Australian Taxation Duties Segeregated Businesses

Question: Describe about the Australian Taxation Duties for Segeregated Businesses. Answer: Introduction The given case study has been segregated into two parts. It is based on an individual named Fred residing in England who visits Australia for setting up his branch. It was observed that in his initial stages of his stay Fred resided in Australia for more than 11 months. It is also given that Fred stayed with his family for some period during his stay in Australia. It is further given that after a period of 11 months Fred decided to return to his native place due to ill health. The study shows on the rationale for his assessment of the tax on the grounds of Australian residential tax norms. The latter part of the report shows the laws and outcomes based on ordinary income. Case Study 1- Residence and Source As per the Australian taxation authority, Fred will be taxed as he has been residing in Australia for more than eleven years before he was observed to return from England. The earnings of him during the stay in France at the time of his employment at Australia will be also taken into consideration during the tax assessment. The various types of the complexities need to be taken into consideration is based on the individual personal circumstances. Bur it should be also noted that one cannot put much stress on the importance of the significance of the lucidity of the subject of the residency and the immigrants who are attaining the appropriate advice for a particular business venture and the undertaking of a contract. It has been also observed that Fred is primarily a resident of Australia as the per the concerns of the tax assessment. It has to be noted that Fred has spent exceeding a period of 183 days. Any migrant who has spent more than 183 days sporadically or consistently is liable to be charged as per the taxation norms. In general term Fred is also liable to hold a land on lease for the past 12 months and used to stay with his wife before he returned to England due to ill health. As per the guidelines given by the Australian taxation agency, an individual can be only exempted from tax if he/she satisfied due to the natural place of residence which is outside his native pace of origin and moreover he does not have any intentions for acquiring the residence. During the domicile test the different types of the tax ruling as per the Income Tax 2650 states that the a country in which a person or an individual is born, unless he/she migrates to some other region and then decided to adopt, the citizenship of his own choice. As per the given case Fred, is originally a British resident with intentions to set up the business in Australia. Although, it has be noted that the total tenure of his stay is sufficient and during his stay he also took a house on lease for a period of 12 months and resided at Australia for a duration of 11 months before he returned to England due to his liverish health. It has to be further noted Freds residential, status needs to be decided as per his stay at Australia and the residency test is used to provide the information of then fact of the liability is dependent on the circumstances of the stay. It has to be also understood that in case an individual returns to his place of origin then in that case the frequency, periods and the regularity of the trips needs to be taken into consideration for making the tax assessment. In case the only reason for the absence of an individual from Australia is due to business, then this facts is not enough for the purpose for the assessment for claiming of the inhabitance of an individual. Due to this reason Freds ties with his business and families based in Australia is enough to be considered for the purpose of taxation under the Income Tax Act. Case study 2 Ordinary Income I. Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159 The case mentioned above states about then realization of the problems pertaining to the capital assets even if the earning from the sale of property can be exploited for mineral in form of the ordinary capital or income (Arthur 2016). Law: As stated in the rulings in assessing in determining the profits that are being extracted for the different types of the isolated income sources and these are assessable under 25(1) of the Income Tax Assessment Act 1936 (Davison, Monotti and Wiseman 2016). The two types of the isolated transaction are shown below as follows: The entries, which are entered into the books of non-business taxpayers The entries which are outside the purview of the ordinary course of the business of a taxpayer including the ones carrying out eh commercial activities Outcome: The outcome of this clearly states that the taxpayer was assessable on the grounds of the profits, which were being sources from the sale of the land and then form of the profits, which are identified as income in nature. It has to be further understood that the taxpayer were actually seeking to earn profits from the sale of land. It needs to be understood that the taxpayer did not have the sufficient funds to mine the land (Bryan, Degeling, Donald and Vann 2016). As stated by the Lord of justice the owner of the ordinary investment decides to realize the investment made by the taxpayer when it attains a higher price and not just the profit. Hence as per Sense of Schedule D of the Income Tax Act of 1842 the income tax is assessable (Cohen-Kurzrock 2015). Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188 The given case takes into consideration the business income and knowledge of subdivision for the sale of land, which may be further utilized for realizing the capital (Hart, Clark and Fazzani 2013). Law: Tax gains from capital: The various types of the capital gains and the loss can be made if the capital gains tax event may take place as per specified in the section 108-5(1) of the income tax assessment act 1997. This clearly states that gains from capital is termed as property or a legal equitable right is not considers as a property (Morse 2013). Outcomes: The decision taken by the management can be long considered for the passing of the proposition, which is related to the meager realization of the enterprise. As per the common law report the hearing took a long time of two days pass the hearing of the judgments which was made after six days of time. The outcomes clearly stated that then essential commercial exercise was being treated as a mere realization of the capital assets (Vermeulen 2015). FC of T v Whit fords Beach Pty Ltd (1982) 150 CLR The study is based on the fact whether a taxpayer was included in taxation on the basis of the profits for the sale of the subdivision of the land and this is considered under the section 25(1) or 26(a) or in case the tax payer was seen to be releasing the capital assets (Fuest et al. 2013). Law: As per the different type of the rulings of the law for the assessment of the proceeds generated as a result of Isolated transactions. These are treated as income or assessable under subsection 25 (1) of the Income Tax Act Assessment Act 1936 (Fleischer 2015). Outcomes: The verdicts stated by Wilson JJ, Mason, Gibbs CJ and Murohy the taxpayers were observed to be assessable for generating the sale of land under the sections under section 25 (1). The high court is observed that the profit surpassed the merely than the realizing the capital asset and the different type of the activities which are constituted for the purpose for the carrying out of the business activities (Campbell 2013). Although it was stated by Mason J and Gibbs to specify the second limb which operated under section 25(1), it does not consider the profits which are being yielded from the gross income. The outcome of this is related to the profit generation, which is computed in the basis of the subtraction from proceeds of the different type of the value of sale data (Ricketson Richardson and Davison 2012). Statham Anor v FC of T 89 ATC 4070 The aforementioned study is related to the questioning of the proceeds which are being received for the sale of the subdivided lots to constitute the assessable income which is given under then sections 25 (1) or 26 (a) (Burke 2016). Law: Taxable/Assessable Income: The various type of the income, which is assessable, from the sale of the subdivided land, which was originally, acquired leading to any sort of realization of the assets. Outcomes: The Federal court has been observed to rule out the net proceeds which are being generated from the sale of the subdivided land which did not take into account assessable income under section 25 (1) or 26 (a). As per Hartigan JJ and Woodward, Lockhart which is related to the understanding of the realization of an asset on the amount of profit which does not necessarily include the amount of the taxable profit. The mere amount of te realization does not convert the business undertakings however the scale of the realization must be considered for the nature of the undertakings (Schwieger and Chen 2013). Casimaty v FC of T 97 ATC 5135 The aforementioned case is related to determining of profit from the subdivision and sale of parts of property which is assessable either under section 25 (1) or 25A (Samuel 2013). Law: The law is related to questioning of profits, which are generated from the carrying of the business or as a result of the realization of assets bearing capital. Outcomes: The court passed its verdict by concluding the action view which was acquired by the taxpayer with the objective primary production that no profit from sales is assessable in accordance with the first limb of Section 25A (1). Moana Sand Pty Ltd v FC of T 88 ATC 4897 The case is related to questioning whether section section 25 (1) or 26 (a) is applicable to the tax payers assessable income and the amount receivable by the tax payer by deducting the relevant cost for deriving the profit from the selling off the land. Law: The law determines whether the profits generated from the isolated income are assessable under section 25(1) of the income tax Assessment Act 1936. Outcomes: As per the court ruling the amount received by the taxpayer was obtained as a form of then isolated payments. Moreover the profit was taken into consideration in terms of the ordinary concept of the compliance as per the decision passed by the in FC of T v The Emporium LTD 87 ATC 4363 and hence it is constituted as assessable income under section 25(1). As per the final verdict the court decided that then profit was assessable under second limbs of section 26 (a) as it was realized on the execution of the profit undertaking scheme. Crow v FC of T 88 ATC 4620 The case is based on the subsection 25 (1) or section 26 (a) of the Income Tax Assessment Act 1936. This is applicable to the selling of the land near Hobart. Law: Taxable Income: The assemble income is based on the selling of the subdivided land initially acquired for farming on which proceed are derived from carrying out of the business activities (Bently and Sherman 2014). Outcomes: The outcome of the decision stated taxpayer had taken money heavily for purchasing of five large area of land and conducted the business activities in them. At a later stage the tax was assessable on the land which was taxable in nature. McCurry Anor v FC of T 98 ATC 4487 The case is related to the profit generation form the sale of the land assessable under section 25(1). Law: As per the law the taxpayers are assessed as per the section 25 (1) of the Income Tax Assessable Act 1936 on the profit from the sale of land. It states the basis of deriving profit from the scheme. Outcomes: The study shows that the brothers used the funds for taking credit for the bank for purchasing land where the house stood. The verdict given by hen court stated in the property is acquired during the course of the business with a profit-earning motive then it will not be regarded as an investment. It further stated that the profit generated is considered as an income under sec 25 (1). The rulings of the court further stated that the taxpayers entered into commercial dealings and they were not carrying any business activities. The profit assessable has to be derived for the transactions, which can be stated as commercial, dealings. Conclusion It can be concluded by stated that will be taxed as per the taxation rule on the Australia as the period his stay exceeded by 11 months. This due to the reason to Fred decided to stay in Australia for a period more than 183 days. It has been also observed Fred decided to hold a land on lease for a period exceeding 12 moths. As per the applied rulings discussed, the residential status of Fred has been determined based on residency test and the various considerations for tax liability shows the tax liability is based on the circumstances of stay. The latter part the report highlight s then different types of the case based on the ordinary income. Then discussion shows the several types of law, outcomes with the relevant examples from the court cases. Reference List Arthur, G., 2016. Tax files: Taxation duties of executors. Bulletin (Law Society of South Australia), 38(2), p.28. Bently, L. and Sherman, B., 2014. Intellectual property law. Oxford University Press, USA. Bryan, M., Degeling, S., Donald, S. and Vann, V., 2016. A Sourcebook on Equity and Trusts in Australia. Cambridge University Press. Burke, K.C., 2016. Taxing Risky and Non-Risky Compensation: Section 707 (a)(2)(A). Journal of Taxation of Investments, 33(4). Campbell, D., 2013. International joint ventures. Juris Publishing, Inc.. 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Startup Ltd.: Tax Planning and Initial Incorporation Location. Fla. Tax Rev., 14, p.319. Ricketson, S., Richardson, M. and Davison, M., 2012. Intellectual property: cases, materials and commentary. LexisNexis Butterworths. Samuel, G., 2013. Law of Obligations Legal Remedies. Routledge. Schwieger, D. and Chen, S., 2013. Tax Consequences of Selling, Purchasing and Using State Income Tax Credits, The. J. Tax'n Fin. Products, 11, p.9. Vermeulen, A., 2015. The tax treatment of rehabilitation liabilities assumed by the purchaser as part of the consideration given on the sale of mining property in terms of Section 37 of the Income Tax Act 58 of 1962.