Taxation and Residency Laws in Australia

The assignment delves into the intricacies of taxation laws and residency tests in Australia. It covers various topics such as sugar-sweetened beverage taxation, public preferences for combating obesity, Australian taxation of offshore hubs, and more. The document also includes references to books, journals, online resources, and case studies, making it a comprehensive resource for students studying taxation law in Australia.

TAXATION LAW OF
AUSTRALIA

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Question 1...............................................................................................................................1
Question 2...............................................................................................................................5
Question 3...............................................................................................................................7
Question 4...............................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The legislations, rules and act developed by Australian Taxation Office in relation with
making an appropriate legislative environment. Therefore, the motive of this authority is to
present the favourable legislations in a nation that will be helpful in reducing the manipulation as
well as bringing adequate jurisdiction to any of the cases. In the present report, there will be
discussion based on various cases and legal advices to the client which were involved. There will
be influences of all the mandatory sections, rulings as well as case laws that will be fruitful in
providing the appropriate judgement to any issues.
Question 1
A Lease negotiation:
Issues:
 In this case where landlord leases his flat to a tenant on which his has acquired a lump
sum amount of $15000 as per lease negotiations.
laws:
 DM & Longbow Pty Ltd v Willoughby City Council (2017)
Application:
In consideration with the case where landlord leases his flat to a tenant on which his has
acquired a lump sum amount of $15000 as per lease negotiations. Moreover, payment received
by the landlord is before starting of lease period. In accordance with the lease negotiation, it can
be said that there will be payment of GST and Income tax over the generated income by a
landlord (Comans, Moretto and Byrnes, 2017).
Conclusion
Thus, it is an income or revenue gathered by the landlord which is even before starting of
the lease but here, he has gathered the revenue which means that he has to make taxable payment
from such gains. However, this case is relevant with the case of DM & Longbow Pty Ltd v
Willoughby City Council (2017)1.
B Insurance claims:
1 DM & Longbow Pty Ltd v Willoughby City Council (2017) NSWLEC 173
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Issues:
 In this case of Cherly she has owned the warehouse which was accidentally caught into
fire. Thus, on which the insurance company has made her payments of $500000.
laws:
 section 54 of the Australian Insurance Contracts Act
 Pantaenius Australia Pty Ltd v Watkins Syndicate
Application:
In accordance with the case of Cherly she has owned the warehouse which was
accidentally caught into fire. Thus, on which the insurance company has made her payments of
$500000. Moreover, Cherly will not have to make payments for the taxable income incurred in
this case. Therefore, these are the cases which are fully exempted and deductible expenses. Thus,
Cherly had loss due to fire on her business so it will not be taxable to her.
Conclusion
Moreover, it can be said that Cherly is not being liable to make the payments of the gains
she has from insurance company (Basu and Madsen, 2017). There will be legislations and
judgements based under section 54 of the Australian Insurance Contracts Act2. Moreover, this
will be relevant with the case of Pantaenius Australia Pty Ltd v Watkins Syndicate3.
C Boris and tax agent:
Issues:
 In this case of Boris and his tax agent for making the payments of the previous lodgement
of $500.
laws:
 Section 60 of Tax Agent services Act, 2009
 Kelly v Tax Practitioners Board
2 Australian Insurance Contracts Act 1984 (Cth) (ICA)
3 Pantaenius Australia Pty Ltd v Watkins Syndicate 0457 at Lloyds
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 CARTER v TAX PRACTITIONERS BOARD, Administrative Appeals Tribunal of
Australia
Application:
In relation with the case of Boris and his tax agent for making the payments of the
previous lodgement of $500. Therefore, these are the payments which will be concession by
Australian taxation Office. Therefore, they have to make payments of $800 for the preparation of
lodgement. Similarly, there are situations on which they can be applicable to apply the
concessional due date (Tax agent lodgment program 2017–18, 2018). History of late or non-
lodgement of tax returns, non-payment of liabilities etc. Therefore, here the payment of $500 as
the tax return has to be taxable in the upcoming payment of the income taxes (Lai and et.al.,
2018).
Conclusion
Under section 60 of Tax Agent services Act, 2009. Thus, the case is relevant with the
case of Kelly v Tax Practitioners Board as well as CARTER v TAX PRACTITIONERS
BOARD, Administrative Appeals Tribunal of Australia4. On the other side, an individual hire an
agent which will help them in making the taxable payments as well as funnel them in terms of
making the adequate payments to such taxes. It will be helpful to them as they indicate the tax
practitioners to make the income tax returns. Therefore, in relation with this case there will be no
exemption over the charges made to the agent on post lodgements.
D James and lunch charges:
Issues:
 James is working in a hospital which used to purchase the lunch from cafe in hospital.
Thus, he has made the payment for $2000
laws:
 TR 2017/D6
Application:
4 CARTER v TAX PRACTITIONERS BOARD, Administrative Appeals Tribunal of Australia, 21 April 2017
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James is working in a hospital which used to purchase the lunch from cafe in hospital.
Thus, he has made the payment for $2000. Therefore, in relation with the ATO legislations, it
can be said that there is and allowance to the employees for the food and drink up to $300.
Moreover, here James can claim the charges as the annual limit is of $3600 and the expenses
incurred by James is for $2000.
Conclusion
Thus, it indicates that James can claim the meal expenses. On the other side, it will not
affect the hospital in making the taxable payments such as providing the meal facilities to their
employees which will be denoted as deductible expenses (Fry, 2017). There will be implication
of the tax ruling as TR 2017/D6 which determines the deduction for employees in terms of travel
and meals. Moreover, in relation with such taxation ruling, it can be said that James can claim
the expenses.
E. Hiring the venue and refreshment charges:
Issues:
 Frances has initiated a new business on which she has launched and hired restaurant and
has invited 100 potential clients
laws:
 TR 97/17
Application:
Frances has initiated a new business on which she has launched and hired restaurant and
has invited 100 potential clients. Therefore, due to these there has been expense of $5000 in
terms of selecting the venue as well as charges of food and beverages. Thus, these are the
charges and expenses which were incurred before the initiation of the business. Therefore, with
respect to this, it can be said that these are the activities which will be treated under
entertainment. Moreover, the exemption is being awarded as if the expenses will be within the
limit (McLaren, 2017).
Conclusion
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Thus, in relation with the taxation rulings of ATO, it can be said that there will be
exemption of $125 per head. Similarly, Frances has invited 100 clients which stated that the
12500 of the limited expenses will be exempted (Common entertainment scenarios, 2018). Thus,
the overall expenditure incurred by her is $5000 which is under the limit of the expenses. Hence,
she can claim the exemption over her expenses. It will be denoted as the fringe benefits as peer
taxation rulings of TR 97/17.
Question 2
Issues:
 Australian residence or non residence
laws:
 section 995-1
 Gregory v DFC (1937)
 TR 98/17
Application:
As per Income Tax Assessment Act (1936), section 995-1, an Australian resident implies
for the person who resides in Australia. By taking into account the case law of Gregory v DFC
(1937), it can be depicted that Australian taxation law should be given the same which had
received in England. Taxation ruling TR 98/17 presents circumstances or situations which entails
whether individuals entering Australia comes under the category of resident or not. ATO
presents that the manner in which domestic and economic affairs are organized help in
determining residency status (Taxation Ruling, 2018). By doing assessment, it has found that an
individual is considered as an Australian resident if his / her behaviour in line with before
entering in Australia (Weier, 2017). Along with this, there are several factors which need to be
kept in mind while determining residential status such as an intention, employment ties,
maintenance and location of assets as well as social and living arrangements.
Conclusion
In addition to this, to reside in Australia, there is a need to display behaviour over the
time frame. Such status must be in line with the people residing there such as a degree of
continuity, routine and habit. Guidelines revealed by ATO clearly shows that when one
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individual stays in Australia for more than 6 months period, then he is considered as an
Australian resident from tax purpose.
Such ruling is applicable on the most of individuals entering Australia includes:
 Migrants
 Academics teaching or studying in Australia
 Students studying in Australia
 Visitors on holiday
 Workers with pre-arranged employment contracts (Residency tests, 2018).
On the basis of Australian tax laws and legislation, test which is undertaken for checking
or evaluating residential status termed as resides test. Specifically, there are mainly three tests
which provide assistance in determining whether an individual is held liable from tax purpose or
not (Comans, Moretto and Byrnes, 2017). Domicile test presents that an individual comes under
the category of an Australian residents unless it is proved that permanent place of adobe accounts
for outside Australia.
Further, 183 days test is also highly effectual which in turn provides high level of
assistance in evaluating the residential status of individuals. On the basis of such test, when
individual is present in Australia for more than half of the income year whether continuously or
with breaks irrespective of having no intention in relation to taking up residence here (Residency
- the resides test, 2018). In other words, it can be depicted that an individual comes under the
category of an Australian resident if he / she has completed 183 days in Australia.
Income tax rules of Australia presents that superannuation test is also highly prominent
which in turn highly applicable on government employees (Basu and Madsen, 2017). Hence, it
can be depicted that superannuation test is applicable on employees working at Australian Post
overseas and members under CSS and PSS schemes.
Given case situation presents that Usman held a French passport at all relevant times. He
held an Australian which in turn permits him to work over there. During the time period, he
worked as an engineer in Australia. In the accounting year 2015, Usman returned top France and
worked over there. In the context of tax year 2016-17, he worked in Australia. Hence, by taking
into account current situation or working aspect of Usman it can be presented that he comes
under the category of an Australian resident (Lai and et.al., 2018). Moreover, in the tax year
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2016-17, Usman has spent more than 183 days which shows that he is liable from the tax
perspective.
Question 3
Issues:
 Norman has purchased the residential house for 6 rooms in 2016 amounted to $700000
on which he has made payments of 70000 as a stamp duty.
 He has made the expense of 100000 as to have hairdressers business which will cover the
2 rooms from the residence
laws:
 D'Emden v Pedder (1904)
 Capital Gain tax
Application:
In relation with analysing the capital gains tax payable by Norman there is need to have
gains from the property. Moreover, he has purchased the residential house for 6 rooms in 2016
amounted to $700000 on which he has made payments of 70000 as a stamp duty. Thereafter, he
has made the expense of 100000 as to have hairdressers business which will cover the 2 rooms
from the residence.
Conclusion
Therefore, in terms with analysing such case it can be said that he will have to make
payment of Capital gains over the property he has used for business or income purpose. Thus, the
remaining property is for his residence will not required to have taxable payments over it (Fry,
2017). Therefore, he has to make the taxable payment over $100000 which was invested as to
develop the hairdresser business into the premises (Weier, 2017). Moreover, this case has the
similarity with the case of D'Emden v Pedder (1904).
Question 4
Issues:
 Tax offsets.
laws:
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 Section of 160AAAA
 ITAA 1936
 Section 61-10 of ITAA 1997
 section 79A
Application:
The research and development cost is offset by ATO (Australian Taxation Office) in
certain cases. Avon has entered into contract with Central Queensland University to undertake
research amounting to $500,000 in the year 2016 in month of June. The project is required to
finish-off within one year. As per the guidelines issued by ITAA 1936 and ITAA 1997. Starting
with ITAA 1936 that have various sections regarding the tax offsets. The section of 160AAAA
of the Act clarifies that tax offset is measured for low income persons and also the aged ones
(McLaren, 2017).
Tax offset means rebate in tax liability is provided on the assessable income of people.
Avon can get this facility by complying with the provision of the Act. The tax offsets on the
research and development are available at the rates of 43.5 % or 38.5 % on costs of contract.
Here, 43.5 % has been into account to calculate income tax deduction. This clarifies that Central
Queensland University should provide this percent of tax offset on the services provided to
Avon. It can be advised to the client that on the amount of $500,000, company can get tax offset
of $217500. This is calculated by taking 43.5 % of contract amount in the best possible manner.
Thus, income tax deduction may be made in this regard so that Avon can easily avail this
provision in effectual manner.
Conclusion
Moreover, it is required that ATO should assess this amount so that income tax liability
burden may be reduced with much ease. In accordance to the provision of ATO, claim can be
made by Avon on the contract amount in the research and development purpose. The tax
incentive is based on self-assessment and as such, Avon is required to claim this amount by
complying with provisions of the Taxation law in relation to this context. First step is required
that firm should be registered with Department of Industry, Innovation and Science.
Furthermore, assessable income must be presented to ATO and claim should be listed in it
regarding the tax offset. The records of company are needed such as financial statements in order
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to clarify whether income assessed is correct or not. This will also impart transparency on the
research and development claim of Avon whether the same is assessed as per the provisions or
not. Thus, deductible rate is required to be furnished by company and ATO can easily assess
transparency in the best possible manner (Offsets and rebates. 2017).
Tax offsets can be availed as the contract amount is less than the limit sealed by ATO. As
per the provision, research and development tax incentive can be availed when total turnover is
less than $20,000,000. This means that company may easily get this benefit as amount is less and
as such, company is advised that claim amount can be garnered as it is in accordance of rules of
ATO. Avon can avail this amount on the income assessed (Lai and et.al., 2018). Tax offset used
in ITAA 1997 is much generic term while ITAA 1936 describes this as rebate. Section 61-10 of
ITAA 1997 clarifies who is entitled to receive the benefit of tax offset. On the other hand, ITAA
1936 section 79A guides to rebates allowed to company and business on income tax. Thus, Avon
can avail this tax offset benefits and as such, net income tax payable should be paid by it. This
means that the calculated amount at the rate of 43.5 % should be deducted and is advised to
Avon to pay its tax liability after deduction of the amount.
CONCLUSION
On the basis of above analysis, it can be said that there are various legislations, rulings
and acts which were imposed by the federal registrar of legislation in consideration with
providing the adequate jurisdiction and legal advices to the citizens. Moreover, in relation with
the Income Tax Assessment Act 1997, there are various amendments and laws which in turn will
be helpful in managing the taxation environment in the country. Therefore, in the present report,
there has been influences of various cases and clients as per their requirements and the remedies
in the taxation analysis. Similarly, they have been awarded with the adequate legal advices with
consideration of all the laws and regulations.
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REFERENCES
Books and Journals:
Basu, S. and Madsen, K., 2017. Effectiveness and equity of sugar-sweetened beverage taxation.
PLoS medicine. 14(6). p.e1002327.
Comans, T., Moretto, N. and Byrnes, J., 2017. Public preferences for the use of taxation and
labelling policy measures to combat obesity in young children in Australia. International
journal of environmental research and public health. 14(3). p.324.
Fry, M., 2017. Australian taxation of offshore hubs: an examination of the law on the ability of
Australia to tax economic activity in offshore hubs and the position of the Australian
Taxation Office. The APPEA Journal. 57(1). pp.49-63.
Lai, F. Y. and et.al., 2018. Measuring spatial and temporal trends of nicotine and alcohol
consumption in Australia using wastewater‐based epidemiology. Addiction.
McLaren, J., 2017. The Economic Development of Northern Australia: A Critical Review of the
Taxation Benefits and Incentives Both Past and Present and the Potential Taxation
Options for the Future. J. Australasian Tax Tchrs. Ass'n. 12. p.1.
Weier, M., 2017. Commentary on White et al.(2017): Adolescent drinking and exposure to
advertising—behaviour does not occur in a social vacuum. Addiction. 112(10). pp.1752-
1753.
Online:
Common entertainment scenarios. 2018. [Online]. Available through:
<https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/In-detail/FBT-and-
entertainment-for-small-business/?page=9>.
Tax agent lodgment program 2017–18. 2018. [Online]. Available through:
<https://www.ato.gov.au/Tax-professionals/Prepare-and-lodge/Tax-agent-lodgment-
program/>.
Residency tests. 2018. [Online]. Available through:
<https://www.ato.gov.au/Individuals/International-tax-for-individuals/Work-out-your-tax-
residency/Residency-tests/>.
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Residency - the resides test. 2018. [Online]. Available through:
<https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/
Residency/Residency---the-resides-test/>.
Taxation Ruling. 2018. [Online]. Available through:
<https://www.ato.gov.au/law/view/document?Docid=TXR/TR9817/NAT/ATO/00001>.
Offsets and rebates. 2017. [Online]. Available Through:
<https://www.ato.gov.au/business/income-and-deductions-for-business/concessions,-
offsets-and-rebates/offsets-and-rebates/>.
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