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2JS601 International Taxation

tag 0 Download 14 Pages / 3,252 Words tag 12-02-2021
  • Course Code: 2JS601
  • University: Uppsala University
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  • Country: Sweden

Question

Facts 

Kross PL (‘Kross’) is a company incorporated in the country Falco. You have the following information about Kross’s activities:

  • Kross assembles electronic devices on behalf of its customers at its assembly facilities in
  • Kross’s employees carryouttheassembly Thecustomerssupplyall components and materials that Kross needs to carry these procedures out.
  • The assembled product is held in Kross’s warehouse in Falco until being delivered to destinations requested by
  • Ownership of the assembled product as well as the input components rests with Kross’s customers at all times that Kross holds
  • Customers pay Kross for assembling the
  • Kross’s income is earned fromcustomers in Australia, Singapore, China and New It earns an equal amount from customers in each country.
  • Kross’s Australian customer is Bobo Pty Ltd (“Bobo”). Bobo has retail outlets in all the major cities of Kross sends the assembled products to these outlets from Falco. Bobo sells the products to end users through its outlets.
  • When Kross holds its customers products for an extended period, it charges them a warehouse space Incomefrom this amounts toabout 8% of itstotal income.

Initially Kross has three directors: Jenni, Lenny and Benny.

You have the following information about Kross’s shareholders:

1. 40% of the shares are held by Benny as trustee for the B The B Trust is governed by the law of the Cayman Islands and was settled by Benny in 1995.
2. 20% of the shares are held by Jenni resides in Falco and has never been to Australia.
3. 29% of the shares are held by Lenny resides in Falco and has never been to Australia.
 a. Kross has a significant loan from Lenny on which it pays annual The borrowed funds were used to partly fund building Kross’s facilities in Falco.
4.11% of the shares are held by Bobo Pty Ltd, a company incorporated and centrally managed and controlled in

Further information on Benny and Kross:

  • Benny was born and grew up in On 1 January 2017 Benny went to Australia on a businesstriptomeetwiththemanagementof Bobo.Bennyobtainedasixmonthbusiness visa to do this. He spent half the six months in an apartment in Perth dealing with business and the other half driving aroundWestern Australia seeing the sights. On his tour he met Kerrie and formed a strong personal relationship with her. Benny returned to Falco on 2 July 2017 and kept in close contact with Kerrie.
  • On 1 September 2017 Benny flew back to Australia on a one year temporary business His true motivation was to spend timewith Kerrie although he did carry out his necessary work tasks. He stayed in Kerrie’s home in Perth during the full period. In August 2018, Benny married Kerrie. Hereturned to Falcofor twomonths in September 2018 and sold his home and tidied up personal matters. He then returned to Australia with the intention of staying permanently. He did fly back to Falco from time to time to deal with business matters.
  • InJuly2019Bennyis backin Falcofor thequarterly directors meeting inwhichallthemajor business decisions of Kross are The meeting does not go well with the other directors unhappyabout Benny’sabsence.Theoutcome ofthisisthat bothLennyandJennicease being directors in late July 2019 and Kerrie is appointed a director. After this point in time directors meetings naturally occur in Australia where Benny and Kerrie live.

Information about profit distribution and foreign tax

  • Kross distributes half its profit to shareholders
  • Falco taxes residents on their worldwide income and non-residents on their Falco source The tax rate is 20%
  • Falco imposes a 5% dividend and interest withholding tax for non-residents.
  • Falco has similar tax residence rules to Australia for both companies and
  • Falco and Australia haveconcludeda The DTAissimilar to the Australia- Poland DTA. Falco has not signed the OECD Multilateral Instrument (‘MLI’).
  • The B Trust is a discretionary In each year the trust makes Benny’s mum presently entitledtoaround 80% of itsincome. Bennyis himselfgenerallypresentlyentitledtothe residual. Benny’s mum lives in Falco.

Information about Benny’s income

  • Benny earns a salary from Kross at all
  • Benny receives the entitlement under the B Trust mentioned
  • Benny earns interest and dividends from accounts and companies in
  • Benny invests in Australian shares and has sold shares at a profit in each He also earns dividends from these shares.

Required 

Explain the Australian income tax implications of the above information for all relevant periods in relation to the following persons/ entities:

  1. Kross
  2. Benny
  3. B Trust
  4. Bobo
  5. Lenny
  6. Jenni
  7. Benny’s

In dealing with the above give reasons and legal backing for all your assertions. When a matter is uncertain , fully examine the possibilities and explain what would make it certain.

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Total 14 pages

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My Assignment Help. (2021). International Taxation. Retrieved from https://myassignmenthelp.com/free-samples/2js601-international-taxation/tax-implications.html.

My Assignment Help (2021) International Taxation [Online]. Available from: https://myassignmenthelp.com/free-samples/2js601-international-taxation/tax-implications.html
[Accessed 27 September 2022].

My Assignment Help. 'International Taxation' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/2js601-international-taxation/tax-implications.html> accessed 27 September 2022.

My Assignment Help. International Taxation [Internet]. My Assignment Help. 2021 [cited 27 September 2022]. Available from: https://myassignmenthelp.com/free-samples/2js601-international-taxation/tax-implications.html.


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