Questions -
Q1. Tom is employed by AA Ltd in the USA which is the parent company located in Los Angelos. Tom was transferred on the 30th of December 2017 to the subsidiary company in Brunswick Melbourne Victoria. AA Ltd manufactures automotive parts for Ford Motor Company Australia.
Tom resides in a flat near Brunswick which is owned and provided for by AA Ltd. Tom has a6 year fixed lease agreement with his employer Tom has taken out a Wespac bank account near his place of residence. He transferred his weekly pay into his bank account. He also brought his wife, mother in law and his two dogs with him during his6 year stay in Brunswick.
Tom and his wife own a house in Los Angelos where they are renting it out to a young family couple. John's wife and mother in law do not work in Australia. Tom is not provided superannuation from his Australian employer.
During the year ending 30th of June 2018 the following transactions had taken place.
- Tom's salary in Los Angelos (period 1/7/2017 to 29/12/2017) 60,000
- Salary obtained from AA Ltd (Brunswick) 80,000
- Wespac Bank (Brunswick Branch) net Interest income received 2,000
- Rental income from the house/residence in London. 30,000
- John earned net interest from the Bank of China. (15% withholding 2,000 tax had been paid in China)
Required -
Part A - Is John an Australian Resident for tax purposes? Discuss your answer with appropriate case laws and legislation.
Part B - Calculate John's taxable income for the year ending 30/06/2018. Discuss if there are any Tax offsets.
Q2. Mr Tan was working as a movie star in an Australian sitcom called neighbours. He was paid $10,000 a week for every episode. Mr Tan resides in Hong Kong and has been living there all his life. He was contracted to make 10 weekly episodes. Once the movie contract was completed he would return to Hong Kong he could pursue his acting career. Mr Tan signed the movie contract in Hong Kong before travelling to Australia.
Required -
Part A - Is Mr Tan an Australian resident for tax purposes? Discuss your answer with appropriate case laws and legislation.
Part B - Where has Mr Tan sourced the income? Discuss your answer with appropriate case laws and legislation.