Taxation Law
Added on 2023-03-17
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Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Taxation Law
Name of the Student
Name of the University
Authors Note
1TAXATION LAW
Part 1
Issue
The issue is to determine the tax residency status of Arun Sharma. Whether he is to be
considered as a resident for tax purpose in Australia for the FY 2018-1019 is the first issue.
Rule
There are 4 types of test which can be deployed to analyze the residency status of a person.
The common law resides tests is an appropriate way to analyze the Tax residency of a person
who has come to Australia from a foreign country. A person is to be treated as an Australian
resident for tax purpose if he resides in Australia under the ordinary meaning of the word
reside. A person is residing in Australia depends on certain factors established in Taxation
Ruling 98/17. These factors include, physical presence of the person in Australia, the
existence of social, economic and family ties, regularity and frequency of visits, the intention
and purpose of being in Australia, employment ties, and permanent being present in
Australia.
Application
It has been provided through the facts that Arun Sharma, originally a student from India,
graduated in Accounting from the University of Sydney at the end of 2007. He is married on
20 December 2008 with another young Indian who graduated in accounting from the
University of New South Wales Mr Sharma is a financial controller with Bell Computers Pty
Limited with operations in 15 different locations around Sydney. These facts signify that the
above factors are satisfied. This is because he is being living and working in Australia for a
significant time which means that he has the intention of staying in Australia. He is also
having his wife in Australia which means that he is having social and family ties in Australia.
He is working for with Bell Computers Pty Limited with operations in 15 different locations
Part 1
Issue
The issue is to determine the tax residency status of Arun Sharma. Whether he is to be
considered as a resident for tax purpose in Australia for the FY 2018-1019 is the first issue.
Rule
There are 4 types of test which can be deployed to analyze the residency status of a person.
The common law resides tests is an appropriate way to analyze the Tax residency of a person
who has come to Australia from a foreign country. A person is to be treated as an Australian
resident for tax purpose if he resides in Australia under the ordinary meaning of the word
reside. A person is residing in Australia depends on certain factors established in Taxation
Ruling 98/17. These factors include, physical presence of the person in Australia, the
existence of social, economic and family ties, regularity and frequency of visits, the intention
and purpose of being in Australia, employment ties, and permanent being present in
Australia.
Application
It has been provided through the facts that Arun Sharma, originally a student from India,
graduated in Accounting from the University of Sydney at the end of 2007. He is married on
20 December 2008 with another young Indian who graduated in accounting from the
University of New South Wales Mr Sharma is a financial controller with Bell Computers Pty
Limited with operations in 15 different locations around Sydney. These facts signify that the
above factors are satisfied. This is because he is being living and working in Australia for a
significant time which means that he has the intention of staying in Australia. He is also
having his wife in Australia which means that he is having social and family ties in Australia.
He is working for with Bell Computers Pty Limited with operations in 15 different locations
2TAXATION LAW
around Sydney, which means that he also has employment tie in Australia. Thus he is an
Australian resident for tax purpose and has to pay tax on income earned world-wide to the
ATO.
Conclusion
he is an Australian resident for tax purpose and has to pay tax on income earned world-wide
to the ATO.
Net Tax Payable for Arun Sharma
Gross salary has been received by Arun for working for the employer. This is a form of
income which is earned from an ordinary source of income which is employer. As stated in
section 6-5 of ITAA97 income earned from ordinary sources is ordinary income. Thus the
gross salary of $85000 is assessable.
Car benefit for work purpose is given to Arun by the employer which is worth $2190. This is
assessable income under section 15-2 as it is an allowance. An allowance is not considered as
a fringe benefit so the amount will also not fall under the ambit of the FBTAA 1986.
The gift of the Sony TV worth 6000 not assessable income as it is a gift and has no nexus
with income producing activity scott v FCT. If an income is not gained in relation to the
employment or services provided by the employee it is to be considered as a wind fall gain
and not an ordinary income which is not assessable.
The Gift for wedding anniversary worth $2000 is not assessable income as it is a gift and has
no nexus with income producing activity scott v FCT. If an income is not gained in relation to
the employment or services provided by the employee it is to be considered as a wind fall
gain and not an ordinary income which is not assessable.
around Sydney, which means that he also has employment tie in Australia. Thus he is an
Australian resident for tax purpose and has to pay tax on income earned world-wide to the
ATO.
Conclusion
he is an Australian resident for tax purpose and has to pay tax on income earned world-wide
to the ATO.
Net Tax Payable for Arun Sharma
Gross salary has been received by Arun for working for the employer. This is a form of
income which is earned from an ordinary source of income which is employer. As stated in
section 6-5 of ITAA97 income earned from ordinary sources is ordinary income. Thus the
gross salary of $85000 is assessable.
Car benefit for work purpose is given to Arun by the employer which is worth $2190. This is
assessable income under section 15-2 as it is an allowance. An allowance is not considered as
a fringe benefit so the amount will also not fall under the ambit of the FBTAA 1986.
The gift of the Sony TV worth 6000 not assessable income as it is a gift and has no nexus
with income producing activity scott v FCT. If an income is not gained in relation to the
employment or services provided by the employee it is to be considered as a wind fall gain
and not an ordinary income which is not assessable.
The Gift for wedding anniversary worth $2000 is not assessable income as it is a gift and has
no nexus with income producing activity scott v FCT. If an income is not gained in relation to
the employment or services provided by the employee it is to be considered as a wind fall
gain and not an ordinary income which is not assessable.
3TAXATION LAW
The token honourarium for the year worth $880 is not assessable income as it is a gift and has
no nexus with income producing activity scott v FCT. If an income is not gained in relation to
the employment or services provided by the employee it is to be considered as a wind fall
gain and not an ordinary income which is not assessable.
The $12750 – Work related travel expenses is not deductible under section 8-1(1) and 8-1(2).
This is because travel expenses are considered to be private in nature and are therefore not
deductible expenditure.
Investment property –
The $850000 in relation to the purchase of the property is Cost base element 1 section 110-
25(2) as the property is a Capital asset for section 108-1. Stamp duty 33740, 2500, 3000 –
element 2 110-25(3)- all this not deductible expenditure.
Rest all expenses deductible expenditure as property is producing income. This is in relation
to section 8-1(1) and 8-1(2). These sections provided that any expenses which have been
gained in relation to production of the assessable income are deductible expenses if they are
not for a private use or capital in nature (Woellner et al. 2010).
The $2500 advise deductible under section 40-88. This is because the section allows for
deductibility of expenditure incurred gaining the assessable income by forming a business.
$12000 from ABC is Income from business. This is a form of income which is earned from
an ordinary source of income which is employer. As stated in section 6-5 of ITAA97 income
earned from ordinary sources is ordinary income. This income is half assessable as the
business is in partnership.
$12000 from SIR is Income from business. This is a form of income which is earned from an
ordinary source of income which is employer. As stated in section 6-5 of ITAA97 income
The token honourarium for the year worth $880 is not assessable income as it is a gift and has
no nexus with income producing activity scott v FCT. If an income is not gained in relation to
the employment or services provided by the employee it is to be considered as a wind fall
gain and not an ordinary income which is not assessable.
The $12750 – Work related travel expenses is not deductible under section 8-1(1) and 8-1(2).
This is because travel expenses are considered to be private in nature and are therefore not
deductible expenditure.
Investment property –
The $850000 in relation to the purchase of the property is Cost base element 1 section 110-
25(2) as the property is a Capital asset for section 108-1. Stamp duty 33740, 2500, 3000 –
element 2 110-25(3)- all this not deductible expenditure.
Rest all expenses deductible expenditure as property is producing income. This is in relation
to section 8-1(1) and 8-1(2). These sections provided that any expenses which have been
gained in relation to production of the assessable income are deductible expenses if they are
not for a private use or capital in nature (Woellner et al. 2010).
The $2500 advise deductible under section 40-88. This is because the section allows for
deductibility of expenditure incurred gaining the assessable income by forming a business.
$12000 from ABC is Income from business. This is a form of income which is earned from
an ordinary source of income which is employer. As stated in section 6-5 of ITAA97 income
earned from ordinary sources is ordinary income. This income is half assessable as the
business is in partnership.
$12000 from SIR is Income from business. This is a form of income which is earned from an
ordinary source of income which is employer. As stated in section 6-5 of ITAA97 income
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