Describe Residence Tax, Oil Rig Company United States (Case Study Sample)

RESIDENCE AND RESOURCES
ORDINARY INCOME
NAME
INSTUTION
DATE
Question one
Yes. The kit is a resident of Australia since he has a permanent residence there and is a worker in Oil Rig Company which is owned by United States government based on the coastal region of Indonesia which is in the north of Australia. Moreover, Kit moved with his family (wife and her two sons) to Australia four years ago where they have purchased a permanent house for three years now. He spends most of his time here i.e. he spends nine months in a year working here in Indonesia more than his home country, Chile. Kit is recognized by Australian since he legally employed in that country this makes a legal residence of, Therefore, though Kit was born in Chile and he maintained his citizenship, he still qualifies to be a residence of working country, Australia.
Both countries will tax kit, the two nations consider him a tax-resident at the same time, and both will require him to pay taxes on his total worldwide, which is his birth country Chile located in South America and Indonesia which is in Australia. Kit will usually be considered tax-resident in the Indonesia since he spends more than six months a year as he spends nine months every year in Indonesia. He would not have been taxed by Indonesian tax authority if he had spent less than six months a year in his working country as he would only remain tax-resident in his country of origin which is not the case. Kit will be taxed by both Australian tax authority and Chilean tax administration as he works in Australia and his homeland country will tax him as it necessary for a person working abroad to be taxed by both countries.
Therefore since he is a resident in Australia, he will be taxed by Indonesian tax authority based on tax rates on his total worldwide income, earned or unearned. This includes wages, pensions, benefits, income from property or any other sources, or capital gains from share portfolio, which generates dividends income, from his homeland country. His local employer may, for instance, deduct taxes from his salary at the time of payment.
Since Kit was hired for a job in Australia and signed a contract for a specified period though not defined here, he will be considered tax–resident, and therefore taxable, in his home country even if he stays in Australia for more than six months. Besides, since he has a family investment i.e. share portfolio, which generates income dividends in his home country, he will have also taxed by Chilean tax authority. Indonesia and Chile may have a double tax treaty that is the country where one lives and earns income will treat you as tax-resident, even if you do not live there. In this case, since he receives his salary in Indonesia, which is deposited, in his joint account (share with his wife) in Westpac Bank.
Tax allowances and deductions
Kit is granted cross-border commuters allowances in his gross income.
In any event, whether the country where one earns income treats one as tax-resident or not, it will be obliged to give the affected party the same allowances and tax reliefs that it gives to a resident. So Kit is bound to these tax reliefs and allowances.
Of course, if Kit receives all allowances available to residents in the country where he works, he will not expect to receive all allowances and reliefs available to residents in the country where he was born as well. This is because tax authorities will communicate with each other to ensure that he don't receive a double set of allowances and reliefs.
Kit should be entitled to family allowance since he lives in Australia with his wife and two children in the permanent house they purchased. This benefit increases his gross income as well as total tax.
He is entitled to a tax deduction on childcare cost in Indonesia this is because he has his two children with him in Australia. Also, he is entitled to tax deductions for owning a house in Australia. He bought a house three years ago which is entitled to tax deduction
Kit is also is entitled to joint tax assessment with his wife since they share a common account in Westpac Bank.
Therefore total tax deducted from Kit's gross income is total tax from his home country added to total tax from his working country less tax relieves from both countries i.e.
Total tax=Total tax from home country+ Total tax from working country-tax reliefs from both countries
Question two
I. Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159
Discussion of the main agenda mostly starts with a citation of the remarks of the Lord Justice Cleark in Californian Copper Syndicate (Limited and Reduced) N Harris (1904) 5 Tax Cases 159 at 166. The often citation of the truism there expressed has given it a Delphic importance. But, in truth, what was said makes no criteria for concluding on such a question as is currently before the Court for this case. However, the output of the business will be the income. But whether it is or not, it must depend on the type of the firm which is defined and the relationship between the source of the profit or gain to that business. Everything received by a taxpayer who owns a business will not be necessary.
II. Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188. This company was mandated to operate in Australia like three decades ago; it was meant to make the decision which was by Scottish and Australian Mining company Ltd and FCT (1950) 817 CnLR 188. Also it is seen that the limb of s 26 (a) of ITAA 1936 had been unnecessary. The other decision in this indicated that the first limb of that subsection is not fundamental. The fact that the availability of most dictum on carrying on making a development of land. It was a scheme for making the profit, and the central issue was whether a profit‐making scheme could make by exchanging for money alone. It shows that it can, though no proceeding case has been allowed by this corporate. The limited legacy of Whitfords Beach is always fundamental because, although corporate tax rates are now 30% of finance and capital appreciation alike, there as much as farmland is concerning that has been partitioned by individuals who are escaping tax because of the limited impact of Whitfords Beach.
III. FC of T v Whitfield's Beach Pty Ltd (1982) 150 CLR
1. The questions on table referred by the High Court of Australia included in chapters 2, 3, 4 & 5 of the conclusion and arrangement of Wickham J.bg of 19/12/ 1978 given below:-
On 20/12/ 1967 was the date at which a business of partitioning developing and selling for the agenda land started.
20/12/ 1967 the whole of the subject property was committed to such business. The value of the subject property as at 20 December 1967 as agreed between the parties for the purpose of calculating income to be looked was 3.1 million dollars. The changing of assessments for the years of income ended 30/11/ 1972 and management for the year of revenue capital ended 30 September 1975 be remitted to the Commissioner of Taxation to be converting according to, and arrangement of the Agreement between court and parties involved.
IV. Statham & Anor v FC of T 89 ATC 4070
Where the relevant land or part thereof is subject to treatment on capital account, then it becomes necessary to examine the transaction for its CGT implications. Even though the CGT provisions are now some thirty (30) years old and have undergone a substantial rewrite into the 1997 tax Act, it is still the case that assets acquired before 19 September 1985 remain outside those provisions. Thus where the farmer had held the land since before that date any gain made on disposal of such property remains outside the "CGT net" and is not subject to tax. Where the farming land has been acquired (including by way of inheritance) after 19 September 1985, then any disposal (or other CGT event) will fall for consideration under the CGT provisions. 50% discount on any gain by the individual(s) or a trust will apply subject to the particular relevant rules being satisfied (a 33 1/3% discount would apply where the owner was a super fund). Where the farm has been added to over the years by purchasing distant lands, it is only that part or parts of the land acquired after September 1985 that will be subject to CGT. It could also be same as "Main Residence" concession could apply where the old "homestead" that sat on the preCGT part of the land was demolished (or even left standing), and a new Main Residence erected on the post-CGT part. In that event, part of the gain on the post-CGT land that encompasses the Main Residence would fall for consideration under those particular provisions. Also, where the land has used the farming business, it may be possible to gain relief under the Small Business CGT provisions. Those provisions are aside from the scope of this Paper.
V. Casimaty v FC of T 97 ATC 5135.
Profit on Subdivision of Farm Capital Purchased 988-acre farm from an origin in 1955 and father forgave duties to pay for the farm. As from 1956 they purchases 40 adjacent acres to construct an apartment. In 1963 one could not exchange for money the land to cater for debts. In 1965 keeping of cattle for milk became uneconomical. 1967 to 1969 drought affected. 1972 tried to sell the whole property to state housing department. Rural market depressed so continued farming. Ill-health and high-intere...