Taxation Theory, Practice & Law

Taxation Theory,
Practice & Law

Table of Contents
QUESTION 1...................................................................................................................................1
Analysis of tax liability of Pablo on salary earned in Australia..................................................1
QUESTION 2...................................................................................................................................1
Explanation regarding the respective outcomes reached by the courts in case of sales of land:
Californian Copper Syndicate V Harris.......................................................................................1
QUESTION 3...................................................................................................................................2
Different GST consequences of arrangement for companies......................................................2
QUESTION 4...................................................................................................................................3
Calculation of tax liability of the organisation for the year ending 30th June 2019....................3
QUESTION 5...................................................................................................................................4
Discussion of ATO's Test Case Litigation Program....................................................................4
QUESTION 6...................................................................................................................................5
Calculating the net income of the firm........................................................................................5
Allocating income to all the partners of the firm.........................................................................5
Legislation related to the case......................................................................................................6
REFERENCES................................................................................................................................7

QUESTION 1
Analysis of tax liability of Pablo on salary earned in Australia
A person named Pablo is resident in Portuguese and working in a domestic company. The
entity is now willing to establish a branch office in Australia for which it has sent Pablo to
Australia. In Australia he worked for one month and the salary for this period was credited in the
Portuguese bank account. In whole year 120000 Australian Dollars were earned by Pablo for the
employment. According to the taxation rules of Australia if a non resident is earning income
within the country then the earned income will be taxable within the country. Therefore, now
Pablo will also have to make payment of tax on the salary which was earned in Australia. There
are several other incomes that are not taxable in Australia that includes royalty, interest and
unfranked dividend (Ambrosio, 2020). The main reason for not applying any type of tax upon
them is that these incomes are provided by the entities after deducting the actual value of tax. As
Pablo generated one month salary in Australia so he will be responsible to make payment of tax
on the income according to Australian Taxation laws.
The tax rate which is applied on non residents in Australia for taxation purpose is 32.5%.
At this tax rate the income of Pablo will be taxable which is generated in Australia. For example,
as 120000 is the salary generated by him during the year so it is estimated that it includes salary
fro the month in which he worked in Australia. For that month the salary will be 10000 (120000 /
12). The tax which will be paid by Pablo on this income will be around 3250 (10000 * 32.5%).
Therefore the income which will be taxable in Australia is 10000 and the tax which will be paid
on the same will be 3250.
QUESTION 2
Explanation regarding the respective outcomes reached by the courts in case of sales of land:
Californian Copper Syndicate V Harris
In the case of Californian Copper Syndicate Vs Harris Lord Justice Clerk provided his
opinion that all the principles that were related to the analysis process if income tax to obtain
higher profit by the owner to acquire higher price from the seller. On the basis of income tax act
1842 the increased price of the assets will not be considered as profit. Details of it is mentioned
in Schedule D of Page no. 166 of the act. The increased value of which is generated from the
purchasing or buying activities of the assets could not be considered as the realisation in the
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