within 28 days. Mr. Nguyen wants an expertsuggestion for dealing with the case whether he should amend the return or not and otherpossible suggestions.RULESAustralian Income TaxIT in Australia is laid by federal government over taxable income of corporations andtaxable incomes. Progressive rates are used for individuals for levy of income tax. Income tax isan important revenue generating source in taxation system of Australia. Tax is collected byAustralian Taxation office for federal government. Difference between incomes which isassessable after allowing deductions is taxable income1.For understanding the tax situations residential status is to be determined first. The rulesthat apply in Department of Home Affairs are not used for determining the residential status of1International tax for individuals.2019.[Online]. Available through :<https://www.ato.gov.au/Individuals/international-tax-for-individuals/work-out-your-tax-residency/>.1
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