International Taxation and Tax Rulings †MyAssignmenthelp.com

Question: Discuss about the International Taxation and Tax Rulings. Answer: Introduction: The purpose of residential status of Marty and Planks Pty is alarmed in the following case study. Shaping the residential status of an individual is based on Resides Test, which is the principle test as per Australian taxation. It is depicted in the case study that a new platform for web designs have ben developed throughout the world by Matry despite of the fact that he is a citizen of Australia. An individual needs to satisfy the 183 days test and domicile test if he has to be reflected as citizen of Australia for if he is residing in Australia (Harris 2013). It is necessary to conduct the test below for determining the residential stated of Marty as depicted from the case study. According to this particular test, an individual is said to have constructive residence in Australia, if he or she is actually present in Australia for more than half the income year. This is regarded if an individual has no intention of taking up residence in Australia and the fact can be established that the actual place of abode is outside Australia (Long et al. 2016). Some of the assumptions regarding this can be stated below: Matry spend only four weeks with his family during Christmas during the financial year 2013-2014. Since the period of his stay in Australia was not for long time, it was only for few weeks. Therefore, for the period of 2013 to 2014, Matry cannot be considered as Australian citizen. It is clearly depicted from the case study that Matry did not reside in Australia for the financial period 2012 to 2013. Hence, for that particular period, he cannot be regarded as resident of Australia. During the year 2015 to 2016, Marty returned to Australia and the purpose of returning to the country was getting married to his love of life and start his new family. In this regard, the criteria of 183 days test is being fulfilled by Marty for the year 2015 to 2016. Therefore, Marty would be considered as Australian resident for that particular period. The objective of Marty returning back to Australia for the financial period 2014 to 2015 was to spend quality time with his girlfriend and his duration of staying in Australia was for the time period of eight months that is from 1st September to 1st The duration of stay of Marty is for more than six months that is the period of stay is more than 183 days (Parker 2014). Therefore, Marty stay during that particular time period will treat him as resident of Australia and he is subjected to assessment of tax on the amount of income earned by him. From the above analysis and discussion, Marty would be considered as Australian resident for the time of more than six months that is during to stay around 2015 to 2015, as indicated by 183 days test. Unless, an individual is recognized that his permanent place of residing is outside Australia and he does not deliberately takes up his residency in Australia. In the financial year 2015 to 2016, Marty returned back permanently to Australia for marrying love of his life. Hence, from the case study it is clearly depicted that deliberation of living permanently in Australia has been expressed by Marty upon his coming back to Australia. Domicile Test: An individual having permanent home that is domicile in Australia is considered to be resident of Australia. This is considered when it is satisfied by conducting the test that the permanent place of that individual is not inside Australia. The significance of the test is that an individual having permanent place to live in Australia is regarded as resident of Australia. An individual ceases to be resident of Australia for the assessment of income tax during her or his stay overseas or outside resident country if he leaves Australia for temporarily for working overseas under the rulings of taxation of IT 2650 (Oestreicher and Hammer 2015). Following rulings are provided in the summary of Domicile and they are as follows: Creation or establishment of home outside the geographical territory of Australia. Deliberation and unusual length of stay outside Australia or overseas nation. Endurance of presence outside Australia and length of stay involved. Coming back to Australia after some point of time while having some particular intention. Marty has been involved in web designs development in Australia and all over the world. In spite of this fact, he is able to maintain his position of being an Australian resident and it can be easily witnessed from the case study provided. Marty continue to stay outside Australia and worked overseas for period of two years and the time duration ranged from 2012-2013 to 2014-2015. Moreover, as Marty intends to come back to live permanent in Australia with the objective of marrying his girlfriend and settling with his wife as indicated by domicile test (Robin Barkoczy 2016). For the purpose of calculation of tax and assessment of his income for taxation, Marty is regarded as Australian resident since his becoming back to Australia to live permanently. Summary of residential status of Marty Period of taxation 183 days test Domicile test Residential status 2012-13 An individual is not residing in Australia In Australia, an individual does not have permanent place of residence Non-Resident 2013/14 After the time period of Four weeks, he returned back to Australia Marty does not have an everlasting place of residence in Australia Non-Resident 1st September 2014 to 1st April 2015 Since he existed in Australia for more than 183 days or seven months is regarded as an occupant of Australia. Has a temporary place of residence outside Australia Resident 2015/2016 A everlasting resident of Australia. Proposed to live in Australia permanently. Resident In order for trusts and corporate limited companies to be regarded as Australian resident, they should meet diverse conditions. It is evident from the case study that incorporation of Planks Pty Ltd was done in United States and it was located in Silicon Valley and is a tech business. It can be ascertained that Marty being the sole director of Planks Pty Limited did not return to Australia for the period of 2012-2013. This has been analyzed for determination of residential status of organization. Hence, for that particular period, Planks Pty will not be regarded as Australian resident. Martys period of stay in Australia was relatively shorter as per residential test and the decisions in regard to company was not done within Australia. For the financial period, 2014-2015, during the period when Marty was staying in Australia and all managerial decisions were being taken from there. Therefore, for this particular period, Plank Pty is regarded as resident company of Australia for calculation of tax. If an organization carries business in Australia but the incorporation is not done in Australia, then under the taxation 2004/15W ruling, it will be regarded as resident of Australia. There are five shareholders of the company and one of the shareholders resided in Australia for the time from 1st September to 1st April and has the voting rights being the Australian resident. Therefore, in this regard, Plank Pty limited would be regarded as Australian resident. Computation of Taxation for the year 2012/13 In the Books of Marty Particulars Amount Base Income 100000 Tax on Income 33400 Medicare Levy 0 Total tax Payable 33400 Computation of Taxation for the year 2013/14 In the Books of Marty Particulars Amount Base Income 20000 Tax on Income 72000 Medicare Levy 0 Total tax Payable 72000 Computation of Taxation for the year 2014/15 In the Books of Marty Particulars Amount Base Income 400000 Tax on Income 153921 Medicare Levy 8000 Total tax Payable 161921 Computation of Taxation for the year 2015/16 In the Books of Marty Particulars Amount Base Income 100000 Tax on Income 24947 Medicare Levy 2000 Total tax Payable 26947 Computation of Taxation for the year 2013/14 In the Books of Marty Particulars Amount Base Income 1000000 Tax on Income (30%) 300000 Medicare Levy 0 Total tax Payable 300000 Computation of Taxation for the year 2014/15 In the Books of Marty Particulars Amount Base Income 2500000 Tax on Income (30%) 750000 Medicare Levy 0 Total tax Payable 750000 Computation of Capital gains tax: Computation of CGT of Rommy for the year 2015 Particulars Amount ($) Amount ($) Sales Price of the property 1500000 Less: Cost of sales 0 Adjusted selling price 1500000 Purchase Price 500000 Add: Cost of purchase and Ownership 0 Adjusted purchase price of asset 500000 Capital gains / (loss) 1000000 CGT under old Regime Indexed capital gains / (loss) 1000000 Tax payable under old regime (marginal tax rate * Indexation factor * capital gains) 472865 Capital gain tax assessments: The difference between the sale of asset on its disposal and consideration concerning purchase represents the capital gains or loss. If the difference is positive, it will be regarded is capital gain and negative difference will be regarded as capital loss. The component of income tax includes capital gain and it is not considered separately. Land was purchased by Rommy for $ 500000 in year 2000 and the income generated from sale of land stood at $ 1500000. Capital gain was generated from sales of such assets. Unless the assets are specifically excluded, they would be subjected to capital gains tax if they are acquired after 20th September 1985, as per Australian taxation office (MacKenzie 2014). Income that is generated from carrying out business activities is regarded as assessable income. Things that can be implicated for capital gain and income tax assessment involves using of property for carrying out business, property for investment and renovation of building done for profit (Taylor and McNamara 2014). From the scenario presented in the case, selling of wine has been the business started by Rommy in the form of weekend hobby by way of small quantity grapes framing. While receiving assistance from honesty box, 20 boxes was sold in local market and outside the property, he sold 20 box. Understanding the deviation between the business for tax and other purpose and hobby is considered to be of crucial importance. The business activities of Rommy is attracted with taxation as it involves wine selling made of grapes. The proceeds generated from carrying out ordinary business course and gross amount of earning are required for computation of assessable income tax. Hence, for computation of Rommys assessable income, income derived from wine creation and framing of grapes would be included. Gain generated from selling of assets comprised of capital gain tax. Based on situation, generation of profit from land that is sub divided would either be regarded as ordinary income or capital gain. Profits attributable from selling of land that has been divided by an individual are entitled to capital gain tax. The newly created block of land is subjected to capital gain. The profits generated from selling of subdivided land by Rommy will be held as ordinary income and subject to assessment. For computation of assessable income, selling of divided land would generate income and will be treated as capital gain (Miller and Oats 2016). Reference and Bibliography: Barkoczy, S., 2017. Foundations of Taxation Law 2017.OUP Catalogue. Harris, P., 2013.Corporate tax law: Structure, policy and practice. Cambridge University Press. Krever, R.E., 2014.Australian Taxation Law Cases 2014: A Guide to the Leading Cases for Commerce and Law Students. Lang, M., 2014.Introduction to the law of double taxation conventions. Linde Verlag GmbH. Long, B., Campbell, J. and Kelshaw, C., 2016. The justice lens on taxation policy in Australia.St Mark's Review, (235), p.94. MacKenzie, N., 2014. ACCTG 503 Federal Taxation of Individuals, Sections 1 and 2. Main, J., 2015. Taxation: Dangerous trusts and hidden tax stings.LSJ: Law Society of NSW Journal,2(11), p.93. Miller, A. and Oats, L., 2016.Principles of international taxation. Bloomsbury Publishing. Mohammed, S.O., 2013. Law of Taxation II. Oestreicher, A. and Hammer, M., 2015.Taxation of income from domestic and cross-border collective investment. Springer. Parker, R.H., 2014. Some international aspects of accounting.International Accounting and Transnational Decisions,9. Robin Barkoczy Woellner (Stephen Murphy, Shirley Et Al), 2016.Australian Taxation Law 2016. Oxford University Press. Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers view.Procedia-Social and Behavioral Sciences,109, pp.1069-1075. Svoboda, V., 2016. Libertarianism, slavery and just taxation.Humanomics,32(1), pp.69-79. Taylor, D. and McNamara, N., 2014. The Australian consumer law after the first three years-is it a success?.Curtin Law and Taxation Review,1(1), pp.96-132. Vella, J., Van de Velde, E. and Luja, R., 2016. International taxation and tax rulings: policy issues at challenging times. Zelinsky, E.A., 2015. Hillenmeyer, Convenience of the Employer, and the Taxation of Nonresidents' Incomes.Clev. St. L. Rev.,64, p.303.