Australian Tax Law Case Study
Added on 2020-02-24
11 Pages2721 Words432 Views
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Running head: TAXATIONTaxationName of the StudentName of the UniversityAuthors NoteCourse ID
1TAXATIONTable of ContentsIssue:..........................................................................................................................................2Legislation:.................................................................................................................................2Application:................................................................................................................................2Resides Test:..............................................................................................................................3Residence as per the ordinary concepts:....................................................................................3Domicile and the permanent place of abode test:......................................................................4The 183 days test:.......................................................................................................................5Liability to tax:...........................................................................................................................6Income from Primary Production:.............................................................................................6Capital gains tax consequences:.................................................................................................7Conclusion:................................................................................................................................8Reference list:.............................................................................................................................9
2TAXATIONIssue: The current issue is based on the determination of tax consequences of Smith alongwith the determination of the residential status of Smith for moving out of Australia for thepurpose of employment. The study will also determine the capital gains consequences fromthe sale of subdivided land by Smith. Legislation: A.Subsection 6 (1) of the ITAA 1936B.F.C. of T. v. Jenkins 82 ATC 4098; (1982) 12 ATR 745C.F.C. of T. v. ApplegateD.Taxation ruling of 98/17E.Subsection 995-1 (1) of the ITAA 1997Application: According to the Domicile Act 1982 a person having the domicile in Australia will beconsidered as the resident of Australia unless it is understood by the administrator of taxationthat the permanent place of residence is outside of Australia (Barkoczy 2016). domicile isconsidered as the legal concept in determining the legal concept in determining the residentialstatus. An individual usually undertakes the domicile of their father at the time when they areborn. Most of Australians leaving Australia with the Australian passport in hand, willpreserve their Australian domicile and will continue to do so for a large period of time. Fromthe current study of Smith it is understood that Smith is an Australian resident and shall beconsidered as the Australian resident on assuming the fact that his permanent place ofdwelling is in Australia.
3TAXATIONAs evident from the current study Smith was employed in Australian firm however in theyear 2013 he decided to move to Hong Kong to work in the senior academic position. Thecontract contained the clause of terminating the contract of employment after the period oftwo and half years provided that if his family is not happy in living in a foreign country(Woellner et al. 2016). Therefore, to determine the residential status of Smith following testare conducteda.Domicile testb.Resides test c.183 days testResides Test:Residence as per the ordinary concepts: Reside test is done to ascertain whether or not a person residing in Australia under theordinary sense of the word. If the person is an Australian resident and lives in Australia, anindividual shall be regarded as the Australian occupant for the taxation purpose and theperson is not required to apply for any other form of test. In the present context of Smithresides test is applied to determine the residential status (Vann 2016). According to thetaxation ruling of 98/17 it provides guidelines in the understanding of the ordinary sense ofthe expression resides that fall inside the meaning of the term resident under subsection 6 (1)of the ITAA 1936. As defined under the section 995-1 of the Act Australian residentrepresent a person who is considered as the occupant of Australia for the purpose of the act1936. The definition defines that the term occupant or resident of Australia is within thecontext of the subsection 6 (1) of the ITAA 1936 of the Act. In determining the residentialtest of Smith it can be stated that the main test of deciding the residential position of a person
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