Taxation laws of Australia Assignment
Requirement for Taxation - Following mention book must be used that is PRINCIPLE OF TAXATION LAW (year 2014, 2015, 2016, publisher Thomson Reuters, Author K Sadiq et al)
QUESTION 1 - Juliette is a famous English dancer who is contracted by a private theatre management company based in the United States of America to come out to Australia to choreograph the dancing routines for a new stage musical based on the Harry Potter books. The contract is for 2 years from 15 March 2015 through to 15 March 2017. The contract is signed in England with payment of AUD$70,000 going into a Swiss bank account on 15 July 2015. Further payments of AUD$70,000 will go into the bank account every 6 months until the contract is complete.
Juliette flies into Sydney on 1 February 2015 with the intention of spending some time looking around the country while she is waiting for her job to begin. At this time Juliette gives up the lease on her flat in London and sells some of her furniture. Other items of furniture consist of valuable antique pieces, which she keeps in storage to use on her return. On arrival in Australia Juliette embarks on a bus trip around the country, which is planned to last for 2 months. However, on 28 February 2015 Juliette finds out her mother is seriously ill and she is required to fly back to England to see her in hospital. Juliette stays at her mother's house until her mother is well enough to look after herself and returns to Australia to fulfill her contract on 1 May 2015.
As the contract will be fulfilled in Sydney Juliette leases a flat in Sydney and purchases furniture to go with it. As the year passes Juliette finds that she is deeply in love with the lead male dancer, Romeo, and they talk about getting married. As Romeo grew up in Sydney and wants to stay there Juliette buys a house for them to live in together in August 2015 and they marry on 1 September 2015. Juliette can't believe her luck as she has always thought she might like to live in Australia permanently.
Sadly, her good luck came to an end when she received a call that her mother had once again become ill and she had to return to England to look after her on 15 October 2015. With a heavy heart Juliette said goodbye to Romeo and returned to England hoping that her mother's condition would pick up quickly so that she could return to her husband and the country she had grown to love. However, Juliette's mother required 24 hour care and insisted that Juliette was the one who looked after her, so Juliette had to stay on in England to fulfill her mother's wishes. To make the arrangement easier for Juliette her mother paid her AUD$1,000 per month to cover her mobile phone bills to Romeo, even though she lived in her mother's house without paying rent. Throughout this time Juliette still received her AUD$70,000 every 6 months as she was able to transmit her choreography notes to Romeo who then passed them onto the assistant choreographer and the show went on without her.
Unfortunately, Juliette's mother passed away on 10 April 2016 and Juliette returned to Australia on 15 April 2016 to seek comfort in the arms of husband Romeo and distract her mind with work.
REQUIRED: Advise Juliette as to whether she will be a resident of Australia for income tax purposes for the 2014/15 income year AND the 2015/16 income year. Please address each income year separately. Please also address each test of residency.
REQUIREMENT must include question-
- 1200 words
- APA referencing
- Primary source
- Must have citation
Must include for year 2014/2015-
- Question
- Issue
- Facts
- Law
- Application
- Conclusion
- Answer
Law must fulfill the following test-
1. Common reside test
2. Domicile test
3. 183 days test
4. Australian house test
5. Superannuation test
6. Source
For year 2014/2015 only Common reside test is applicable.
-Must describe each test with section in three to four sentences.
-You have to define in separate paragraph "why common reside test is applicable relating to case study".
-For the year 2014/2015 must include case law
1. Commissioner of taxation V Miller
2. Levene
3. Lysaght
Above mention 3 case will be found at Austlii-Common law-Income tax act 1997-section 6.5-section 995.1-Act 1936-Interpretation-Resident test
For year 2015/2016-
- Question
- Issue
- Facts
- Law
- Application
- Conclusion
- Answer
Law must fulfill the following test
1. Common reside test
2. Domicile test
3. 183 days test
4. Australian house test
5. Superannuation test
6. Source
For year 2015/2016 Common reside test , Domicile test and 183 days test are applicable.
- Must describe each test with section in three to four sentences.
- You have to define in separate paragraph "why above three test are applicable relating to case study". For the year 2015/2016
1. Answer must relate to Question
2. Law must relate to Fact
3. Conclusion must relate to Issue
QUESTION 2 - George had a relative who had lived in Sydney but who died in October 1995. On the death of the relative George inherited his Sydney house.
On inheriting the house George decided to let the property, and appointed 'Honest Chris' Real Estate' managed by local real estate baron Christopher Skate, as property manager. The property had been rented from the time it was inherited.
Repairs were carried out in December 2015, including:
- replacing the damaged fibro roof with longer lasting color bond - $15,000
- general repairs and maintenance - $6,000
- new furniture and fittings - $1,200
- repainting the front fence which consists of painted wooden pickets - $2,500
- fixing the broken front door which was damaged by vandals - $1,000
The new items were all purchased on 1 December 2015.
George uses the prime cost method for decline in value for the rental property. The cost and effective lives of the assets are:
|
|
Cost
|
Effective life
|
|
Stove
|
$900
|
12
|
|
Hot water service
|
$2,000
|
12
|
|
Carpets
|
$3,500
|
10
|
|
Furniture and fittings
|
$5,000
|
13 1/3
|
Rent received for the current income year totals $13,900.Management commission paid to the agent amounts to 5% of this.
REQUIRED:
a) Prepare a statement setting out the taxable income that will arise from the rental property.
b) Prepare a discussion explaining each component of the rental property statement prepared in Q2a). This discussion should clearly explain the inclusion/exclusion of each element of the rental property statement above.
Solve the numerical question as per text book and please explain each part of numerical.
words:-2500
APA references 15.