Taxation Law Exam Notes Tax Payable (s4-10) = (Taxable Income ...
Taxation Law Exam Notes Tax Payable (s4-10) = (Taxable Income * Tax Rate) – Tax Offsets Tax/Financial Year = 1st July to 30th June Taxable Income (s4-15) = Assessable income – Deductions Residency: Australian resident (s6-5(2) & s6-10(4)): Assessable income = all ordinary and statutory income derived directly or indirectly from all sources during tax year. Foreign resident ( s6-5(3) & s6-10(5)): Assessable income = all ordinary and statutory income derived directly or indirectly from all Australian sources during the income year and any other amounts. Residency test (4 in total) to determine whether TP is Australian resident: (residency decided yearly, only 1 test needs to be satisfied to be Australian resident.) Australian resident is resident and foreign resident is not (s 6(1)) 1. Ordinary resident test: Person’s physical presence must reside in Australia. If they work overseas, the frequency, regularity and duration of visits will determine if person is Australian resident. If their nationality is Australian, then they are Australian resident. Cases: Joachim; Levene Levene: Dwell permanently for a considerable amount of time in a particular place. ATO TR 98/17 factors: Physical presence in Australia; Frequency/regularity/duration to Australia; Purpose of visits to Australia + abroad; Maintenance of place of abode in Australia during absences; family, social + business ties; Nationality 2. Domicile test (s6(1)(a)(i)): Person is permanent resident of Australian unless FCT(Federal Commissioner of Taxation) is satisfied TP has ‘a permanent (not forever - Applegate) place of abode (home or presence outside Australia - Applegate) overseas!’ Cases: Applegate; Jenkins IT 2650 factors: intended/actual stay in foreign country; duration & continuity of TP’s stay in overseas country; establishment of home outside Australia; Residence/place of abode in Australia; durability of association with Australia (bank accounts, family ties etc.) 3. 183 Day test (s6(1)(a)(ii)): TP is Australian resident if TP has resided within Australia for 183 days or more unless FCT is satisfied TP has residency outside Australia and does not wish to reside in Australia. If TP passes test, they are treated as tax resident for whole of income year. Cases: Executors of the estate of Subrahmanyam (2002); Groves v FCT
(2011) Executors of the estate of Subrahmanyam: Treated as Australian tax resident for whole of income year. 4. Superannuation test (s6(1)(a)(iii)): members of Commonwealth funds are deemed to be Australian residents. Temporary residents (768-R): TP who holes temporary VISA under Migration Act 1958, TP not considered Australian residents under Social Security Act 1991, therefore treated as foreign resident. Company Residency test (3 alternative tests) (s6(1)) 1. Incorporation test: Company incorporated in Australia, then resident of Australia for tax purposes. All other factors are irrelevant. 2. Central Management & Control test: Only relevant to companies that are not incorporated in Australia. The company is considered resident of Australia for tax purposes if company’s central management and control reside in Australia. Cases: Malayan shipping (1946); TR 2004/15 Malayan shipping: Both requirements could be fulfilled by the same facts. 3. Voting control test: Company carrying business in Australia. Voting power controlled by Australian shareholders. Cases: Kolotex (1975); Patcorp (1976) Kolotex: Majority of votes in a general meeting. Patcorp: Limited to registered shareholders (not beneficial owners)
(2011) Executors of the estate of Subrahmanyam: Treated as Australian tax resident for whole of income year. 4. Superannuation test (s6(1)(a)(iii)): members of Commonwealth funds are deemed to be Australian residents. Temporary residents (768-R): TP who holes temporary VISA under Migration Act 1958, TP not considered Australian residents under Social Security Act 1991, therefore treated as foreign resident. Company Residency test (3 alternative tests) (s6(1)) 1. Incorporation test: Company incorporated in Australia, then resident of Australia for tax purposes. All other factors are irrelevant. 2. Central Management & Control test: Only relevant to companies that are not incorporated in Australia. The company is considered resident of Australia for tax purposes if company’s central management and control reside in Australia. Cases: Malayan shipping (1946); TR 2004/15 Malayan shipping: Both requirements could be fulfilled by the same facts. 3. Voting control test: Company carrying business in Australia. Voting power controlled by Australian shareholders. Cases: Kolotex (1975); Patcorp (1976) Kolotex: Majority of votes in a general meeting. Patcorp: Limited to registered shareholders (not beneficial owners)
