Taxation - Theory - Practice and Law by Free Sample

Question: Describe about the taxation, theory, practice law in australia. Answer: Issue To provide advice regarding a suitable taxation of the gathered revenue to a Chilean citizen for verifying his tax residency status on a kit Rule There is an act of paying tax regarding the residential position of an assessee. This tax will be imposed on that individual based on the residential status of that person by following the section 6 (1) of ITAA, 1936 (Burnett et al., 2015). Moreover, under this act, some tax ruling are also there like TR 98/17, which on the other and comprises of four test to find the ascertain of the taxpayer (ATO, 1995). 1. Domicile Test A person has to clear their tax payment even if they are residing in some foreign countries for any reason like for studying or for some professional reason. Thus, taken for an example, for an Australian citizen, who is living in the foreign territory, a test will be performed in order to analyse or evaluate their tax residency status in their home country (Woellner et al., 2012). The residential position of an assessee is resolute for every year compared to each previous year as the taxation amount may fluctuate from previous year to previous year. Thus, it is clinched that the Australian citizen has to pay the tax under Domicile Act 1982 (Mason, 2015). Another consequence is that, if a person has a permanent citizenship of some other countries for living for a longer period, even then also they have to be considered having an Australian domicile. Gonzales and Stuart, (2014) states that the destination country is capable of tracking the individual's location compared to the current residence relying on many factors by the Tax Commissioner as per the statement stated in Taxation Ruling IT 2650. The factors are discussed below: The citizen wants to relocate in some foreign country. The citizen was associated with some activity that makes them relocate their current location. The difference between the expected and actual interval of the staying period from outside Australia The frequency of the trip to the outside territory from Australia and the waiting time interval on that state 2. Superannuation Test According to Edmonds et al., (2015) illustrate that if an individual fulfilled some conditions regarding residency taxation, that person should be liable for paying tax for their resident as an Australian tax resident and is recognised by the Tax Commissioner. These two schemes are: Commonwealth Superannuation Scheme Public Sector Superannuation Scheme Joseph et al., (2015) mention that this test encompasses by considering the instruction of the federal government of Australia for the officers who are instructed to be posted on the foreign territory. It is also evident that the concerned person stayed outside of Australia but is currently associated with these schemes. Thus, the Australian citizen, who is also the taxpayer in Australian territory, would be considered as tax resident if the person is involved either of the two schemes which are mentioned above (Feng et al., 2014). 3. Residency Test There are some factors that are responsible for the payment of tax for an individual residing in Australia. Zelinsky, (2014) depict that the prime reason of such analysis as a residence cannot explain someones decree. As a result, in context of the relevant cases according to the tax rulings some undertaken verdicts and statement are highlighted: The current location of the individual The frequency with which the concerned person visits outside Australia The primary reason and the intensity of those foreign visit either for professional or personal commitments following the legislation of the judgement of the Levene v IRC [1928] AC 217 case (Miller Oats, 2012). The time interval for the person to stay in the foreign territory A particular duration of foreign visit especially in the home country that is in Australia 4. 183-day Test Dziurdz, (2013) illustrate that in order to test the taxation amount for a person, the Tax Commissioner tests whether the person stayed in the home country for a minimum period of 183 days for a single financial year. However, it is not necessary that the person has to stay in Australia continuously for 183 days; it may be in discounted form. Application In the given case study, an Australian resident named Kit currently works in the Indonesian oil rig due to some professional commitments. The person had a permanent abode in Australian territory and signed a contract in the home country also; however, the person retains with the Chilean citizenship. Moreover, the person has some possessions in Australia like an owned house and a joint account with the spouse in Australian bank, where on every month his salary credited. The person comes back to Australia for a month every after three weeks to spend some family time or visit South America for vacations. Thus, it is apparent from the above criteria and the learned legislations for the tax payment of residents; Kit must have to undergo for domicile test. Kit has nor planning to reside outside Australia and also maintain the current bank account in the home country. All these factors ensure the eligibility of Kit to be a part of Domicile test. Furthermore, Kit possesses an Australian domicile and is an Australian permanent resident, which is the foremost substantial requirement of the domicile test (Zelinsky, 2016). Thus, both the imperative conditions concerning the Domicile test is fulfilled by Kit and hence, the person is eligible for paying the Australian tax resident following the legislation of section 6(5) of ITAA, 1997. As per the rules provided by the Australian tax law, according to Sharkey, (2015), desired tax have to be paid by Kit for ordinary income that is the salary and investment income coming from Indonesia and income coming from residential land under the provision o f ITAA. Conclusion It is concluded that Kit is worthy to pay the residence tax and considered as Australian tax resident as the person satisfy the domicile test conditions that is own a house in Australia and maintain the current bank account. Australian tax law also imposes tax coming from the investment in foreign lands. 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