Australian Taxation Laws: Case Study & Assignment

Added on - 29 Apr 2020

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TAXATION
TABLE OF CONTENTSQUESTION 1.............................................................................................................................11) Determine the residency status of Daniel for tax purpose for 2016/2017..........................12) Calculate the tax payable by Daniel for 2016-17...............................................................2QUESTION 2.............................................................................................................................31) Analyze the transactions in determining whether there any FBT or income taximplications............................................................................................................................32) Calculate FBT liability for the year...................................................................................5REFERENCES...........................................................................................................................9
QUESTION 11) Determine the residency status of Daniel for tax purpose for 2016/2017Residency status plays a significant role in determining the residency status of anindividual while assessing the tax liabilities incurred on an individual in a particular year.There are three residency tests required to pass by a person to get the status of resident ornon-resident for taxation purpose in evaluating the tax liabilities in the Australia.1Incomeearned by Daniel in the current case is assessed on the basis of determined residency status ofhim as different tax slabs are there for resident individual and non-resident individual in theAustralia.Domicile tests-It is one of the tests used by the Australian taxation officer to assessthe tax obligation incurred on a person.2This states that a person is an Australianresident if they permanently reside in the Australia unless the permanent place of theperson is outside the Australia.183 days tests-Another tests used to determine the residency status of a person foranalyzing the tax liabilities of an individual. This test helps in determining theresidency status of a person.3If a person stays in the current country for 183 days orhalf of the income year that is 6 months spent in the Australia is count as one of theresident of this place. Relaxation has mentioned in the act and its tax determinationprinciples about the determination of the residency status of a person is that totalperiod of 183 days spent by a person in a country can be of complete 183 days or inbreaks.4This checks the presence of a person in a country to provide all the benefit ofa resident of the country as compared o all the people living in this particular country.Superannuation tests-Superannuation is a retirement fund held by all the employeeswho are working in an Australia is an easy way to determine the residency of all theemployees.5A person having legal superannuation funds account is treated asAustralian resident as they are living in this county for the working purpose in whichthey leave their original country to accept the citizenship of the country in which theyare doing job counts under a legal resident individual.1Residency tests, 2017.Available through: <https://www.ato.gov.au/individuals/international-tax-for-individuals/work-out-your-tax-residency/residency-tests/> [Accessed on 27thOctober 2017].2Robertson, S., 2017.3Hedrick, K., 2017.4To, H., Grafton, R.Q. and Regan, S., 2017.5Walters, R. and Zeller, B., 2017.1
In the current case of Daniel he satisfy Domicile test as he is an executive ofAmerican multinational company in mining capital company due to which he shifted toAustralia to handle the business operation in one of the subsidiary firm of Multinational inthe Australia.6Daniel and his wife has rented house in Perth in the Australia which will notcount as a permanent house of an individual.7Domicile tests has not passed by Daniel forgetting the status of resident Australian as they are living with their family in rented houseinstead of a permanent house.Another test applicable on Daniel in evaluating their residency status is 183 days teststhat helps in ascertaining the Australian Citizenship.8Daniel has moved to the Perth city ofthe Australia on 1stNovember 2016 till 1stmay 2017 that is 183 days.After applying the above tests of 183 days, Daniel is proved as an Australian residentfor the taxation purpose as he passed this particular test to get the desired residentindividual’s status.2) Calculate the tax payable by Daniel for 2016-17ParticularsAmountAnnual salary$ 250,000.00Superannuation$ 23,750.00Interest from Australian bank accounts$ 3,000.00Interest from Malaysian bank accounts$ 8,000.00Rental income from property in Malaysia$ 24,000.00Bonus incentive$ 15,000.00Travel allowance$ 20,000.00Dividend from Mining capital$ 5,200.00Dividend from BHP shares$ 5,000.00Accommodation allowance$ 40,000.00Total income$ 393,950.00Less: franking credit$ 2,142.00Less: deductions$ 2,500.00Taxable income$ 389,308.000-18200$ -Tax$ 166,998.60Total tax$ 166,700.006Estin, A.L. ed., 2017.7Income tax estimator, 2017.8Lanis, R., McClure, R. and Zirnsak, M., 20172
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