Kirby and Kirby (2010) mentioned that the income tax is stated to be one of the major forms of Taxation Law Assignment in the country that includes certainly rules regulations and policies that is been collected by the federal governmental bodies from all the individuals employed in the country. The taxation collected by the population of citizens of the country said to make a relevant contribution of 25.6% on the GDP growth of the country in the year of 2013. In the particular study, there will be the implication of different law, principles, statements and applications of the Australian taxations and law been engaged by the governmental bodies to judge some of the cases related to taxation. The cases engaged based on taxations and salary as assessment, will certainly need to be analyzed and decision need to be made as per the taxations rules and legislations been incorporate by the governmental bodies in Australia.
Part A: Case 1
1.0 Taxation source of salary
In relation to assess the taxation on the individual’s incomes, it is necessary to analyse the reliability of the individual or identity of the person as an Australian citizen or a foreigner. Thompson (2010) mentioned that the tax residency is almost based on the situations and circumstances of an individual. As per the legislation of Taxation Law Assignment, it has been stated that the if an individual leaves the country with his or her family outside the country with intentions to settle down in another country more than one or two years are stated to be as stated to be non-residential of Australia (Mann, 2009). It has been stated by the Australian Taxation Law Assignment office that an individual is stated to be residential of Australia if the individual is living in the country for permanently or has settled down in the country permanently or is living more than hold of financial year that is about 182 days of e every year.
Figure 1: Australian Taxations
As per the case scenario, James Cookie owns the capital city of the country Sydney lived with his family. Although, estranged wife and children live in Singapore. The house is been rented to his cousin and family but he usually visits in this house to stay over there. In the financial year, James has been spent almost 80 days in Sydney and rest of the days in the cruise of sails International.
The Australian personal and income tax and legislations sources stated as per the current financial year information’s. James cannot be treated as the Australian residence as he has spent less that hold of the years that is 182 in the country and most of the time in cruise. Thus, he has a property in the capital city of country ha s usually visits thus can be treated as the non-residential or foreigner of the country. The source of salary that is been earned by James from the Sails International is not been treated as national sources as the company is based on Southern United States Island Bermuda. Thus, the source of income been generated or received by James is been treated as foreign source of income as per the Australian Taxation Law Assignment rules and regulations of personal income tax section Mann, 2009).
2.0 Residential exemption
As per the income tax assessment act 1997 under Subdivision 118-B the capital gain and loss that is been received form the selling of persona; property by the tax payer, if the the property is belong to the tax payer its self from the beginning of the years that it can be stated as the the individuals personal property (Body, 2008). In the broader prospect, if an individual purchases a property such as house or apartment in Australia, the gains and loss or any kind of source of income from the particular property will certainly be received by the particular individual as the owner of the property. Under the subdivision sections 118, the major residential profit and losses to be followed as per the acquisition legislations and polices been incorporated by Subdivision 855-43(3). The tax on the sour e of income generated form the party received by the individual as the residential as well as non-residential certainly been measured the ownership time referring to the subdivision 118-B (Kirby and Kirby, 2012). The capital gain Taxation Law Assignment states the exception and exceptions legislations that explains that the the self of the assists or properties been owned by the tax payer as per the time period that is been suited to be taxpayer living in the property, the location of the taxpayers family members, the movement of personal belongings to be shifted in the particular property going to sell (Whiteford, 2010).
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As per the case, it has been stated that in the financial year, he has been spent most of the time in the cruise ship among which 80 days been spent in the Sydney where his house belongs with every personal belongings he has in the home. The visit to Singapore for 20 days to meet with his children’s are not be taken into considerations as they will certainly not considered as the part of the family as per the separations events has been occurred between him and his wife (Australia.gov.au, 2014). The Subdivision 118-B of Income tax Assessment Act 1997, the house certainly belongs to James as per the resident of Australia form the beginning. Thus, if James sells the house he will certainly entitled as the Australian residences as the income or gain generated by sell of the house will be received by James himself. Although, the there will be the transformation of property ownership of the particular property sold to the other party.
Part B: Case 2
1.0 Taxation returns
According to Waller (2007), the individuals execute a business in Australia, there are two major way of expenditures they are been incurred by the individuals doing business. The accrual method of payment and cash based payments. Bothe of the methodologies has different aspects of the business. It has been stated that most of the individuals prefers accrual based taxation payments in the commencement of the business.
Figure 2: Australian tax returns
As per the accrual basis, the rules and legislations of the Australian taxations are stated to be used by nig firm or the companies usually able to enhance huge amount of funds for business expansion in the market place. The goods and service taxations legislations has stated that the accrual basis of Taxation Law Assignment certainly provides a proper coverage on the invoices been received by the company to pay it in later periods (Young, 2013). As per the sales, if the individual accounts of GST that goods and services tax in the invoices its certain receives a full part payment that signifies the individual able to get the tax invoices payments before making an issue thus, the individual need to engage amount of tax invoice in the selling. In the other hand, the cash basis is been used by the organizations having the business less than $ 2 million. It states that the amount of GST is needed to be engaged at the time of the sales (Ato.gov.au, 2014). The evaluation states that the company has to make payments at the time of the sales of the company. As per the rules of Cash payments GST , the individual can able to apply or use to if the business is less than $2 million, turnover of the business needed to be less than $ 2 million, the income tax will be claimed as per the cash basis (Law.ato.gov.au, 2014).
In the particular study, Lee has just commenced a business that has enhanced a revenue generations of $75000 in the year of 2012-2013. The cash payment of good and service taxations on the sales of the company made by Lees Business certain pressure the cash relevance and further investment options for Lee. Thus, Lee need to engage accrual GST invoices at the starting of business in 2012. However, the business has been borrowed an amount of $ 1 million that is been measured as $1.75 million with all the conclusion of assets and staffing, Lee can able to apply the cash GST taxation. The business can be applied the cash GST as it is suitable for the legislations been applied in cash based taxation in GST.
2.0 Appropriate of GST case law
2.1 factors affecting cash or accrual based choices
There are certain factors that is been assessed and estimated by the business individuals in Australia in relation to make decisions to choice cash based ort accrual based taxation systems need to be adapted. As per the GST regulations most of the big firs goes for accrual basis whereas the small business entities options cash based taxations. Kirby and Kirby (2010) stated that the factors that is been considered by the managerial individuals of the business organizations are based on the availabilities of inventories in the business, relationship is between the debtors and creditors of the organizations, Capital and fund engagement in business assessments and methodologies been used for financial measurements of the company.
Figure 3: Factors effecting Tax Return
2.2 Choice of basis to adopt
As per the case study, it has been stated that business that is been commenced by engages certain elements that can provide relevant choice and to make effective decisions on which is the probable method of taxations can be adapted for his business (Millbank, 2006). In the year of commencement of the business, Lee engages inventories and other factors that certain provide to make a choice to use accrual taxations. Hence, in the current financial year of 2013-2014, the business has cash reserve of $1.75 million thus Lee can able to easily apply the cash methodology of taxation to be engaged in the invoices been received by the company as per the GST regulations.
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2.3 Right of commission of taxations
As per the Australian constitution law, it certain includes a proper assessment and implications of constitutions of Australia stating every rights and law based on the GST taxations and law implication based on the business to be commenced in the Australia (Ato.gov.au, 2014). There are certain rights that is been imposed by the constitutions of government of the country such as freedom on the political communication that certain states the freedom of creating connectivity and political relationships is necessary with corporate bodies in the country,. Another implied right that has been engaged is right to due processions that determine system of responsibilities and parliamentary legislations. This right does not provide information on no separation for negligence of the legislative, taxation and exclusive powers cab be made by the government. Thus, the implied rights been addressed by the commissions of taxation been stated under the Australian constitution law provides proper right to insists for particular basis form the business entities been commenced in the country (Law.ato.gov.au, 2014).
2.4 Taxations Base in different years
In the year of 2012-13, Lee has commenced the business providing building designs, specifications to the local permitted buildings. It has soon gained business of $ 75000. . Whereas in the current year of 2013-14 the company has been borrowed an amount of #1.75 million to enhance its business. As per the ST taxation legislations been involved, the basis of Lee for both the years will be different. As in the first year the business circumstances and new starting been engaged lack of cash thus the accrual basis is stated more suitable whereas in the next year the business has enhanced more cash reserve thus Lee can apply cash methods. In the accrual methodologies the payments of taxations are been covered as per the credible periods taken by the company (Body, 2008). Although in the case of using the cash methodologies, Lee certainly has to make payments as per the sales made by the company in the profitable financial year.
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The Australian Law and Taxation Law Assignment has engaged different law, legislations, applications and polices in relation to make judgments on the circumstances been provided in the particular case study. It has provided a brief assessment measurement and analysis ion the case scenarios based on the income tax, residencies policies, goods and services taxations to resolve the issues been raised b engaging different principles and policies engaged in Australian governmental taxations policies.