Taxation Calculation Essay

Q1. Calculate the tax liability of a company
Q2. Taxation of shareholders
Q3. Taxable income of an individual

Taxable income= assessable income-deductions s.4-15(1) ITAA 1997 =ordinary income + statutory income - general deductions - specific deductions (except: exempt income和non-assessable non-exempt income)
Tax liability=taxable income* tax rate

第一步：判断是resident 还是non-resident
S. 6(1) ITAA 1936 “resident of Australia" (既定义了individual，也定义了company)
针对individual
4 tests (any of them):
(1) Firstly, primary test: “reside"(由tax law引申出的7个factors；case law；tax rulings)
a) Case law: Levene v IRC(temporary visit abroad,两个国家都住宾馆，但每年4,5个months在UK接受医疗，走亲戚还有宗教活动， resident of UK, until he rents a flat; nothing more than a temporary purpose

IRC v Lysaght：在英格兰退休卖了房子并继承爱尔兰的房产，但还是英格兰一家公司的股东，每月一周在英格兰参加会议，还是resident of England, ordinary course of life, short regular visit Factors:
Home
Family, business and social ties
Physical presence (在哪待着)
Residency history frequency and regularity movement
Purpose of presence（为什么要在那待着）
Nationality (minor importance) b) ATO ruling W2 p4

(2) Supplementary tests:
Secondly, “domicile” & “permanent place of abode”
A person whose domicile is in Australia is a resident unless his permanent place of abode is outside Australia. (澳洲人出去)
Domicile of choice: act and intention, 带全家过去可以选是domicile（外国人过来）
Applegate派去海外工作，带走所有资产，虽然老板员工都肯定自己最终回来澳洲但是时间不确定。在海外的这段时间，“permanent” does not require to be “forever” (otherwise, same as “domicile”),Permanent place of abode outside Australia, though domicile still in Australia

Jenkins派去海外工作三年，18个月后生病回来，想卖房子但是找不到买主，去海外前租了房子Non-resident because permanent place of abode outside Aust. Just because you knew upfront how long you are going o/s for doesn’t make it temporary

Thirdly, “Half year” test (income) & “usual place of abode”
A person who has been in Aust for 183 days or more is a resident unless his usual place of abode is outside Aust and there is no intention to take up residence in Aust. (eg working holiday)

Fourthly, “Superannuation scheme” test

针对company
2 Tests (s 6(1)1936)
(1) Incorporation, or
(2) Carry on business in Australia and either: - “central management and control” here,
Central mgt and control means decisions about broad company policy and financing policy and business strategies made at directors’ meetings.
No central mgt and control just because you have extensive operating control but no control of general corporate affairs of the coy or control of matters concerning policy and finance: Koitaki

Koitaki: coy based in Sydney and have directors meeting in Sydney, Has a rubber estate in PNG and employs an officer to run the operations there and gave officer a power of attorney.
Resident of AUS, it didn’t extend to the general affairs of the coy or to matters of policy or finance in PNG

Central mgt and control is usually exercised by the board of directors. But sometimes can be a single director or shareholder: Cth Aluminium Corp v FCT
Central mgt and control is usually located where the directors’ meetings are held. If meetings held regularly in 2 countries, possible to be resident of both countries: Nth Australian Pastoral Co. Ltd
Possible for central mgt and control to be exercised by a parent coy. : Unit Construction v Bullock
Sometimes the nature of the business is such that it is carried on in the place where central mgt and control is exercised i.e. the place of business and central mgt & control are both at the same place: Malayan Shipping

- Carry on business in Aust and voting power controlled by Aust resident shareholders
If carrying on a business in Aust and voting power is controlled by Australian resident shareholders, the company is a resident.
Control of voting power – more than 50%
Core business must have some connection with Aust. Not enough if only receive monies in Aust via an Australian bank a/c.

第二步：判断source是Australia还是overseas
Source of income is a question of fact and

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