Australian Income Tax Law And Practice Assignment PDF 2022

Running Head: AUSTRALIAN INCOME TAX LAW AND PRACTICE
Australian Income tax law and practice
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AUSTRALIAN INCOME TAX LAW AND PRACTICE
Introduction
Foreigners under Australian Tax
Foreigners are those individual on whom the Foreign Acquisition and Takeover Act and
Register of Foreign Ownership of Agricultural Land Act are applicable. Foreigners are under
many obligations under these acts. Under section 4 of the act, it states that a person is considered
as a foreigner if he or she satisfies any of the condition prescribed. Which are individuals who
are not ordinarily resident in Australia, a corporation in which an individual is not ordinarily
resident and a foreign corporation hold substantial interest (Altshuler, Shay and Toder 2015).
Foreigners are those persons and individual who are not the citizen of Australia as they
belong to some other nationality. They belong to some other country visiting a different country.
When the Australian taxation matter is concerned about, it is important to understand the
territorial principle as Australia is a large country. It is ruled by a single federal government and
by the eight state territorial government. Australian taxation system is based on the self-
assessment and responsibility principle. Taxpayers need to file their tax return as per the
Australian Tax Office (ATO). They audit every tax return in order to check the truthfulness and
creativeness of the returns (Arnold, Ault and Cooper 2019).
Resident under Australia tax
A individual is a tax resident if they work in Australia for more than six month, having an
Australian domicile or staying in Australia for a long time. An individual can be declared as a
resident if he or she satisfies any of the four test specified by the Australian Tax Office or ATO.
A company becomes a tax resident when it is incorporated in Australia, business which is
managed and controlled by the Australia or having business in Australia whose shareholders are

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AUSTRALIAN INCOME TAX LAW AND PRACTICE
Australian resident. Assessable incomes that are subjected to taxation in Australia include wages,
salaries, business income, rents, interest and dividends. Deduction for the expenses is also
allowed on the income which are related to the income earning. This expense must be of capital
nature instead of personnel expenses. Gain from a business or capital gain tax is imposed on the
sale which is also considered as the part of the income tax (Blunden 2016).
Agricultural business
Agricultural business is a business that consists of farming, production, Management and
marketing of agricultural commodities consisting of livestock’s and crops. It is also known as the
Agribusiness as it consists of activities related to the farming and commercial activities related to
the farming. With the technology advancements and increase of market, agricultural business has
developed a lot. This business includes all activities from producing agricultural goods until
sending the goods to the market.
Agricultural business is an important part of the economy in a country as it plays a
strategic role in the economic development of the country. It contributes to the economic
prosperity in the country especially in the less developed countries. A country where per capita
income is low gives more emphasis on the agricultural industries. Various under developed
countries in the world are engaged in the process of economic development are putting their
emphasis on the agricultural business rather than industrialization. Both the industrial and
agricultural development is complementary to each other as they mutually support with their
respective outputs and inputs. Increase in the agricultural business contributes substantially to the
overall economic development.

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AUSTRALIAN INCOME TAX LAW AND PRACTICE
Residency
Tax treatment of resident
Taxation of the income is based on the principle of the residential status of an individual.
There are some basic rules which helps in determining the tax residence and the source of
income which helps in calculation of the tax chargeable on the income of the individual.
Taxation of the Australian resident is charged regardless to the source of income and residential
status. A non-resident to Australia has to pay tax on the income he or she earned in Australia.
Individuals are taxed according to the prescribed rate from the Australian Tax office. As the
individual company are also taxed but the difference is that the companies enjoy a fixed rate of
tax at the rate of 30 % of their income which (Devos and Zackrisson 2015).
Individual income taxation must include income tax and capital gain tax. In Australia
taxation starts when the income is more than the AUD $18200 and the rate of tax is charged
according to the income, which increases with the increase in income.
Residency test
There are four test in Australia which is prescribed by the ATO to check the residential
status. To become a resident an individual has to satisfy any one of the test as specified. This test
includes Reside test which is the primary test for tax residency. It is used to determine whether
the individual is a resident in Australia or not. These test checks the cause of presence of the
individual in Australia.
If the reside test does not satisfies than then this domicile test need to be done where the
individual permanent house is checked. If the permanent house is present in Australia then he or
she is classified as the Australian resident.