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Australian Taxation System Assignment

   

Added on  2020-10-23

11 Pages3215 Words178 Views
TAXATION

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................11. Advising Minh's with context of tax purpose with application of legal precedent............12. Explaining Minh's residency status impact assessability of Malaysian investment incomeand business............................................................................................................................3QUESTION 2...................................................................................................................................5ISSUES:..................................................................................................................................5RULES AND LEGISLATION...............................................................................................5APPLICATION OF LAWS AND FACTS............................................................................6CONCLUSION......................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONThe Australian taxation system is combination of direct and indirect taxes levied throughboth state and Commonwealth government, depends on tax type. Generally, Australian taxationis based on model of self assessment where taxpayers are highly responsible for purpose oflodging own return of taxation. The present report will give brief discussion about keyadministrative components of Australian Taxation system along with their basic principles ofAustralian income tax, goods and service tax and fringe benefits taxation legislation. In thisaspect, there will be identification of issues and outlining relevant cases and legislation alongwith evaluation of facts and law through ATO and position of taxpayers. Furthermore, this reportwill discuss, analyse and resolve issues on basis of determination of allowable deductions andassessable income.QUESTION 11. Advising Minh's with context of tax purpose with application of legal precedent.Issue: Minh would be regarded for tax purpose or not for being and Australian residentwith its explanation of legal precedent. Furthermore, residency status of Minh will impactassessability of his investment income and Malaysian business or not.For identifying residency for purpose of tax, there are various tests for undertaking it asfirst is resides test. In this, if one live in Australia and replicated as Australian resident for tax sono test will be applied. Further, resides test is not satisfied, then there will be application of threestatutory test such as domicile, 183 day and superannuation test. Minh fails to resides test andthen there will be application of statutory test.Ruling:The 183 day test is one of statutory test where Minh has spent 120 days in Australia.From 30 June 2018, he has not established and not even started business in Australia. With thiscontext, he failed to 183 day test and other two tests are superannuation and domicile test(Residency tests, 2019). Superannuation test is framed for ensuring employees of commonwealthgovernment who are operating in Australian posts overseas and directly considered as Australianresidents. In this case, behaviour of Minh during in Australia is traced for organising economic anddomestic affairs as contributing life as very influential factor for identifying residency status. Forconsideration of Australia resident, any regular activities are similar to behaviour prior to1

entering Australia (Bridgen, 2019). With the case of residency, condition is replicated withregards of each relevant circumstances and facts. There should be account of numerous factorsfor determining any reside such as:Family and business/ employment tiesSocial and living arrangements.Intention or purpose of presenceLiving and social arrangements.The presence of family in Australia might indicate about residence in Australia but helives in Kuala Lumpur and doesn't visit in Australia in financial year and maintains social andcultural arrangements in Malaysia. With context to intention there was absence of any opinion tosettle on permanent aspect as his behaviour is reflected in contrast to his initial decision. Minh'sfamily was staying in Australia so he was considered as foreign resident to Australia.In the similar context, there is other factor to identify status of Minh which is physicalpresence in Australia. For purpose of residing in Australia, there is requirement of displayingbehaviour over specific duration which is directly consistent for residing like habit, degree ofcontinuity and routine. The period one spend is not considered as decisive for purpose ofidentifying status of residency. Usually six months is actual time for deciding that behaviour isconsistent for residing as it doesn't mean one lives for less than six months is replicated asforeign resident and more than this are Australian resident (Residency – the resides test, 2019).Simultaneously, it is mix of multiple factors of time and behaviour during in Australia willidentify residency status.Case law: DEMPSEY v FC OF T, Administrative Appeals Tribunal of Australia, 29May 2014The Taxpayer Dempsey was directly employed on construction project as projectmanager in Saudi Arabia with employment contract of indefinite duration. With context of thisduration, he lived in Saudi Arabia and contract lasted for three years. The main question wasfrom AAT that Mr Dempsey was Australian resident for income years of 2009 to 2010 so in thiscontext, his assessable income is comprised and derived through employment in Saudi Arabia forthose particular years (Dempsey and Commissioner of Taxation, 2019).The decision by Administrative Appeals tribunal was satisfied that taxpayer wasdomiciled in Australia with relevant years of income as he was not Australian resident during2

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