Your analysis of each problem should:
include an introduction
identify the issues that you have to consider
discuss the relevant legislation and cases
evaluate the facts and the law from both the ATO’s and the taxpayers position
form a conclusion based on your discussion of the issues, the law and the facts.
Marks are allocated for your overall presentation.
Lin is an auditor who works for a global shipping company. Lin moved from Malaysia to Australia with his spouse and children several years ago and purchased a home in
Melbourne for the family to live. His job occasionally requires an extended overseas assignment, but ultimately he intends to settle in Australia.
In 2015 he was posted to his employer’s office in Singapore for a definite period of two years with a possibility it might extend a further two years. Lin was keen to take this
option if it arose because the pay and working conditions were good. Lin took a two year lease on an apartment in Singapore for himself to live in, while his family remained in
Melbourne where his children go to school.
During his short holiday breaks his family would travel to stay with him in Singapore. Lin did not return to Australia during the income year.
Lin was paid an annual salary of AU$100,000, most of which was sent home to support his family and make accelerated payments on the family home loan. He also owns an
investment property in Melbourne which provides a net rental income of $15,000.
Lin has asked for your advice on whether:
- he is a resident of Australia for income tax purposes in the period during the income year to 30 June 2017; and
- the effect this decision might have on his income tax liabilities in Australia
Explain the alternative arguments using quality legal references, and form an opinion as to which is the better view from the facts.
In 2015 Winnie, an Australian resident individual, sold her horse breeding business based in the south eastern suburbs of Melbourne.
The purchaser of the business did not want to buy the land. The real estate comprises 10 hectares which cost her $1m in 2005.
Winnie put the entire real estate up for auction but it failed to reach her reserve price of $10m and was passed in. Her real estate agent had suggested the reserve was a fair market value but at the moment no buyers were interested in buying such a large parcel of land.
She sought advice from agents and accountants who suggested that smaller blocks of land would be more affordable for home buyers. Potentially, 10 vacant one hectare blocks would sell for $2m each and would require minimal costs to subdivide.
However, Winnie was also advised that 50 townhouses could be built at a cost of $100,000 each and they could sell for $1m each.
In July 2016, Winnie installed office cabins on the site and personally managed the entire construction, sales and marketing activities. 50 townhouses on equal size and value blocks were constructed and by 30 June 2017 half of these had been sold for a total of $25m