Fred Carroll Case Study

Woellner, R, Barkoczy, S, Murphy, S and Evans, C (2011). Australian taxation law 2013 (22nd ed.). Sydney, NSW: CCH

The law of Residence and Source within Australia has been both and unclear and problematic, thus creating uncertainties that have recently been “magnified with factual application and technology changes that allow remote management” (Dirkis 2005). Even cases as similar as

* Australian residents are liable for tax on their worldwide income. While Non-residents are liable for their income with an Australian source.

Commonwealth Government, Budget Paper No 3: Australia’s Federal Relations, 2009-10, 12 May 2009, p 7.

individuals who are not Australian residents and don't have consent to be in the nation) to be

• - some other Commonwealth matters, such as those covered by the Customs Act 1901, the Social Security Act 1991 and the Taxation Act 1953

Megan Cluey, aged 22, arrived in Australia on 12 October 2010 to take up permanent residence. Three months

Under s 6-5 ITAA97, ordinary income includes in taxpayer’s assessable income. Furthermore, an Australian resident is required to include ordinary income, which receives from both directly and indirectly from all sources in assessable income under s 6-5(2). It is important to know that ordinary income is not stated by the law. However, there have been many cases that tend to help with the circumstances (Barkcozy 2014, p.251). One of the categories of income is Income from Business, which is derived from trading transactions. In contrast, it is not gains from the mere realization of capital assets. In order to constitute a business, it

183-Days test: The individual was occupant in the Australia on the off chance that he was really and persistently in the Australia amid more or more than the one-half year wage. As per the S19 85 ATC 225, 183 days test does not was apply a man amid the year is occupant and the end of the year he was not in the Australia.

3. Phillips, Janet and Spinks, Harriet. 2012 "Skilled migration: temporary and permanent flows to Australia" Social Policy Section, Parliamentary Library.

In this assignment, it is assumed that Emma and Ryma are both tax residents of Australia.

In Australia, the laws regarding taxation are contained within the ‘Income Tax Assessment Act’ (ITAA) 1936 and 1997. Income is comprised of ordinary and statutory income. Ordinary income is defined by the ITAA97 as income derived from personal exertion (i.e. salary or wages), property (i.e. rent, dividends or interest) and income derived from carrying on a business (i.e. rental sales, farming)1. Statutory income is defined as amounts outside the ordinary concepts that have been specifically included in assessable income (i.e. capital gains, royalties, lump sum payments upon termination of employment)1. This assignment asks to answer questions regarding a hypothetical scenario involving a single, Australian resident taxpayer, and so all references to definitions and legislation will deal with this taxpayer’s specific circumstances. Income tax is defined as a tax imposed by any of the following legislations1.

The Australian Federal Government commissioned a review lead by John Ralph into the existing taxation framework undertaken in 1998. The review outlined proposals to enhance Australia 's current existing

Over the years, the government has tried to combat tax avoidance and tax evasion schemes through various approaches such as improvements to existing legislations, strict enforcements and collaborations with international counterparts. This is done in effort of protecting the government’s main source of revenue and the integrity of the tax system. However, clear and distinctive boundaries between tax evasion, avoidance and planning were never established in the legislation, hence, it has caused many uncertainties. In Australia, the Court provides the judicial interpretation as to the application of the tax law.

Paragraph (a) (ii) of the definition of a “resident” in section 1(1) of the Income Tax Act refers to a natural person who is not at any time during the relevant year of assessment ordinarily resident in the Republic. The ‘ordinarily residence’ test supersedes the physical presence test. The physical presence test is thus not applicable during any year of assessment that a person is ordinarily resident in the Republic.