Case Study 1
The provided case study sheds lights on the residential status of Kit as per the act of “IT ruling 2650 under ITAA 1997”. Kit took birth in Chile, but he is permanently residing in Australia. The three main tools to identify his residential status and taxable income are 183-day test, domicile test and assessment of income tax (Barkoczy 2016). All these aspects are discussed below:
Domicile Test
Domicile test is considered as one of the major tools to determine the residential status of an individual. In this regard, “Domicile Act 1982” is an important aspect. As per “Section 6 of the Taxation Ruling 2650”, the individuals who desperately want to be the permanent citizens of Australia are subject to tax liability. The right of the selection of the domicile nation lies on the individuals and one can verify this statement with reference to the case of “Henderson v Anderson 1965”. This case indicates that it is the responsibility of an individual to manage the decision of selecting the domicile nation. Kit has taken job in a company of Australia. In the present situation, Kit’s wife and children resides with him in their own house in Australia.. Thus, Australia is the domicile country of Kit as per his desire. Hence, the domicile teat and “Section 6(1) of ITAA 1936” states that Kit is a citizen of Australia and he is liable for taxation as per the rules of Australian taxation (Oats 2012).
183-day Test
As per this test, a person will be deemed as an Australian citizen if he/she stays in the country for more than 183 days. As per the information in the provided case study, Kit has been residing in Australia for more than 183 days and he has to visit Indonesia for his job purposes. In addition, Kit is an Australian citizen as he is residing in this country with his wife and children. Kit’s working organization provides his salary in the Westpac bank. The bank account is related with Kit’s wife. Al these aspects have made him the citizen of Australia. Moreover, in “F .C. of T. v. Applegate (79 ATC 4307; (1979) 9 ATR 899”, it is mentioned that an individual will be considered as the Australian citizen in case he has been residing in the country for a long time. This rule is applicable for Kit as he has been residing in Australia for a long period (Davis et al. 2015).
Income Tax Assessment
There are certain rules and regulations for the individuals in order to be an Australian citizen and these rules and regulations are applicable for Kit. This statement can be verified against the case of “Applegate per Franki J79 ACT”. As per this act, any income generated in Australia including the share income will be taxed. Kit receives his salary in AUD in the Westpac bank of Australia and he also has income from the share market in Australia. Hence, all the incomes of Kit that are generating in Australia will be taxable as per the rules and regulations of Australian Taxation Office (Lignier and Evans 2012).
Case study 2
1.Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159
The tax regulations regarding the sale of properties are the main topic of this case. As per the verdict of the case, the court stated that the incomes generated from the sale of property would be subject to tax as per the Australian taxation rules. In this case, the mining firms toot unethical way for tax evasion (Daley and Coates 2015).
2.Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188
The main concern of this case is related with the tax treatments of subdivided lands of the businesses. The sale of assets for the fulfilment of the business needs is subject to taxation. As per the verdict of the court, the realization of capital gains of Scottish Australian mining organization will be come under the capital gains (Edwards 2012).
3.FC of T v Whitfords Beach Pty Ltd (1982) 150 CLR
In this case, the Australian Taxation Office states that the subdivision of properties is not subject to taxation. As per the verdict of the court, the sale of fully or subdivided assets of business will be taxable in case the net income is obtained from the transactions. Australian Taxation Office will impose tax on the disposal of assets as complied with section 25 (1).
4.Statham & Anor v FC of T 89 ATC 4070
This case states that for the purpose of the business, the proprietor purchased the land. In this regard, “Section 25(1) or 26(a)” states that tax will not be imposed on any transacting that involves with the sale of properties. The income is taxable but the capital gain is not taxable (Jacob 2016).
5.Casimaty v FC of T 97 ATC 5135
According to this case, the farmer was forced to sell his land due to the effect of low wages. Hence, the income from form the sale of the property of the farmer will not be subjected to tax liabilities. The court says that the necessary tax will be acquired with the help of capital gains (O'Connell, Martin and Chia 2013).
6.Moana Sand Pty Ltd v FC of T 88 ATC 4897
Not to make profit from the investments was the intention of the company, as per this particular case. “FC of T v The Emporium Ltd 87 ATC 4363” the net income of the business organization will not be laid under the process of tax deduction as per the Australian Taxation Office. In addition, “sections 25(1) or 26(a)” states that any sale of property is subject to taxation. As per the verdict of the case, there was not any intention of profit making (McQueen 2016).
7.Crow v FC of T 88 ATC 4620
As per the statement of the court, any sale of property in the nation is taxable under the capital gain law. Hence, in case of capital loss, taxation cannot be applied. The court used this particular law to prevent the unethical tax evasion (O'Connell, Martin and Chia 2013).
8.McCurry & Anor v FC of T 98 ATC 4487
In this particular case, the court firmly pointed the intention of the business to use the lad for business purposes and the company did use the land to carry on its business. Hence, any kind of income generated from this kind of lands is subject to taxation. The income from the sale of land leads to the capital gain that is taxable under taxation law of Australia (O'Connell, Martin and Chia 2013).
References
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Daley, J. and Coates, B., 2015. Property taxes. Grattan Institute.
Davis, A.K., Guenther, D.A., Krull, L.K. and Williams, B.M., 2015. Do socially responsible firms pay more taxes?. The Accounting Review, 91(1), pp.47-68.
Edwards, C., 2012. Advantages of low capital gains tax rates.
Jacob, M., 2016. Tax regimes and capital gains realizations. European Accounting Review, pp.1-21.
McQueen, R., 2016. A Social History of Company Law: Great Britain and the Australian Colonies 1854–1920. Routledge.
Oats, L. ed., 2012. Taxation: A fieldwork research handbook. Routledge.
O'Connell, A., Martin, F. and Chia, J., 2013. Law, policy and politics in Australia's recent not-for-profit sector reforms. Austl. Tax F., 28, p.289.
