LAW6001 Case Study T2 2018 Law Case Study Research (Case Study Sample)

LAW6001 Case Study T2 2018
Word Count: 2,190
1.0 Question One: Tax Obligation
1.1 Permanent Establishment
The UK Australia Double Tax Agreement considers an enterprise’s permanent establishment as the fixed place where a business entity transacts its business from. As evidence adduced by Taylor shows, this provision applies to Australians who conduct their business outside the country or foreigners who conduct their business within Australia. This definition is consistent with the Income Tax Assessment Act 1936? Subsection 6(1) as well as the ruling made in TR 2002/5 that a permanent establishment must have an element of permanence in both a geographical or temporal sense. For example, it could be a place where a business entity has installed its equipment, is constructing a property, is represented by an agent or broker, or is involved in selling or buying of goods and services. For example, a branch, office, agent office, mine, quarry, construction site, or agricultural property could be used when settling a double taxation question.[John Taylor. Some distinctive features of Australian tax treaty practice: An examination of their origins and interpretation. 2011. EJournal of Tax Research, 9(3), 294 - 338.]
1.2 Taxation of UK Enterprise Doing Business in Australia
For purposes of taxation, the profits of a UK company doing business in Australia can be taxed in Australia or in the UK depending on its permanent establishment status. Article 7 of the UK Australia Double Tax Agreement clarifies where a business entity from either contracting state. It specifically states that, “… The profits of an enterprise of a contracting state shall be taxable only in that State unless the enterprise carries on business in the other contracting state through a permanent establishment situated in that other State.” However, the article goes on to clarify that such taxation has limits on the amount to be taxed. It stipulates that, “… if the enterprise carries on business [has a permanent establishment in the other state], the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. Also, both Maisto and Articles 2 and 3 of the Agreement clarify that the tax commissioner should deduct expenses incurred in setting up or running the permanent establishment of the enterprise.[See Article 7 of the UK Australia Double Tax Agreement.] [Ibid] [See Maisto, Guglielmo. Residence of companies under tax treaties and EC Law. Amsterdam: IBFD Publications, 2009, p. 171. See also Article 2 and 3 of the UK Australia Double Tax Agreement]