Assignment: TAX LAW Case Study
Learning Outcome
1. Describe the taxation framework in Australia and identify the concepts and principles that underpin Australian Tax Law.
2. Explain how the main tax laws and regulations in Australia have been applied and identify the body of case law that informs current interpretations of the taxation regime.
3. Recognise, describe and analyse taxation issues and concepts with regard to problems encountered in commercial settings.
4. Demonstrate an understanding of substantive areas of taxation law including income tax, goods and services tax and fringe benefits taxes.
Case
Sinclair Pondage at all relevant times held a German passport. From the time of his first visit Australia in 2007 until the end of the 2016 income year, he held a visa which permitted him to live and work in Australia.
During the time he was in Australia, Sinclair worked under contract as a marine engineer on a sea-going barge owned by an Australian company. Subsequently, the barge was leased to a Malaysia-based company, Ocean Development Ltd (OD), for use in carrying out work in China. Sinclair accepted employment with OD and left Australia on 8 July 2015, leaving his son and wife in Australia. He worked for Ocean Development Ltd for nine months in China and earned AUD $90,000. He then terminated his contract and returned to Australia where he stayed for the rest of the income year. On his arrival back in Australia he entered into a partnership business with his wife.
Accommodation provided for Sinclair in China by his employer was of a temporary or transitory nature in the form of single men's quarters or barracks. Meals were also provided. Ocean Development Ltd.'s office in Malaysia paid Sinclair's wages into his bank account in Australia, after deducting tax required to be paid in Malaysia. Sinclair paid no income tax in China. Sinclair's assets in Australia are his home in Sydney, an investment residential unit in Randwick, a super policy with AMP, listed shares, bank accounts and membership of a local golf club. Sinclair intended to be absent from Australia for approximately nine months and was in fact away for that period only.
Required:
For the 2015/2016 tax year:
1) Is Sinclair a resident or non-resident of Australia? Refer to the relevant legislation and cases.
2) Determine the source of income Sinclair received while he was working in China?
Question 2
On 10 July 2015, Jarrold Alexander was transferred to the Singapore office of his company, Global AIH Ltd, for five years. His wife Rosemarrie accompanied him to Singapore. In Singapore they lived in a house owned by the company and leased their Sydney residence. While residing in Singapore Rosemarrie borrowed $100 000 from the Commonwealth Bank on 1 December 2015, to fund the purchase of 50 000 shares in Global AIH.
During the 2015/2016 tax year Rosemarrie received $5 000 as her share of net rental income (after deductions) from the lease of their Australian home, and $2 500 in fully franked dividends from Global AIH. She incurred no other expenses in deriving the rental income, but her interest payments on the Commonwealth Bank loan amounted to $5 650.
Required:
Advise Rosemarrie Alexander for the Australian tax consequences of these transactions. (Hints: you need to do some research on the tax consequence of dividends paid to a resident and non-resident).
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.