This is a solution of Australian Taxation Law Assignment Help in which we discuss Developing business For the purpose of setting up an branch office of his company.
Australian Taxation Law and provision imposes that any visitor lives in Australia at a same place for a period of more than six months or having some kind of existing ties within the Australian community or build some new ties where he/she stays, this situation clarifies that visitor is liable to pay taxes as he/she is considered as the resident of Australia for the purpose of taxation (Taylor, 2012).
The given scenario stated that Fred is working with British company as an executive. For the purpose of setting up an branch office of his company he need to visit the Australia and in order to process the activities he need to stay in Australia for a period of 12 months and for this purpose he took residence on lease in Melbourne. He took his spouse with him to Australia but didn’t bring his two sons due to the start of their new session in college. Fred is having family home in UK which he put on rent and make the investment of the rent amount in France in order to get the interest over that amount. Fred is performing all these activities before shifted to the Australia and continue with doing this. After the tenure of 11 months in Australia Fred fell ill and leave Australia (Taylor, 2012).
In order to evaluate the residential status of Fred in Australia there are some facts needs to be evaluated in context to the taxations such as: –
- He rented property for the purpose of residence for a period of 12 months and more.
- The purpose of visiting Australia is to open up its company’s branch office for the purpose of providing management consultancy and it shows establishment of business ties (Smith, 2015).
- He put his family home on rent in UK.
- He make use of the rent amount for making further investment in France.
- He continue all the activities even after visiting Australia.
- He fall ill and it results into leaving Australia before completing 12 months.
- He took his spouse with him in Australia and left his two sons in London due to their education (Smith, 2015).
By evaluating the above discussed facts it is declared that Fred is Australian resident for taxation purpose. It is declared as he stays in Australia at one place only for more than a period of six months. Along with this period there is clear cut intention is to open up branch for its office. He stays in the Melbourne city for more than six months and these are the major factors that make him eligible for the taxation purpose. Even he get returned to the UK after 11 months from its arrival due to ill health but then also he is liable to pay taxes in Australia (Smith, 2015). The main factors that results in making him eligible for taxation are: –
- Residing in Australian city Melbourne for more than 6 months.
- Continue all the activities in UK even after visiting Australia.
- He visit Australia in order to set up branch office on behalf of his Company for consultancy services (Smith, 2015).
- Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159
This case is associated with the implication of tax laws over the profit amount with the sale of land. With the sale of land profit is that amount that get realised over and above of the amount of its acquisition. But as per this case the excessive amount with the sale of land didn’t get assessed as it get related with the carrying in or out of investment made by business owner. This situation leaves a question that the excessive amount over the sale of land is termed as earned profit by the individual or association with the intention of buying and selling of lands and securities or not. If it is considered as profit it is considered for taxation purpose (Khoury, 2011).
If the excessive amount earned is not associated with the business prospective or it didn’t get earned with the help of the speculation then the excessive amount earned with the sale of land didn’t get termed as assessable for taxation purpose. In this case California Copper Principle recommend twofold test applicability for the purpose of determining the nature of business as well as earned profit that help the business in indentifying the implication of income tax. That results into two considerations for the purpose of the separating profit taxability on the basis of the available circumstances and other facts. The court didn’t make inclusion of the capital profit for the purpose of taxation as it is the increased value of the land after the purchase date till the date on which land get sold out. This activity is related to the investment purpose not related to the running business activities or speculation activities (Khoury, 2011).
Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188
This case is related to the Scottish Australian Mining Co. that run their business activities of mining in 1771 acres of land. They purchase that land in the year 1863-65 and sold that land in the year 1942 because the mine was exhausted. However in order to get the attractive price of the land they made heavy expenditure for the purpose of subdivision of land. The process of subdivision of land make inclusion of various activities such as constructing roads, grant land for school, churches, parks and for railway station. High court realise that company is regularly indulge into mining activities and doesn’t continuing the activities related to the land subdivision. They made the subdivision because they need to get the maximum value of their piece of land and the profits earned with these activities get considered as the capital profit and didn’t considered as assessable for taxation purpose. In the year of the 1982 the decision get altered when Judicial Terrain rendered decision of Whitfords Beach Pty Ltd. The reasons behind these decision made by the court was that business didn’t acquire the piece of land for the purpose of selling and the excessive amount realised is advantageous for them and this amount didn’t get considered for the purpose of the taxation purpose (Whait, 2012).
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