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The legislations, rules and act developed by Australian Taxation Office in relation with making an appropriate legislative environment. Therefore, the motive of this authority is to present the favourable legislations in a nation that will be helpful in reducing the manipulation as well as bringing adequate jurisdiction to any of the cases. In the present report, there will be discussion based on various cases and legal advices to the client which were involved. There will be influences of all the mandatory sections, rulings as well as case laws that will be fruitful in providing the appropriate judgement to a
A Lease negotiation:
- In this case where landlord leases his flat to a tenant on which his has acquired a lump sum amount of $15000 as per lease negotiations.
- DM & Longbow Pty Ltd v Willoughby City Council (2017)
In consideration with the case where landlord leases his flat to a tenant on which his has acquired a lump sum amount of $15000 as per lease negotiations. Moreover, payment received by the landlord is before starting of lease period. In accordance with the lease negotiation, it can be said that there will be payment of GST and Income tax over the generated income by a landlord (Comans, Moretto and Byrnes, 2017).
Thus, it is an income or revenue gathered by the landlord which is even before starting of the lease but here, he has gathered the revenue which means that he has to make taxable payment from such gains. However, this case is relevant with the case of DM & Longbow Pty Ltd v Willoughby City Council (2017).
B Insurance claims:
- In this case of Cherly she has owned the warehouse which was accidentally caught into fire. Thus, on which the insurance company has made her payments of $500000.
- section 54 of the Australian Insurance Contracts Act
- Pantaenius Australia Pty Ltd v Watkins Syndicate
In accordance with the case of Cherly she has owned the warehouse which was accidentally caught into fire. Thus, on which the insurance company has made her payments of $500000. Moreover, Cherly will not have to make payments for the taxable income incurred in this case. Therefore, these are the cases which are fully exempted and deductible expenses. Thus, Cherly had loss due to fire on her business so it will not be taxable to her.
Moreover, it can be said that Cherly is not being liable to make the payments of the gains she has from insurance company (Basu and Madsen, 2017). There will be legislations and judgements based under section 54 of the Australian Insurance Contracts Act. Moreover, this will be relevant with the case of Pantaenius Australia Pty Ltd v Watkins Syndicate.
C Boris and tax agent:
- In this case of Boris and his tax agent for making the payments of the previous lodgement of $500.
- Section 60 of Tax Agent services Act, 2009
- Kelly v Tax Practitioners Board
- CARTER v TAX PRACTITIONERS BOARD, Administrative Appeals Tribunal of Australia
In relation with the case of Boris and his tax agent for making the payments of the previous lodgement of $500. Therefore, these are the payments which will be concession by Australian taxation Office. Therefore, they have to make payments of $800 for the preparation of lodgement. Similarly, there are situations on which they can be applicable to apply the concessional due date (Tax agent lodgment program 2017–18, 2018). History of late or non-lodgement of tax returns, non-payment of liabilities etc. Therefore, here the payment of $500 as the tax return has to be taxable in the upcoming payment of the income taxes (Lai and et.al., 2018).
Under section 60 of Tax Agent services Act, 2009. Thus, the case is relevant with the case of Kelly v Tax Practitioners Board as well as CARTER v TAX PRACTITIONERS BOARD, Administrative Appeals Tribunal of Australia. On the other side, an individual hire an agent which will help them in making the taxable payments as well as funnel them in terms of making the adequate payments to such taxes. It will be helpful to them as they indicate the tax practitioners to make the income tax returns. Therefore, in relation with this case there will be no exemption over the charges made to the agent on post lodgements.
D James and lunch charges:
- James is working in a hospital which used to purchase the lunch from cafe in hospital. Thus, he has made the payment for $2000
- TR 2017/D6
James is working in a hospital which used to purchase the lunch from cafe in hospital. Thus, he has made the payment for $2000. Therefore, in relation with the ATO legislations, it can be said that there is and allowance to the employees for the food and drink up to $300. Moreover, here James can claim the charges as the annual limit is of $3600 and the expenses incurred by James is for $2000.
Thus, it indicates that James can claim the meal expenses. On the other side, it will not affect the hospital in making the taxable payments such as providing the meal facilities to their employees which will be denoted as deductible expenses (Fry, 2017). There will be implication of the tax ruling as TR 2017/D6 which determines the deduction for employees in terms of travel and meals. Moreover, in relation with such taxation ruling, it can be said that James can claim the expenses.
- Hiring the venue and refreshment charges:
- Frances has initiated a new business on which she has launched and hired restaurant and has invited 100 potential clients
- TR 97/17
Frances has initiated a new business on which she has launched and hired restaurant and has invited 100 potential clients. Therefore, due to these there has been expense of $5000 in terms of selecting the venue as well as charges of food and beverages. Thus, these are the charges and expenses which were incurred before the initiation of the business. Therefore, with respect to this, it can be said that these are the activities which will be treated under entertainment. Moreover, the exemption is being awarded as if the expenses will be within the limit (McLaren, 2017).
Thus, in relation with the taxation rulings of ATO, it can be said that there will be exemption of $125 per head. Similarly, Frances has invited 100 clients which stated that the 12500 of the limited expenses will be exempted (Common entertainment scenarios, 2018). Thus, the overall expenditure incurred by her is $5000 which is under the limit of the expenses. Hence, she can claim the exemption over her expenses. It will be denoted as the fringe benefits as peer taxation rulings of TR 97/17.
- Australian residence or non residence
- section 995-1
- Gregory v DFC (1937)
- TR 98/17
As per Income Tax Assessment Act (1936), section 995-1, an Australian resident implies for the person who resides in Australia. By taking into account the case law of Gregory v DFC (1937), it can be depicted that Australian taxation law should be given the same which had received in England. Taxation ruling TR 98/17 presents circumstances or situations which entails whether individuals entering Australia comes under the category of resident or not. ATO presents that the manner in which domestic and economic affairs are organized help in determining residency status (Taxation Ruling, 2018). By doing assessment, it has found that an individual is considered as an Australian resident if his / her behaviour in line with before entering in Australia (Weier, 2017). Along with this, there are several factors which need to be kept in mind while determining residential status such as an intention, employment ties, maintenance and location of assets as well as social and living arrangements.
In addition to this, to reside in Australia, there is a need to display behaviour over the time frame. Such status must be in line with the people residing there such as a degree of continuity, routine and habit. Guidelines revealed by ATO clearly shows that when one individual stays in Australia for more than 6 months period, then he is considered as an Australian resident from tax purpose.
Such ruling is applicable on the most of individuals entering Australia includes:
- Academics teaching or studying in Australia
- Students studying in Australia
- Visitors on holiday
- Workers with pre-arranged employment contracts (Residency tests, 2018).
On the basis of Australian tax laws and legislation, test which is undertaken for checking or evaluating residential status termed as resides test. Specifically, there are mainly three tests which provide assistance in determining whether an individual is held liable from tax purpose or not (Comans, Moretto and Byrnes, 2017). Domicile test presents that an individual comes under the category of an Australian residents unless it is proved that permanent place of adobe accounts for outside Australia.
Further, 183 days test is also highly effectual which in turn provides high level of assistance in evaluating the residential status of individuals. On the basis of such test, when individual is present in Australia for more than half of the income year whether continuously or with breaks irrespective of having no intention in relation to taking up residence here (Residency - the resides test, 2018). In other words, it can be depicted that an individual comes under the category of an Australian resident if he / she has completed 183 days in Australia.
Income tax rules of Australia presents that superannuation test is also highly prominent which in turn highly applicable on government employees (Basu and Madsen, 2017). Hence, it can be depicted that superannuation test is applicable on employees working at Australian Post overseas and members under CSS and PSS schemes.
Given case situation presents that Usman held a French passport at all relevant times. He held an Australian which in turn permits him to work over there. During the time period, he worked as an engineer in Australia. In the accounting year 2015, Usman returned top France and worked over there. In the context of tax year 2016-17, he worked in Australia. Hence, by taking into account current situation or working aspect of Usman it can be presented that he comes under the category of an Australian resident (Lai and et.al., 2018). Moreover, in the tax year 2016-17, Usman has spent more than 183 days which shows that he is liable from the tax perspective.
- Norman has purchased the residential house for 6 rooms in 2016 amounted to $700000 on which he has made payments of 70000 as a stamp duty.
- He has made the expense of 100000 as to have hairdressers business which will cover the 2 rooms from the residence
- D'Emden v Pedder (1904)
- Capital Gain tax
In relation with analysing the capital gains tax payable by Norman there is need to have gains from the property. Moreover, he has purchased the residential house for 6 rooms in 2016 amounted to $700000 on which he has made payments of 70000 as a stamp duty. Thereafter, he has made the expense of 100000 as to have hairdressers business which will cover the 2 rooms from the residence.
Therefore, in terms with analysing such case it can be said that he will have to make payment of Capital gains over the property he has used for business or income purpose. Thus, the remaining property is for his residence will not required to have taxable payments over it (Fry, 2017). Therefore, he has to make the taxable payment over $100000 which was invested as to develop the hairdresser business into the premises (Weier, 2017). Moreover, this case has the similarity with the case of D'Emden v Pedder (1904).
- Tax offsets.
- Section of 160AAAA
- ITAA 1936
- Section 61-10 of ITAA 1997
- section 79A
The research and development cost is offset by ATO (Australian Taxation Office) in certain cases. Avon has entered into contract with Central Queensland University to undertake research amounting to $500,000 in the year 2016 in month of June. The project is required to finish-off within one year. As per the guidelines issued by ITAA 1936 and ITAA 1997. Starting with ITAA 1936 that have various sections regarding the tax offsets. The section of 160AAAA of the Act clarifies that tax offset is measured for low income persons and also the aged ones (McLaren, 2017).
Tax offset means rebate in tax liability is provided on the assessable income of people. Avon can get this facility by complying with the provision of the Act. The tax offsets on the research and development are available at the rates of 43.5 % or 38.5 % on costs of contract. Here, 43.5 % has been into account to calculate income tax deduction. This clarifies that Central Queensland University should provide this percent of tax offset on the services provided to Avon. It can be advised to the client that on the amount of $500,000, company can get tax offset of $217500. This is calculated by taking 43.5 % of contract amount in the best possible manner. Thus, income tax deduction may be made in this regard so that Avon can easily avail this provision in effectual manner.
Moreover, it is required that ATO should assess this amount so that income tax liability burden may be reduced with much ease. In accordance to the provision of ATO, claim can be made by Avon on the contract amount in the research and development purpose. The tax incentive is based on self-assessment and as such, Avon is required to claim this amount by complying with provisions of the Taxation law in relation to this context. First step is required that firm should be registered with Department of Industry, Innovation and Science. Furthermore, assessable income must be presented to ATO and claim should be listed in it regarding the tax offset. The records of company are needed such as financial statements in order to clarify whether income assessed is correct or not. This will also impart transparency on the research and development claim of Avon whether the same is assessed as per the provisions or not. Thus, deductible rate is required to be furnished by company and ATO can easily assess transparency in the best possible manner (Offsets and rebates. 2017).
Tax offsets can be availed as the contract amount is less than the limit sealed by ATO. As per the provision, research and development tax incentive can be availed when total turnover is less than $20,000,000. This means that company may easily get this benefit as amount is less and as such, company is advised that claim amount can be garnered as it is in accordance of rules of ATO. Avon can avail this amount on the income assessed (Lai and et.al., 2018). Tax offset used in ITAA 1997 is much generic term while ITAA 1936 describes this as rebate. Section 61-10 of ITAA 1997 clarifies who is entitled to receive the benefit of tax offset. On the other hand, ITAA 1936 section 79A guides to rebates allowed to company and business on income tax. Thus, Avon can avail this tax offset benefits and as such, net income tax payable should be paid by it. This means that the calculated amount at the rate of 43.5 % should be deducted and is advised to Avon to pay its tax liability after deduction of the amount.
On the basis of above analysis, it can be said that there are various legislations, rulings and acts which were imposed by the federal registrar of legislation in consideration with providing the adequate jurisdiction and legal advices to the citizens. Moreover, in relation with the Income Tax Assessment Act 1997, there are various amendments and laws which in turn will be helpful in managing the taxation environment in the country. Therefore, in the present report, there has been influences of various cases and clients as per their requirements and the remedies in the taxation analysis. Similarly, they have been awarded with the adequate legal advices with consideration of all the laws and regulations.
- Basu, S. and Madsen, K., 2017. Effectiveness and equity of sugar-sweetened beverage taxation. PLoS medicine. 14(6). p.e1002327.
- Comans, T., Moretto, N. and Byrnes, J., 2017. Public preferences for the use of taxation and labelling policy measures to combat obesity in young children in Australia. International journal of environmental research and public health. 14(3). p.324.
- Fry, M., 2017. Australian taxation of offshore hubs: an examination of the law on the ability of Australia to tax economic activity in offshore hubs and the position of the Australian Taxation Office. The APPEA Journal. 57(1). pp.49-63.
- Lai, F. Y. and et.al., 2018. Measuring spatial and temporal trends of nicotine and alcohol consumption in Australia using wastewaterâ€based epidemiology. Addiction.
- McLaren, J., 2017. The Economic Development of Northern Australia: A Critical Review of the Taxation Benefits and Incentives Both Past and Present and the Potential Taxation Options for the Future. J. Australasian Tax Tchrs. Ass'n. 12. p.1.
- Weier, M., 2017. Commentary on White et al.(2017): Adolescent drinking and exposure to advertising—behaviour does not occur in a social vacuum. Addiction. 112(10). pp.1752-1753.