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Contribution Of Custodians And Systemic Risk

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Kit is a person who was given Chilean citizenship by virtue of his birth in the country. He is working for a company originally situated in the United States. The place of his work is yet another country, Indonesia. Most of his work lies along the Indonesian coast. In spite all these facts, the place where Kit has a permanent house is in Australia. His wife and children have been living in Australia for the previous four years (Chow, 2015). The Australian taxation law considered Kit to be an Australian citizen, for which he was included within the purview of paying tax. In a bank located in Australia, Kit has an account with his wife. The salary that he gets for his job is paid by his employers to this bank account. If the rule of taxation for Australia is taken into consideration, then the above factors contribute in proving that he is entitled to pay the tax. The other factors which are relevant in this regard are some investments and settlements for a business purpose which Kit made in Australia. These factors clearly prove that Kit has chosen Australia as the permanent residing place for himself and his family (Chomik and Piggott, 2016). Kit takes a leave from his work after a period of three months to meet either his family in Australia or his parents who are living in his birthplace in Chile. Finally, the law of taxation applicable for Australia included him under the purview of a tax payer due to the aggregate effect of the above factors.

The Australian government attaches much importance to those residing in Australia as well as paying taxes in accordance with the taxation law of that country. But the taxation department has the right to know the taxpayer's eligibility for being certain that any person is entitled to pay the tax. However, there are quite some differences between the taxation liabilities of the residents and those of the non-residents of Australia (Danon, 2010). The differences are in the following aspects:

The government in Australia attaches considerable importance to the residents of the country that are entitled to pay the tax. Before it holds anyone responsible for paying the tax, this department concerned with taxation should be aware of the required eligibility for a taxpayer. Thus after the eligibility would be taken into account, there would be considerable change in how taxes by residents and non-residents will be calculated. Thus there would be a better and clearer judgment (Cortese, 2006).   


Payment of tax by virtue of residential proof: It is a basic fact that the income earned by any person living in a country is the basis of the calculation of tax to be paid by the government. The income from any domestic source does not affect the calculation of tax at all since it is not included in the income earned from official sources. On being a permanent resident of the country, any person will be considered liable to pay the residential tax that any Australian is considered to pay.   

The taxes charged by virtue of factors other than residential proof: this section of the tax is payable for every type of income that the tax payer earns. It may be income from different sources. But it should not include that from domestic sources. The official sources are considered in this case. Various taxation laws are used to charge the people of Australia the various kinds of taxes. For the case in consideration, the person is not required to pay taxes for Medicare (Donald and Nicholls, 2014).   

The tax that the government collects is fully supported by the citizens of the country in consideration, that is, Australia. The basis of the calculation of taxes is the entire assets owned by any person, including thee income from the salary, the properties, and various other valuable articles. The department concerned with taxation divides the tax into two portions, namely indirect and direct taxes. There are a few special features such as the compulsion to pay the tax and any increase in the amount of tax required to be paid, is given out by the Australian government. The tax required to be paid actually considered as the charge for availing the services offered by the government. The refusal by the public to pay the taxes which is a common phenomenon might result in a critical economic problem (Freebairn, 2016). The regular payment of taxes helps to fulfill the needs of the economy and ultimately adds on to the economy in the form of increased gross domestic product. This is because there is an all-around development of the economy due to the government's increased efforts since it makes use of the collected tax for this purpose.

Thus if Kit wants the authorities to consider him as the resident of Australia, it is ideal for him to pay the taxes for which he is liable. The tax for residents is totally dependent on income from all official sources. The rates of interest charged by the banks are usual and apply to the person under consideration, that is, Kit.

The person’s citizenship can be subjected to verification. The taxes that are finally charged from the person depend on the following factors:


If the person is finally more likely to return to the country and settle there permanently, then he would be taken as a resident of the country. Consequently, he would be taxed.

On having made any investment or business negotiations in this country, hee will be considered a citizen here and would be taxable (Ingles and Stewart, 2013).

If his family is permanently settled in Australia, he would be known as a citizen of this country.

When a person, has gone on trips to the country with family for a duration of more than a month, the person would be rightful to have a citizenship of Australia.

Doing a regular job in the country makes a person eligible for citizenship in Australia and would make him liable for paying tax.

Permanent residence in Australia makes a person a citizen of the country.

  • On having accounts in any of the banks in the country and any assets of any type will make a person liable to pay the tax.
  • On migrating from any other country to Australia and making an effort to set up a business, a person will be treated as a citizen (Engdahl, 2011).

In a nutshell, on fully living in Australia for six months or more permanently, any person would be treated as a citizen of this country.  As far as kit is concerned, it is evident that he has a plan to permanently reside in Australia. The investments and business negotiations are a proof of this fact. His family is also settled permanently in the country. Thus kit is eligible for citizenship and hence has to pay the due tax in accordance with the taxation rules of the country. The tax on capital gains and that on income will be applicable in his case.


Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159

This case was concerned with a common occurrence related to the business and profits of the taxpayer. The company actually had the primary purpose to obtain a land area within its control which would contain copper. The coal was not extracted from the area after a certain duration of time. The court was in the opinion that the profit generation through the land would be more in future. The purpose was, after all, earning more profits through the sale of the property. The increase in returns was the final goal of the corporation or the company (Warren, 2010). Retaining the land with itself for a longer duration implied it could not be used for any other work. The company finally sold the land to another similar one and was with the expectation to get shares of the latter company in return. The land was divided into many parts and roads as well as other infrastructure were also constructed on that property, to improve the profitability by selling it.

The case in consideration had the company starting the business of mining coal on the land area which was purchased by it. The coal was extracted in its entirety after a certain period of time. Having extracted the coal, the company then took the decision to sell the property. They were quite determined to their purpose, and so had an intention of selling the land area anyhow. This company also adopted the same technique as the previous one to make the land area more profitable (Heng, Niblock and Harrison, 2015). They created subdivisions and constructed several kinds of infrastructure on that land area. In the opinion of the court, the money obtained from selling the land area was not considered as profits from usual income sources, but as the benefits or advantages from capital assets. Thus the profits were regarded as being capital in nature.

For this case, the entity which had to pay the tax was a company which wanted to acquire a land area which was in an undeveloped state. It was located on the beach of Whit fords. As is evident from the name, the land area was the front portion of a beach, and hence people had the right to use it. There was a group of persons who created a company for the purpose of owning the land and using it for the purpose of fishing (Taylor, 2011). After a couple of years, the problematic capital share belonging to the company was sold. The new owners purchased the land only for the reason that they would have control of the land and would increase the area by subdividing it and then sell the sites at a profit. The court gave the verdict that the land was being used for normal practical purposes to add to the return. This was a regular occurrence and could be quantified as well.


Statham & Anor v FC of T 89 ATC 4070

The case in consideration had a relation with income tax. The authorities concerned with determining the income tax value found that there was some incorrect assessment of the tax. The court reached the conclusion that the commissioners had made the adjustments to the income of the state.

In the given case study, an individual want to make profit from the sale of a piece of land. Thus, the question arises weather the profit from the sale of land should would be considered as taxable income. This case was related to the expression of the conditions where there is the lack of profit-making purpose in the event of profit production intentions (Rodger, 2008). The court has stated that the profit from the sale of land would be used for commercial purpose. In the given case study, an organization purchase a land of sand for their own purpose and extracted sand from it. The company was expected that the price of land will increase and it will sale in future. The company want to earn profit from the sale of the land. The main issue is that weather the profit should be considered for the tax purpose. The court stated that the land would be sold for commercial purpose and tax should be paid on it.  

in this case study, the issue arises whether the farmer should pay the tax or not. Due to having some disputes, the farmer was offered for the land by the seller. So the land tax will be charged for the farmer (Palat, 2003). The tax should be paid on the sale of the land.

As per the case mentioned above, two brothers were the owner of the land. To renovate the land they had to remove the houses placed over there. The difficulties arise during the time of the payment of tax bill regarding the land. Ultimately it is decided that according to the law of Australia the brothers don't need to pay any tax bill for the particular land (Prince, 2012).



Chomik, R. and Piggott, J. (2016). Australian Superannuation: The Current State of Play. Australian Economic Review, 49(4), pp.483-493.

Cortese, C. (2006). Taxation and the Australian Superannuation System: An International Comparison. Australian Accounting Review, 16(39), pp.77-85.

Chow, M. (2015). Australian master tax guide 2015. CCH Australia.

Donald, M. and Nicholls, R. (2014). Bank Custodians and Systemic Risk in the Australian Superannuation System. SSRN Electronic Journal.

Danon, R. (2010). Double taxation conventions. Zu?rich: Schulthess.

Freebairn, J. (2008). Comment:on ‘The Economics of Superannuation’. Australian Economic Review, 19(3), pp.87-88.

Engdahl, S. (2011). Taxation. Farmington Hills, MI: Greenhaven Press.

Heng, P., Niblock, S. and Harrison, J. (2015). Retirement policy: a review of the role, characteristics, and contribution of the Australian superannuation system. Asian-Pacific Economic Literature, 29(2), pp.1-17.

Freebairn, J. (2016). Taxation of Housing. Australian Economic Review, 49(3), pp.307-316.

Lakshmanan, J. (2015). Taxation laws. [Place of publication not identified]: Universal Law Publishing.

Palat, R. (2003). Tax planning for salaried employees. Mumbai: Jaico Pub. House.

Ingles, D. and Stewart, M. (2013). Superannuation Tax Concessions and the Age Pension: A Principled Approach to Savings Taxation. SSRN Electronic Journal.

Prince, J. (n.d.). Tax for Australians for dummies.

Rodger, A. (2008). The Economics of Superannuation. Australian Economic Review, 19(3), pp.75-86.

Parker, J. (2007). Tax power for the self-employed. Naperville, Ill.: Sphinx Pub.

Warren, G. (2010). Equity home bias in Australian superannuation funds. Australian Journal of Management, 35(1), pp.69-93.

Taylor, S. (2011). Captured Legislators and Their Twenty Billion Dollar Annual Superannuation Cost Legacy. Australian Accounting Review, 21(3), pp.266-281.

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