Australian Taxation Laws and Regulations

This assignment provides a detailed analysis of the Australian taxation system, covering various aspects such as capital gain tax, negative gearing, options for reforms, and transition arrangements. It also discusses the impacts of valuation and taxation operations on rights and regulations, and the implication of laws and regulations in enforcing legal environments. The assignment draws from relevant sources including books, journals, and online resources to provide a comprehensive understanding of the Australian taxation system.

TAXATION LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
QUESTION 1...................................................................................................................................3
Permanent Establishment............................................................................................................3
Business profits of an enterprise incorporated in UK have been taxed in Australia...................4
Contracts made by an individual agent has a permanent establishment.....................................4
QUESTION 2...................................................................................................................................5
Liability of Andrew to make taxation payments for his basketball skills...................................5
Liability of Andrew to make taxable payments on the income generated through rental income
.....................................................................................................................................................5
QUESTION 3...................................................................................................................................5
Analysing the case of Myer Emporium v FCT in demonstrating assessable income through
ordinary income or capital gain...................................................................................................5
QUESTION 4...................................................................................................................................6
Ascertaining case scenario and analysing deduction available for interest paid, on a loan
during preparatory stage of entity...............................................................................................6
Identifying the importance of incidental and relevant test..........................................................6
Determining the deduction can be allowed over the interest paid on loan after stoppage of
business activities........................................................................................................................7
QUESTION 5...................................................................................................................................7
Analysing the 3 different sources that will be an indicator of good tax.....................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Legislation imposed by various laws, acts, rules and regulations which are based on bringing
adequate control over all legal requirements in economy. Taxation in Australia is being executed
and administered by Australian Taxation Office (ATO) which has facilitated various guides and
details with analyzing the assessable income. In present report discussion will be based on
regulations incorporated by Australian legal authorities for giving the citizenship to individual or
corporation. Moreover, discussion will have been based on various cases and guidelines that will
provided to tax practitioners in analyzing their assessable income and suggesting exemption on
which they could apply.
QUESTION 1
Permanent Establishment
It is the framework on which a person or a business unit gets established in Australia and
carries out their activities. In this, profit generated by the business who is resident in the country
will have to make payment of taxes on income. Taxation will be levied on entity in the
residential country of another, as per the sources of income states in such locations (Edmonds,
2018). There will be taxable payments incurred on the dividends, interest and royalty paid to or
obtained through a different nation.
However, considering the act ITAA, 1997 where section 6-5(2), (3) and section 6-10(4),
(5) defines the process where, taxes will be payable on the income generated by a person or
corporation which is a residential in Australia. Similarly, the non- residents will make payments
of tax only on an Australian sourced income and therefore it is charged at higher rates. Thus, in
relation with permanent residency of an individual and business than there will be 3 tests which
are incorporated with this term. Domicile test insists that person has taken birth in Australia or an
organization has originated the business in country (Residency Test, 2018).
183 days’ test comprises condition that a foreign person entity needs to complete their 183
days in Australia, then the individual will be liable to take citizenship. Superannuation test
comprise fund which is generated by government and employer of an individual on the salaries
awarded to people. Thus, if a person is liable to have superannuation on their salaries than they
will be treated as resident and bound to make payments of taxes on their generated income.

Business profits of an enterprise incorporated in UK have been taxed in Australia
Considering the conventional agreement between UK, Northern Ireland and Australia, they
will not charge double tax on income or profit generated in these nations. Avoidance to double
taxation and prevention of fiscal evasion will not bring charged over the income or any capital
gains of business or an individual.
However, convention has been implicated on various sources of obtaining adequate income
such as personal income, profits from corporation, capital gains etc. Thus, in relation with
charging taxes on business which has retained profit by performing industrial activities in UK
will be exempted and will not being charged in Australia.
On a similar instinct, it can be said that if a firm carries a business in Australia and have
central management or execution in country, then it will liable for paying tax as he is resident in
nation. Therefore, there will be measurement on the revenue generated through various sources
of income which will go through process such as analysing the foreign income tax offset (UK/
AUSTRALIA DOUBLE TAXATION CONVENTION, 2017). In relation with, analysing the
convention among nation business which is performing activities in UK and have generated the
income there will be no taxable payment as the double tax will not being charged on such gains.
However, in relation with addressing the case of Esquire Nominees v FCT, on which the
directors were resident in Norflok Island which have addressed meeting in Melbourne. Thus, this
location comes in the territory of Australia on which they will not being charged double tax on
their income as well as on profits gathered by their business. Similarly, case of Pechey v FCT
taxpayer went to Cococ Island for 4 weeks, but he has to make payment of tax for a single time
as per norms in the conventional agreement.
Contracts made by an individual agent has a permanent establishment
Analysing the contractual agreements which has been made by agent or person will have
validity as if they were permanently resident to country. Considering Article 5.5 which deals
with “Dependent Agents” who has habitual rights and power in performing contract on tb behalf
of entity (Azam, 2017). Therefore, the permanent establishment exist even when there were no
abstractive place for organisation. Thus, business is being carried on by dependant agent.
On the other side, considering operational framework of “Independent Agent” who operates
the business activities on behalf of enterprise as a broker, individual agents or commissioned

agent. Thus, Article 5.6 represents all the norms and regulations of an independent agent who is
carrying on business on an individual perspective. Therefore, there will not be any impacts or
influences of the governmental rights and regulations on operational activities of Independent
Agent.
QUESTION 2
Liability of Andrew to make taxation payments for his basketball skills
Andrew has signed contract on which Australian Baseball League has offered him for
joining club and participating in Adelaide Chomp. Thus, he has been paid 45000 for the
following 3 months. However, as per the amendment and rules starts in the Australian Taxation
Office on which it has been considered that the player who is engaged in any contract with the
sport club or academy than they will be treated as employee (McLaren, 2017). However, if the
player is from another country or state that he has to apply for foreign resident withholding to the
rates that will be applicable to the employees. Moreover, in this regard it can be said that Andrew
has to make payment for tax levied on $45000, as it has been paid to players as they are
considered to be employee of that particular organisation.
Liability of Andrew to make taxable payments on the income generated through rental income
Analysing the liabilities of Andrew in making taxable payments on the income generated
through rental property on which it can be said that the property has been stated in Australia and
he will have earning as per using the property for earning (Burton, 2017). Therefore, in relation
with such case it can be said Andrew has to make payment on the taxes on the rental income
which was obtained by him during the period.
QUESTION 3
Analysing the case of Myer Emporium v FCT in demonstrating assessable income through
ordinary income or capital gain.
Considering the case of Myer Emporium v FCT on which the tax practitioners are intended
to enter into any transactional activities. It brings benefits in making the profitable gains and
such income have been treated as extraordinary. It will be when judged against taxpayer’s
ordinary course of corporate activities.

However, considering the profit-making scheme, which will not be exit because of capital
assets has been disclosed as revenue or in business method like securing best price. Therefore,
there will be requirement of looking deeper into the taxpayer’s intention.
QUESTION 4
Ascertaining case scenario and analysing deduction available for interest paid, on a loan during
preparatory stage of entity.
This was known to be an appeal by a taxpayer company in which Board claimed that
firm’s charges was not deductible. It stated that expenses which were occurred were deductible
as well as it was sought or offset all those losses that occurred against all the investment income
between the year 1966-67. All the expenses which occurred were related to local travel and
overseas, legal as well as accounting, testing of raw materials and professional fees for
conducting feasibility studies by several experts (Deutsch, 2018). It was stated by commissioner
that expenses incurred by taxpayer and was not deductible under two limbs of sec. 51(10) and his
appeal was dismissed because from all evidences it was revealed that planning of project was
never proceeded and activities which were taken were completely preliminary. The expenses
which incurred were due to actual production of income which was assessable. Thus, it can be
said that amount was claimable if it lied under 1st limb of section 51(1).
Identifying the importance of incidental and relevant test
With reference to Ronpibon Tin NL v. Federal Commissioner of Taxation (1949) 78 CLR
47, appealing person was not liable for mining company which was registered in Victoria and
sustained due to outbreak of war with Japan. The companies were completely cut off from their
access to mines. Both firms have derived their revenue from operations of mining which were
prior to mine and fallen under hands of enemy. The organization which was situated in
Melbourne has expenditure that incurred in central administration. While having assessment, the
commissioner deducted income that was assessable and treated every balance as taxable income
(Azam, 2017). It was similar method of assessing that has been adopted in previous years, when
income was completely derived from other mining operation. Apparently, company claimed that
complete expenditure of Melbourne office was incurred in obtaining assessable income with the
motive of gaining income. Therefore, it was very important to assess every criterion to
acknowledge incurred tax and associated income.

Determining the deduction can be allowed over the interest paid on loan after stoppage of
business activities.
According to this case FC of T v. Brown 99 ATC 4600; (1999) 43 ATR 1, federal court has
stated that, taxpayer was titled for deduction in the interest that was incurred for a particular loan,
which were taken for the purpose of investing in a project of blueberry. Also, repayment of
associated loan was provided for making out proceeds of various sales which were associated
with products. There are various claims which were done for deductions for particular amount of
interest in the year of 1998, 1999, 2000 and 2001 income years.
With regards to equal interest in a particular court which provides response for
commissioning various argument. Thus, on which taxpayer was not having on the business of
blueberry growing business (McLaren, 2017). It was true that there was no evidence that guest
was every visited in blueberry farm or had any participation in a particular business for signing
documents such as paying of money, returning income as well as claiming deduction.
QUESTION 5
Analysing the 3 different sources that will be an indicator of good tax
Considering the capital gain tax policies on which analysing various norms and regulation
which will be adequate for measuring the operations and building profitable gains to business.
However, there can be influences of three different sources which will be adequate for defining
good indication for capital gain tax such as negative gearing, options for reforms and transition
arrangements (Burton, 2017). Acknowledgement of various operations which will be helpful in
reducing the CGT levied on various transactional operations. Capital gain taxes will be
administered in having fruitful exemption over the revenue and operational wants and needs of
professionals. These are the charges which were usually charged on sale and purchase of assets.
There are some of the assets which does not have any impacts in the exemption and changes in
each operations.
CONCLUSION
On the basis of above report it can be said that there are huge variations and determination in
legislative requirements of the Australian Taxation Officers. Considering the impacts of such
valuation and the taxation operations on which influences of various rights and regulations bring
ethical execution on all legal terms and activities. Moreover, implication of various laws and
regulation which will have impacts better enforceability and execution of the legal environment.

Regulation will be made and come into force for better controlling operations and management
of each issues.

REFERENCES
Books and Journals
Azam, R., 2017. Minimum Global Effective Corporate Tax Rate as General Anti-Avoidance
Rule. Colum. J. Tax L.. 8. p.5.
Burton, M., 2017. A Review of Judicial References to the Dictum of Jordan CJ, Expressed in
Scott v. Commissioner of Taxation, in Elaborating the Meaning of Income for the
Purposes of the Australian Income Tax. J. Austl. Tax'n. 19. p.50.
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.
Deutsch, R., 2018. Senior tax counsel's report: Superannuation: A new, simple 15/15/0
regime. Taxation in Australia. 52(7). p.357.
Edmonds, R., 2018. Resource Capital Fund IV LP: The issues on appeal?. Taxation in
Australia. 53(1). p.22.
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.
Online
Residency Test. 2018. [Online]. Available through :<
https://www.ato.gov.au/Individuals/International-tax-for-individuals/Work-out-your-tax-
residency/Residency-tests/ >.
PDF
UK/ AUSTRALIA DOUBLE TAXATION CONVENTION. 2017. [PDF]. Available through :<
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/
attachment_data/file/496636/uk-australia-dtc_-_in_force.pdf>.