Answer: Introduction: A rental or investment property will be negatively geared if the amount of expenditures associated with such property and investment is lower than the amount of income accrued from such property and investment. For example if am investment has been acquired by using borrowed funds and if the net income from such investment is less than the interest expenses on such borrowed fund then such investment will said to be...Read More
Answer: Part 1 Factors taken into consideration In the earnings method, income recognition considers only that income for which the seller or service provider has fulfilled the contractual obligations and hence would derive payments. The actual receipt of the payment is not crucial. In sharp contrast, receipts method requires that the underlying cash must be received irrespective of whether the contractual obligations towards the client have b...Read More
Answer: Answer to question 1: Answer to A: A permanent establishment refers to the fixed place of business that usually results in increase income for the value added liability of tax in a specific jurisdiction (Sadiq et al. 2013). The concept of permanent establishment explains that the profit of a company of one contracting state is considered for taxation purpose in other state. Answer to B: Profits derived by the compa...Read More
Answer: Part 1- Starting a new business Section 6(1) ITAA 1936 highlights the three main tests for ascertaining if the underlying company is an Australian resident for tax purposes or not. These tests are mentioned as follows (Woellner, 2014). Test 1: The place of incorporation of company ought to be Australia and not any foreign location.Test 2: The company must have some business in Australia and the control of the voting power should be wit...Read More
Answer: Part 1 Australian Tax Office regulations define the terms, conditions, and environment that surrounds tax residency of limited companies in Australia. This terms and condition are primarily based on formation, ownership operations, control and decision-making options. Australian Tax Office qualifies a company for tax residency purpose if the company is formed and incorporated in Australia Miller and Oats (2016.Pg 31.) Applying this c...Read More
Answer: Part 1 Letter of Advice To Elwood and Inda, From Tax Consultant, Date- 9th September 2018. Sir and Madam, The letter aims to draw an attention to the status of the residence that is based on the information provided by you. This is the information about the ‘Taxation ruling TR 98/17’ where the clarification is provided of the general meaning of the term residence under ‘subsection6 (1) of the ITAA 1936&rsq...Read More
Answer: 1.Issue: The issue currently on the consequences of the capital gains taxation under the section “104 of ITAA 1997” Laws: According to “section 102-5 of the ITAA 1997”, taxpayer is required to include Capital gains in to the assessable income. . It is very important to understand that whether there is any CGT event that has occurred with the taxpayer that has initiated the situation of capital gain or l...Read More
Answer: 1.Based on the given information, the task is to determine the net capital gain or net capital loss of the client for year ended 30 June of the existing tax year. Calculation of capital gains or loss derived from selling of block of land Pre-CGT assets are those assets which are acquired by the concerned taxpayer earlier than 20 September 1985 and are not taken for the Capital Gain Tax (CGT) under the provision of 149(10) of I...Read More
Answer: Part 1: In this current study, it is realised that the vital matters are linked with the tax implications and the accounting methods where Frank Lloyd is commencing a business on architect. In the preliminary stage of the business commencement, the garage is considered as the operation station. Frank got a fast reply and a trivial customer base as because of the occupation stipulation and providing accommodation to the native builder....Read More
Answer: Introduction According to section 6-5 of ITAA 1997, the assessable income of an Australian resident should be regarded as taxable in accordance with the ordinary concepts which can be derived from either direct or indirect sources. The sources of ordinary income can be divided into certain categories; such as income from rendering personal services, income from property and the income generated from any business (Gitman et al., 2015)....Read More
Answer: Introduction Taxation compliance is mandatory in Australia. Failure to comply with taxation laws can lead to penalties or criminal proceeding leading to imprisonment. Taxation in Australia is collected by Australian Taxation Office (ATO) on behalf of the Federal Government. The Australian financial year start on 1st July and ends 30th June next year (Woellner et al., 2010). The Australian taxation law treats residents and fo...Read More
Answer: 1. Issue The major issue is to tender advice with regards to the potential tax implications of the assets that have been disposed by the client. In regards to consulting the client on the tax treatment, the various given information need to be critically analysed in the wake of applicable legislations coupled with taxation rulings. Law Revenue v Capital Proceeds The proceeds from sale of an item could be revenue or capital based on...Read More
Answer: 1. Issue The issue is to consult the taxpayer about her taxation implications for year 2017/18 on the account of received capital proceeds from the disposal of the capital assets belonging to taxpayer. Law When the taxpayer does not carry a business course of action of trading the assets for deriving the assessable income, then the disposal of assets would be considered as capital receipts not revenue receipts (Barkoczy, 2017). The...Read More
Answer: The given scenario deals with a client who has liquidated certain assets during the year. It is noted that these transactions are not business transactions which implies that the client does not have a business which deals with selling and purchasing of assets such as land, painting, shares, and violin. This is crucial information which indirectly hints that the proceeds from the sale of the given assets would not have a revenue elem...Read More
Answer: Question 1 All citizens are required to mandatorily pay tax if their income is more than the minimum threshold. The tax is collected by the government so that it is able to carry out its basic functions. The money collected through various forms of taxes provides the resources required by the government to be able to carry out their functions. It also ensures that the government is able to target income inequality (Riccardi, 2018). Q...Read More
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