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Fred Carroll Case Study

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STUDY CASE 1

In the following case we need to determine if Fred is a resident of Australia for taxation purposes. To come up with a conclusion first of all we need to examine is he satisfies the 4 following tests of residence.

1. Resides test: We need to mention if the individual or taxpayer is a resident of Australia or if he has the intention to become one. In our case Fred has an intention to reside in Australia as he is setting up a brunch of his existing business in Britain. Another fact that makes Fred a resident is that his wife is living with him in Australia and he is leasing a residence for 12 months.
2. Domicile and permanent place of abode test: An individual’s place of abode is considered to be the place where he lives or where …show more content…

183-days test: This rule indicates that the individual has been in Australia continuously for more than one-half of a year receiving an income. In our case Fred satisfies the rule as he has been a resident of Australia for more than 183 days before he returned in the UK due to his illness.
4. Commonwealth superannuation test: Fred is a Resident of Australia as he is an eligible employee for the purposes of the superannuation Act 1976.

Furthermore we need to check Fred’s business income. As Fred’s company is set in Australia the source of business income will be where the business is transacted. Similar case (FC of T v United Aircraft Corporation 1943)
The source of interest arising under the terms of a business contract will usually be the place where the business is transacted. In our case the source of the interest received is from investments in France, thus Fred is not going to be taxed in Australia.
The source of rent from the lease of fixed property, such as land, would ordinarily be where the property is located. In Fred’s case the source of the rental income is from the UK, therefore he is not going to pay tax in Australia.

To conclude Fred is considered an Australian resident for taxation purposes and he is going to pay tax on the income he is receiving in …show more content…

After having exploited the mines for many decades the company decided to sell the land. In order to reach a better selling price the company developed it by constructing roads, building a railway station, and giving part of the land to schools, public institutions and hospitals. It also used part of the land as a park. The High Court under the decision of William J. held that the purpose of the company when it was purchased was not the selling of the land but the coal mining activities. Furthermore the Court held that the company took the necessary steps in realizing the capital asset to its best advantage when the land was no longer businesslike, therefore any profit obtained from its sale should not be considered in its assessable income. A similar decision was reached also in Ruhamab Property Co Ltd v FC of T(1928) 41 CLR

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