IT Ruling 2650 under the ITAA 1997 Act †Myassignmenthelp.Com

Question: Discuss About The It Ruling 2650 Under The Itaa 1997 Act? Answer: Introducation The case study is based on a person named Kit who is a citizen of Chile but due to his work, he is staying in Australia. It is seen that being a Non-Australian he is living in the country on a permanent basis as he works in an Australia based organization. The IT ruling 2650 under the ITAA 1997 Act states that earnings that are received by an individual residing in Australia are stored and tax is levied over the income received from Australia and any other income that is received from international sources (Edmonds, Holle and Hartanti 2015). The paper is constructed in order to analyse the residential status of Kit so that his tax can be calculated by looking at the income he receives from the country and any other earnings from investments that are made abroad. In accordance with the taxation policy of Australia, it is seen that the income of Kit will be taxed if he is found to be in line with the Australian residing policy. In that case, if Kit is found to be a permanent resident of Australia, then he will be taxed on his income accordingly. It is seen that Kit has been living with his family in Australia for more than three years because of his work even though he is a citizen of Chile. Kit is earning is income from Australia and has been residing in the country and therefore, it important to realize the residential status of him as accordingly he will be taxed on his income (Sharkey 2015). The determination of the actual tax that can be levied on Kit is only possible if his status of resident can be determined. The understanding of the residential status is possible by undertaking various residential investigations that will be useful in attaining the idea regarding residential status of Kit. There are several examinations that can be un dertaken in order to realize the residential status of a person and therefore these tests will be done to determine the residential position of Kit. The analysis of the tests are given below: Domicile Test The domicile test is undertaken with respect to the Domicile Act of 1982. This act gives out the relevant and particular rights and policies that are pertinent to every individual for realising their residential status. The domicile test actually comprises of a legitimate structure that is helpful in the recognition of the current status of resident of an individual (Altshuler, Shay and Toder 2015). The act even describes that every individual has the supremacy and power to maintain dual citizenship. It is seen that with respect to the case study related to Kit, the person has even purchase a house in Australia. Kit has purchased a house in Australia and it is in regard to Section 6 of the taxation ruling 2650 of Australia. This section explains that tax is levied on individuals who have intended to purchase a house in Australia. Hence, when an individual is discovered to a domicile of the country, they are liable to be taxed according to the taxation policy of the country (McLaren 2015). With respect to the case study, it is known that Kit has purchased a house in Australia and therefore, his case is in line with the Section 6 one of the taxation ruling 1936 and therefore, Kit is found a domicile of Australia and therefore his income will be taxed according to taxation system of the country. Kit has even passed the domicile test and can be declared to be a permanent resident of the country as he has been living in the country for over three years and this incident shows that Kit has been living in the country for more than six months without any interval, which is another characteristic of the residential status. 183 Days Test The 183 Days test explains that if a person lives in Australia for more than 183 days without any interval he or she can be recognised as an Australian resident. With respect to the case study, it is seen that Kit has purchased a house in Australia and has been residing there with his family for more than three years. This incident is in relation to the F.C of T.v Apllegate 79 ATC; (1979) 9 ATR 899 as this section explains that a person will be taken as a domicile of Australia if they reside in the country for more than 183 days without any gap (Cooper 2016). However, it is seen that due to his work Kit has to go abroad on a quarterly basis but even though he goes out of the country, in total he and his family lives in the country for more than 183 days. This evidence therefore reveals that Kit is proved to a permanent domicile of the country and hence he will be taxable under the Australian taxation system over his income earned from the country and any other income that has been ga ined from international sources. Income Tax Assessment The individual tax of an individual is computed with respect to the Income Tax Act that has been laid down by the Australian Government. The income tax that is computed for a person is estimated on the basis of the total income that is gained within a financial year. With respect to the case study of Kit, it is seen that the salary that is received by Kit from his organization that is Australia based, is deposited in his bank account in Westpac. Kit holds a bank account jointly with his wife. Kit has even undertaken various investments in Chile. Applegate per Franki J 79 ATC explains that an individual who is a domicile of Australia is accountable to reveal all their information regarding their income and investments to the government thereby helping the taxation department to calculate the real tax and avoid the double taxation issue (Vann and Cooper 2016). Hence, Kit is liable to disclose all his income that he receives as salary and the income he receives from the investment in Ch ile so that the real taxation amount can be attained. Californian Copper Syndicate Ltd vs. Harris (Surveyor of Taxes) (1904) 5 TC 159 This is a case that considers the problems that Copper Syndicate Ltd face with respect to their non-refundable assets and lands that are used up for the purpose of mining of minerals. The court is under the consideration and has given out a decision that all the potential earnings are taken as the incomes that the management and the organizations receive (McCluskey. and Franzsen 2017). It is seen that capital for financing in the firm is not adequate and therefore, the end result has some significance. The decision that has been given out by the court is useful as it minimizes the mistakes and the fraudulent operations within the mining sector due to the fact that the revenue that can be subtracted are under the scrutiny of being taxed if the earnings are associated with the sale of property. Scottish Australian Mining Co Ltd vs. FC of T (1950) 81 CLR 188 In this scenario, it is observed that the revenue generated from land may or may not be granted as capital. The earnings that are liable to be taxed reveal that there is an uncertainty in the revenue generated from land and hence does not support the value investigation. It can be seen with respect to Section 25(I) that has a relation with the case of Mason, Wilson and Morphy, where the earnings that are constructed with the help of sale of land can be understood as an individual property (Newman 2016). The conclusion to this case reveals that revenue from property sales is equated to the income of the taxpayers in accordance to the principles of accounting. Statham Anor vs. FC of T 89 ATC 4070 This is a case that explains that any revenue from sales will be taxable if it is related to the loss of earnings in farming. The Section 25 and 26 describes that the income from the trading of land and estates are segregated in order to be analysed and monitored. The section even explains that profit that is gained from selling of land due to losses in farming will even be taxed. There remains an uncertainty that is in relation to the diversification of the earnings received from land sales. Casimaty vs. FC of T 97 ATC 5135 In this scenario, it is seen that segregation of a land is undertaken has become ripened and so it is sold off to any firm or land. The revenue that is created from the sale of land in this case has actual changes in the value of tax. In order to understand the full potential of land, the land was segregated and thereby by observing the characteristics of land so that the actual price can be given and minimizing the chances of the revenue getting posted in the capital gains (Clough and Roberts 2014). This action can be only be undertaken if the property earlier was not exploited for any business operations. Moana Sand Pty Ltd vs. FC of T 88 ATC 4897 It is a case where the conclusion of the results has given out that any property or land that is bought with the intention of creating profit is not always fruitful to give out the profit as such lands require to pay extra tax keeping in line with the notion that a profit is gained with the help of the sales activity. Crow vs. FC of T 88 ATC 4620 It is a case in which it is seen that a land was bought with the purpose of farming and due to some unavoidable circumstances, the land is divided and sold off so that some income can be gained. The court has given a judgment that the income received from the selling of land is taken as income and therefore tax will be implied over the profit that is received by the proprietor (Griffiths 2015). It is due to this reason that the procedure of sale is conducted in a systematic manner. Mc Curry Anor Vs. FC of T 98 ATC 4487 The owner of the house in this case reconstructs their old house into a new one so that they can sell off the house with the purpose of earning profit. The court has seen such scenario to be a misconduct on the part of the owner and hence instructs the owner of the renovated house to pay out taxes over the profit gained. It is because, the house constructed primarily did not have the intension of making profit (Millar 2014). The purpose of the owner is to make profit by reconstructing the house and therefore, tax is implied on his sales proceeds and revenue. Reference List Clough, M. and Roberts, J., 2014. Commissioner of taxation wins appeal upholding tax assessment issued to.Australian Resources and Energy Law Journal,33(2), p.93. Cooper, G.S., 2016. Implementing BEPS, or Maybe Not-The Australian Experience One Year On. Altshuler, R., Shay, S.E. and Toder, E.J., 2015. Lessons the United States can learn from other countries territorial systems for taxing income of multinational corporations. Edmonds, M., Holle, C. and Hartanti, W., 2015. Alternative assets insights: Super funds-tax impediments to going global.Taxation in Australia,49(7), p.413. Griffiths, J., 2015. Application of the Australian consumer law to government commercial activities. Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia, 29(3), p.3. McCluskey, W.J. and Franzsen, R.C., 2017.Land value taxation: An applied analysis. Routledge. McLaren, J., 2015. The Taxation of Foreign Investment in Australia by Sovereign Wealth Funds: Why Has Australia Not Passed Laws Enshrining the Doctrine of Sovereign Immunity.J. Austl. Tax'n,17, p.53. Millar, R., 2014. Grappling with basic VAT concepts in the Australian GST: the meaning of supply for consideration.World Journal of VAT/GST Law,3(1), pp.1-31. Newman, S., 2016. The new CGT withholding regime: More than meets the eye. Proctor, The, 36(5), p.18. Sharkey, N., 2015. Coming to Australia: Cross border and Australian income tax complexities with a focus on dual residence and DTAs and those from China, Singapore and Hong Kong-Part 1.Brief,42(10), p.10. Vann, R.J. and Cooper, G.S., 2016. Transfer Pricing MoneyThe Chevron Case. Vann, R.J., 2016. Hybrid Entities in Australia: Resource Capital Fund III LP Case. Williams, L., 2017. Risk: Real property changes: Risk management tips for solicitors.LSJ: Law Society of NSW Journal, (30), p.76.