Taxation Law: Australian Resident and Overseas Income Taxation

This report delves into Australian taxation law, examining the tax implications for residents and non-residents, specifically addressing scenarios of individuals working overseas and self-employed professionals. The report analyzes relevant legislation, including the Income Tax Assessment Act 1936, and taxation rulings like IT 2650, to determine residency status and assessable income. It discusses cases such as F.C. of T. v. Jenkins, F.C. of T. v. Applegate, and Henderson v. Henderson to clarify tax liabilities on overseas employment income and income from professional services. The report also explores the application of accrual basis accounting for tax purposes, considering the timing of income recognition and the impact of recoverable debts on assessable income. The conclusion summarizes the tax treatment of the income, emphasizing the importance of understanding the relevant legislation and case law for accurate tax assessment.

Running head: TAXATION LAW
Taxation Law
Name of Student:
Name of University:
Author’s Note:

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Table of Contents
Answer to question 1:......................................................................................................................2
Issues:..........................................................................................................................................2
Legislation:..................................................................................................................................2
Application:.................................................................................................................................2
Answer 2:.........................................................................................................................................5
Issues:..........................................................................................................................................5
Legislation:..................................................................................................................................5
Application:.................................................................................................................................5
Conclusion:......................................................................................................................................7
Reference List:.................................................................................................................................8

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Answer to question 1:
Issues:
The issue which is discussed below depends on the evaluation of the effects of tax for the
wages or the salary which were derived by a resident of Australia who is working overseas and
for taxation purposes, has to leave the country.
Legislation:
a. F.C. of T. v. Jenkins 82 ATC 4098
b. F.C. of T. v. Applegate (1979) 9 ATR 899
c. Henderson v. Henderson [1965] 1 All E.R.179
d. Subsection 6 (1) of income tax assessment act 1936
e. Taxation rulings of IT 2650
Application:
This particular study considers the tax treatment of the salary which have been
ascertained by Can Robyn from the Indian Subcontinent in the form of an employment overseas
in order to work as an arranger for the University of Calcutta. The requirements for working as a
co-ordinator were lengthy, because Can Robyn desired to work for so long as there would be the
existence of the course in the University of Calcutta. According to the taxation rulings of IT
2650 the guidelines aim to be laid for ascertaining whether a particular person who leaves the
country Australia, to reside overseas temporarily due to work assignments ceases to remain an
Australian resident due to the reason of income tax during their stay outside the Country of
Australia. 1
1 Pinto, Dale. "State taxes." Australian Taxation Law. CCH Australia Limited, 2011. 1763-1762.

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In accordance with the subsection 6 (1) of income tax assessment act 1936 individuals
having domicile in Australia as given by the commissioner remains satisfied by their abode being
outside of the country Australia2. According to the statement under subsection 6 (1) an
individual residing in Australia, for more than half of the entire year of income will be
considered as a resident of Australia unless there is contentment within the commissioner that the
individual does not intend to stay in Australia for a permanent period of time.
Regarding the subsection 6 (1) of the ITAA 1936 it can be stated that Can Robyn would
be considered as a resident of Australia as she has stayed in Australia for not less than half of the
entire year of income before leaving the country3. Evidently, a flat was under the ownership of
Can Robyn, and it was not abandoned by her. There is a possibility that the flat owned by Can
Robyn was on mortgage and the amount of mortgage was paid from the income of employment
which was received in the bank account in Australia.
According to the statement in Henderson v. Henderson [1965] 1 All E.R.179 the own
origin of a person’s domicile is maintained unless the particular individual acquires their own
choice of domicile in a different state by the law operations4. From the current study it can be
2 Woellner, R. H., et al. Australian Taxation Law Select: Legislation and Commentary 2016. Oxford University
Press, 2016.
3 ROBIN, H. AUSTRALIAN TAXATION LAW 2017. OXFORD University Press, 2017.
4 Blakelock, Sarah, and Peter King. "Taxation law: The advance of ATO data
matching." Proctor, The 37.6 (2017): 18.

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stated that Can Robyn has kept her Melbourne flat retained, and it is her intention to return to
Australia clearly which foreseen as well as expected, as also the contingency after the end of her
employment in Calcutta University.
Based on the liability of Tax, on the segment of income which is assessable in the bank
account in Australia, the tax liability originates in the connected to the taxation ruling of IT
2650 the residence of the taxpayers must be considered after putting the rulings discussed
above5. In case the references F.C. of T. v. Applegate (1979) 9 ATR 899 the question of the
utmost importance is the residential status of an individual organisation leaving the Australian
country for the tax purpose. In general the particular individual leaving Australia permanently
would be regarded as upholding the Australian Domicile omitting the individual gets a different
place to stay based on the law operations6.
According to the present situation, Can Robyn will be considered to have kept her
Australian Citizenship due to the maintenance of her bank account in Australia such that it
becomes possible for her to pay for her mortgage flat from the remuneration amount provided to
her in her bank account in Australia. Thus, a Visa in working condition for a significant period of
time would not be thought of as sufficient evidence of attaining a new domicile for Can Robyn.
5 Braithwaite, Valerie. "Responsive regulation and taxation: Introduction." Law & Policy 29.1
(2013): 3-10.
6 Vann, Richard J. "Hybrid Entities in Australia: Resource Capital Fund III LP Case." (2016).

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Determining the consequences of tax, the salary received by Can in her bank account
would be considered as foreign employment of income. The foreign employment and its income,
can be defined as that income of a particular individual who is an Australian resident working as
an employee overseas. Any resident of Australia, is usually taxed on the basis of income which is
obtained in every quarter of the world. In connection to the present scenario, Can Robyn’s
income amount obtained from the Australian bank account belonging to her would be treated as
assessable income. It is to be understood that the a payment given in Australia can still qualify
for foreign income even if the amount is not derived by a person working outside the country
anywhere overseas. With regard to F.C. of T. v. Jenkins 82 ATC 4098 the foreign employment
obtained from the Indian subcontinent, would attract the liability of tax and is likely to comprise
a segment of the assessable income in the form of overseas employment income7.
Answer 2:
Issues:
The present issue depends on the determination of taxable income of the payer of tax
which has the personal business of the Teacher of Golf.
Legislation:
a. Barratt v. FC of T 92 ATC
b. Henderson v. FC of T (1970)
c. Taxation Rulings TR 93/11
d. Subsection 6-5 (2) and (3) of the Income Tax Assessment Act 1997
7Barkoczy, Stephen. "Foundations of Taxation Law 2016." OUP Catalogue(2016).

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e. Subsection 25 (1)
Application:
In compliance with subsection 6-5 (2) and (3) of the Income Tax Assessment Act 1997
it is compulsory for each of the taxpayers to take account of the income which is taxable in the
gross or total income which they generate8. As mentioned in subsections 6-5 (2) and (3) an
income ascertained at the time of the income year but obtained from another income year was
thought of as a topic of speculation by the taxpayers. It is crucial for the taxpayers to apply the
suitable method of ascertaining the earnings applied in a particular year of income9. As defined
in taxation rulings of TR 93/11 it is important for each individual to apply one of the two
processes namely the earning process or receipt process of the accounting tax in order to
determine the assessable income.
Based on the TR 93/11 the fee income receipt, under the subsection 25 (1) will be
regarded as connected to the ordinary conceptions of ITAA 1936 for experts or professionals
whose income is to be assessed under the accrual basis10. As is clear from the scenario discussed,
8 Snape, John, and Jeremy De Souza. Environmental taxation law: policy, contexts and practice.
Routledge, 2016.
9 Cao, Liangyue, et al. "Understanding the economy-wide efficiency and incidence of major
Australian taxes." Treasury WP 1 (2015).
10 Taylor, Grantley, and Grant Richardson. "The determinants of thinly capitalized tax avoidance
structures: Evidence from Australian firms." Journal of International Accounting, Auditing and

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which was received by Paul, he received a free earning from the golf’s private lessons from his
clients. This gave the introduction to the concepts discussed under subsection 25 (1) of the
ITAA11. This needs to be ascertained from the current study on Paul with regard to the contract
that Paul entered. It has also been determined that the Paul was given a fee by Doreen, after
imparting five years of golf lessons. This resulted in the recoverable debt establishment in case
the professional person is not required to perform any actions before the debt is entitled to be
paid. There is the possibility of recovering the fees if the time for reimbursement has been
sanctioned.
In the case of Henderson v. FC of T (1970) assessable income in terms of accrual basis
is ascertained under the subsection 25 (1) of the ITAA where a recoverable debt is formed.
Along with this particular development, an individual who is extremely professional receives the
fee income beforehand and an arrangement has been created between the client and the
professional’s fee income, which is generated becomes connected either entirely or partially for
which the person completes the work12. From the current scenario it is evident that the derivable
Taxation 22.1 (2013): 12-25.
11 Fry, Martin. "Australian taxation of offshore hubs: an examination of the law on the ability of
Australia to tax economic activity in offshore hubs and the position of the Australian Taxation
Office." The APPEA Journal 57.1 (2017): 49-63.
12 Ross, Monique, Jarrod Walker, and John Walker. "Multinationals targeted down
under." Taxation in Australia 52.1 (2017): 22.

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fee income by Paul, is thought of as a part of his assessable income will be considered at the time
of considering the determination of tax liability.
From the current study of Paul, the fee income receipt by Doreen would be considered as
a segment of assessable income. The amount of fees that Paul received would be regarded as the
assessable income. This is because, the fee receipt would be considered as assessable income for
the lesson he provided to his client13. During the time of ascertaining the assessable income
belonging to Paul, receipt of sum $6,000 and $28,000 from the lessons on Golf, would be
considered as taxable income. As in the case of Barratt v. FC of T 92 ATC the court of Australia
has also taken the statutory impediment under consideration at the beginning of the proceedings
of bad but recoverable debt14.
13 Anderson, Colin, Jennifer Dickfos, and Catherine Brown. "The Australian Taxation Office-
what role does it play in anti-phoenix activity?." INSOLVENCY LAW JOURNAL 24.2 (2016):
127-140.
14 Davis, Angela K., et al. "Do socially responsible firms pay more taxes?." The Accounting
Review 91.1 (2015): 47-68.

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Particular Amount
Receipt 6000
Lessons from Golf 28000
Taxable income 34000
However, this does not put of the time of derived fee income under the subsection 25 (1) by the
professional person, the income of whom would be treated for tax purpose under the accrual
basis15.
Conclusion:
In terms of the conclusion of the stated case study, the situation of Paul, is thought of as
the considered as the aftermath of income tax at the time of business. With regard to the sub-
section 25 (1) of the Income Tax Assessment Act 1936 the amount which Paul received as his
earnings, from the golf lessons imparted, are to be treated as assessable income and will be taken
into consideration in the calculation of the assessable income.
15 Smith, Fiona, et al. "Reforms required to the Australian tax system to improve biodiversity
conservation on private land." Environmental and planning law journal 33.5 (2016): 443-450.

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Reference List:
Anderson, Colin, Jennifer Dickfos, and Catherine Brown. "The Australian Taxation Office-what
role does it play in anti-phoenix activity?." INSOLVENCY LAW JOURNAL 24.2 (2016): 127-
140.
Barkoczy, Stephen. "Foundations of Taxation Law 2016." OUP Catalogue(2016).
Blakelock, Sarah, and Peter King. "Taxation law: The advance of ATO data matching." Proctor,
The 37.6 (2017): 18.
Braithwaite, Valerie. "Responsive regulation and taxation: Introduction." Law & Policy 29.1
(2013): 3-10.
Cao, Liangyue, et al. "Understanding the economy-wide efficiency and incidence of major
Australian taxes." Treasury WP 1 (2015).
Davis, Angela K., et al. "Do socially responsible firms pay more taxes?." The Accounting
Review 91.1 (2015): 47-68.
Fry, Martin. "Australian taxation of offshore hubs: an examination of the law on the ability of
Australia to tax economic activity in offshore hubs and the position of the Australian Taxation
Office." The APPEA Journal 57.1 (2017): 49-63.
Pinto, Dale. "State taxes." Australian Taxation Law. CCH Australia Limited, 2011. 1763-1762.
ROBIN, H. AUSTRALIAN TAXATION LAW 2017. OXFORD University Press, 2017.

11TAXATION LAW
Ross, Monique, Jarrod Walker, and John Walker. "Multinationals targeted down
under." Taxation in Australia 52.1 (2017): 22.
Smith, Fiona, et al. "Reforms required to the Australian tax system to improve biodiversity
conservation on private land." Environmental and planning law journal 33.5 (2016): 443-450.
Snape, John, and Jeremy De Souza. Environmental taxation law: policy, contexts and practice.
Routledge, 2016.
Tan, Lin Mei, Valerie Braithwaite, and Monika Reinhart. "Why do small business taxpayers stay
with their practitioners? Trust, competence and aggressive advice." International Small Business
Journal 34.3 (2016): 329-344.
Taylor, Grantley, and Grant Richardson. "The determinants of thinly capitalized tax avoidance
structures: Evidence from Australian firms." Journal of International Accounting, Auditing and
Taxation 22.1 (2013): 12-25.
Vann, Richard J. "Hybrid Entities in Australia: Resource Capital Fund III LP Case." (2016).
Woellner, R. H., et al. Australian Taxation Law Select: Legislation and Commentary 2016.
Oxford University Press, 2016.

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