Explain and apply their knowledge of the relevant Australian Tax Laws using the three step process.
Briefly the process is:
1. Identification of correct legal issues;
2. Articulation of arguments and application of law to facts; and
3. Depth of analytical thinking shown in logical reasoning and calculations to form an opinion where applicable.
Scenario-1: Topic: Fringe Benefit Tax
Alan is an employee at ABC Pty Ltd (ABC). He has negotiated the following remuneration package with ABC:
• Salary of $300,000;
• Payment of Alan's mobile phone bill ($220 per month, including GST). Alan is under a two-year contract whereby he is required to pay a fixed sum each month for unlimited usage of his phone. Alan uses the phone for work-related purposes only;
• Payment of Alan's children's school fees ($20,000 per year). The school fees are GST free.
ABC also provided Alan with the latest mobile phone handset, which cost $2,000 (including GST).
At the end of the year ABC hosted a dinner at a local Thai restaurant for all 20 employees and their partners. The total cost of the dinner was $6,600 including GST.
(a) Analyze and then advice ABC of its FBT consequences arising out of the above information, including calculation of any FBT liability, for the year ending 31 March 2015. Assume that ABC would be entitled to input tax credits in relation to any GST-inclusive acquisitions.
(b) How would your answer to (a) differ if ABC only had 5 employees?
Scenario-2: Topic: Residence and Sources
The Big Bang Company was set up by Ed, an Australian resident. It is incorporated in Singapore and has two directors who are resident in Singapore and who hold board meetings in Singapore. Each director has two shares in the Big Bang Company, which they hold on trust for Ed. The Big Bang Company owns real property, all of which is outside Australia, and makes its pro?ts from commercial property leases on a large scale. Ed does not attend the board meetings in Singapore; however, the constitution of the Big Bang Company provides that the decisions of the directors are only effective if Ed concurs with them. The directors carry on all operational activities, such as collecting rent, paying commission, ?nding tenants, making minor repairs and maintaining the buildings.
Is there any possible scenario in which the Big Bang Company could be considered a resident of Australia for tax purposes? Refer to Ruling TR 2004/15, justify your answer considering all the possibilities applicable in this scenario to become a resident of Australia. A detail analysis of each possibility is required.