Principles of International Taxation †Free Samples to Students

Question: Discuss about the Principles of International Taxation. Answer: Introduction: The case study depicts that there is a permanent occupation in country of Australia despite the fact that Kit has retained Chilean citizenship and was born in Chile. It is also evident in the case study provided that although Kit has permanent abode in Australia, but he does not hold the citizenship of the country. According to taxation rule listed under IT ruling 2650 under ITAA 1997, incoming originated from universal resources are held for variety purpose, if the Australian inhabitant has generated the income (Wickerson 2014). The assessment of an individual for the purpose of taxation are based on profits generated from Australia according to residing arrangement of country. As per the requirement of Australian taxation system, the proceeds generated by Kit will be charged principally. Furthermore, for settling the answerability of definitive tax, it is necessary that acknowledgement of residential status of Kit needs to be done. As evident from the case study, that Kit has been holding citizenship of Chile and has been making income in Australia simultaneously (Braithwaite and Reinhart 2013). Hence, for determining the Kit satisfactory status, it is essential to carry out residential applicable test. Conduction of such test will help in influential the existing residential status of Kit. A declaration is provided as per this, test that an individual will be considered as Australian resident in continuous manner or if he is not in country for period of six months, the he or she will be regarded as resident of Australia. As a result, following the case study, it can be perceived and acknowledged that Kit is considered as Australian citizen as he his existence in the country is for period of more than six months in particular financial year. In addition to this, Kit was not residing in his place for work for around month and the purpose was to visit his relative. The assessment of entire residential status of Kit is assisted by witnessing the fact from given case study that Kit has acquired a permanent house in Australia where his child and spouse resides together (Kirchler et al. 2014). The family of Kit has been staying in Australia for a period of more than three years. Kit is regarded as Australian inhabitant. Individual residing in the country for longer time are regarded as Australian resident as per F .C. of T. v. Applegate (79 ATC 4307; (1979) 9 ATR 899 (Saad 2014). Domicile test: This test is considered s legally recognized model that helps in assessing in individual residential status. As per the domicile act of 1982, regulations and decree presented, it is required to carry out residential test. Upholding the residents in different country, it is required by individual to possess their own constitutional rights according to domicile act of 1982. Every individual has their rights and choice for choosing their country to reside in a transitional manner as involved in Henderson vs. Anderson 1965 (Tomasic and Pentony 2013). It is evident from case study that Kit has intentions of obtaining residence in Australia as new domicile has been acquired by him in Australia. Theory of test of domicile and 183 days test are convinced by Kit as per the scenarios provided in the case study. It is regarded as major evident that Kit is Australian resident. Moreover, according to taxation system and applicable duties levied, Australian resident are required to make tax payment. If sufficient evidence is obtained about residency condition of an individual then according to income tax act of Australia, an individual is liable to pay tax. In order to ascertain residential status and viability of an individual paying tax, residential test can be employed. Kit Salary has been received by Kit in account of Westpac bank that is hosted in Australia. Usually incomes that are received in Australia are taxed under Australian taxation law. Investment is made by Kit in Chillies market and such incomes are also assessed for taxation. For filing of the return of income tax the depiction is provided Applegate per Franki J 79 ATC and requests to makes obtainable all his returns together in abroad and residence nation (Woellner et al. 2017). It is declared by residency test that proceeds involve money and funds in particular financial year. The dodging of the dual taxation fault that lead to utilization of Australian taxation law. Discarded property for natural resource utilization experienced by the California copper Syndicate Limited has been depicted in the cases study. A judgment was given by court of law that earning acquired by an individual are identified as probable earnings. At the time of assets sale, for most changeable part are involved to the inference of all the appropriate expenditures. Decision about modification of the possession is ruled out by court. Incomes generated from business processing are obliged to be taxed. Dealing of nation and relevant earnings from business are measured under the measurable products as depicted in the case study. As per the tax authorities of Australian laws and regulations, the proceeds generated from selling any property is taxable and chargeable income tax act. Capital assets are comprised of industrial activities and it involves exchange of land also as given by court of law. The activity of selling the property is regarded as capital nature assets and that needs to be taken care of. Deducing the fact that cash inflow generated from selling of property or any assets is evident in the given case study. In assessing the value of tax, does not involve profit realization and property by payers of tax. Section 25 depicts there are some adequate person held for generating income from selling of property Case of Mason, Morphy and Wilson (Miller and Oats 2016). Declaration involves meanings of actions performed by individual after the court violation. The assessable income under income tax act has to be in compliance with general accounting principles as given by verdict of court. Incomes generated from selling of subdivided property are assessed for purpose of taxation under the section 25 or 26. Loss incurred from selling of property is also assessable for taxation as stated under the section (Krever 2014). In the given case, selling of assets was mainly because of loss occurred in farming business, and the realized amount automatically becomes taxable as indicated by court of law. The proceeding of land comes with realization scale. When performing subdivisions of an old property and selling them discretely on dissimilar occasions, the overall changes in tax needed to be paid by tax payer as depicted in the case. Income generated from selling of individual blocks are treated as ordinary income and it is suggested by court that since the tax payer was not carrying any sub division, it is required to depict the capital assets. Selling of property under different sub divisions does not involve any profit making scheme. The reason attributable for sub dividing land was because of making proper transaction and realizing land full potential. Moana Sand Pty Ltd v FC of T 88 ATC 4897 Even if the land has been purchased solely for realizing profit as depicted in the given case, its purpose does not necessarily is to generate profit. According to ordinary concepts, it is required to state the indispensable purpose of land and if the land is purchased solely for the intention of making profit, tax payers are required to make extra payment from the sale proceeds of such acquired land. It is depicted in the given case that after the two years of purchase, land was divided into different blocks with intention of generating profit. However, initially, farming was the main purpose of land acquisition. Owner income increased very successfully after the sub division. Hence, verdict was provided by court of law that profit proceeding from selling of property will be taxable and assessed under income tax. In the given case study, it is evident that in order to increase the gain from proceeds of sale and this has lead to conversion old house into new house. Sale proceeds from sale of new properties after developing the old ones; it is required by tax payers to make the tax payment as per the verdict given by case study. Development of the property and selling them to other individuals is the intent of tax payers into undertaking on commercial basis. Reference: Braithwaite, V. and Reinhart, M., 2013. The Taxpayers Charter: does the Australian Tax Office comply and who benefits. Centre for Tax System Integrity Working Paper, 1. Henry, K., Harmer, J., Piggott, J., Ridout, H. and Smith, G., 2014. Australias future tax system. Canberra, Commonwealth Treasury. Kirchler, E., Niemirowski, A. and Wearing, A., 2014. Shared subjective views, intent to cooperate and tax compliance: Similarities between Australian taxpayers and tax officers. Journal of economic psychology, 27(4), pp.502-517. Krever, R.E., 2014. Australian Taxation Law Cases 2014: A Guide to the Leading Cases for Commerce and Law Students. Lang, M., 2014. Introduction to the law of double taxation conventions. Linde Verlag GmbH. Miller, A. and Oats, L., 2016. Principles of international taxation. Bloomsbury Publishing. Morgan, A., Mortimer, C. and Pinto, D., 2016. A practical introduction to Australian taxation law 2016. Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers view. Procedia-Social and Behavioral Sciences, 109, pp.1069-1075. Scholes, M.S., 2015. Taxes and business strategy. Prentice Hall. Tomasic, R. and Pentony, B., 2013. Taxation law compliance and the role of professional tax advisers. Australian New Zealand Journal of Criminology, 24(3), pp.241-257. Wickerson, J., 2014. The changing roles of taxpayer audit programs: some recent developments in the Australian Taxation office. Revenue Law Journal, 4(2), p.2. Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2017. Australian Taxation Law 2017 27th edition. OUP Catalogue.