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BLO2206 - Taxation Law and Practice

   

Added on  2020-03-07

12 Pages2298 Words126 Views
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TAXATION LAW AND PRACTICE BL02206STUDENT ID [Pick the date]
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Table of ContentsPART A...........................................................................................................................................2Issue.............................................................................................................................................2Law..............................................................................................................................................2Application..................................................................................................................................6Conclusion...................................................................................................................................7PART B...........................................................................................................................................8Issue.............................................................................................................................................8Law..............................................................................................................................................8Application..................................................................................................................................9Conclusion.................................................................................................................................10References......................................................................................................................................101
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PART A Issue The major issue is to determine whether the taxpayer Robyn from Victoria University would betaxed as per Australian tax law for the tax year 2016/17. LawThe tax liability on the derived income of taxpayer mainly depends on the tax residency position.When a taxpayer is termed as Australian tax resident, then the income derived from domestic(Australian) source and from international sources would be taxed as highlighted in Section 6-5(2), ITAA 19971. Further, when the taxpayer is foreign tax resident then only the part of incomewhich is derived from Australian sources would be held for taxation as per the highlights ofSection 6-5(3), ITAA 19972. Therefore, it is critical aspect to find the tax residency position ofunderlying taxpayer. Section (1), ITAA 1936, comprises imperative provisions related to the tax residency status ofindividual taxpayer. Further, in order to determine the tax residency position of taxpayer taxruling TR 98/173 would be taken into consideration. When the taxpayer is residing in othercountry rather than Australia then the tax residency positions would be determined based onresidency tests. There are four main tests (Residency tests) describe in the TR 98/17 whichcomprises the requisite conditions that needs to be satisfied by the concerned taxpayer in order torecognized as Australia tax resident. It is essential that taxpayer must fulfill the conditions of atleast one of residency test4. 1ATO, INCOME TAX ASSESSMENT ACT 1997, <https://www.ato.gov.au/law/view/document?DocID=PAC/19970038/6-5>2Commonwealth Consolidated Acts: Income Tax Assessment Act 1997 –SECT 6.5 <http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s6.5.html>3Australian Taxation Office, TR 98/17-Income tax: residency status of individuals entering Australia [ (25 November 1998), <http://www3.austlii.edu.au/au/other/rulings/ato/ATOTR/1998/tr1998-017/>4Sadiq, Kerrie, et. al., Principles of Taxation Law 2015, (Pymont,Thomson Reuters, 2015), p.372
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Residency tests and their applicability are as given below:TestsResidency TestsApplicability1.Resides TestForeign Residents2.Superannuation TestAustralian Government’s officers3.Domicile TestAustralian Residents4.183 day TestForeign ResidentsDetermination of tax residency position when the taxpayer is foreign resident51.Resides Test There is no direct law or ruling available in Australian tax law, which describes the actualmeaning and implication of word “Resides.” Hence, the relevant case law and their verdicts aretaken into consideration in order to decide the tax residency through this test. Moreover, themain factors considered by the tax authorities are as highlighted below6:Purpose of visits and abode in Australia Frequency of visits Presence of any personal/professional/educational tie with Australia Social arrangement of taxpayer with Australia 5Deutsch, Robert, et. al., Australian tax handbook. (Pymont, Thomson Reuters, 2015), p.67-686 Ibid.3. 3
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