Australian Taxation Office - Article Example

Part A 1. Chris Jordam AI is the acting chairman of Australian Taxation Board after the retirement of Mr. Richard F E Warburton AO and will continue on the same post until a chairman is appointed. (Board Members, 2011) 2. The board of taxation has been entrusted with the following work (Current Activities, 2011) Calculate the tax treatment in relation to collective investment vehicle Ascertain the tax treatment of Islamic Finance Product Implementation of consolidation regime Ensure a taxation structure for the whole economy 3. The information about the Australian Taxation Office can be found on their website of Taxation office which is http://www.ato.gov.au/ and ensures that all the formalities and tax structure is looked after by all individuals, firms and corporations. (Taxation Office, 2011) 4. No, the taxpayer charter doesn’t allow the board or the department to disclose any personal information. The board has to safeguard the information and should ensure measures to guard it (Confidentiality, 2011) Private information relating to third parties will be released for banks, government agencies, and taxing authorities of another country with which they have an agreement. This will be done on the condition that the information won’t be leaked further and will be provided only if the matter is very urgent and very important (Taxpayer Charter, 2011) 5. The taxable income is calculated in the following manner “Taxable Income = Assessable Income – Deductions” (Income Tax, 1997) 6. Section 15-2 of the Income Tax Assessment Act 1997 provides the expenditure which is exempted from tax and is allowed as an allowable deduction. The heading for this section is “allowances and other things provided in respect of employment or services”. (Commonwealth Consolidated Act, 2011) 7. Division 8 of the Income Tax Assessment Act 1997 provides the value of allowances which is included into assessable income. The heading for this section is Deductions. 8. The value of the information which is allowed as an allowance in assessable income has to be in monetary terms. The information for the same can be obtained from the website of Taxation office which is http://www.ato.gov.au/ 9. The taxation ruling of 2010/11 discusses the following The ruling discusses the administrative issue in relation to deductions and manner to implement it (NTLG, 2010) The technical issue in relation to practical applicability issues (NTLG, 2010) The deductions in relation to superannuation contribution (NTLG, 2010) Process of litigation (NTLG, 2010) 10. The taxation rate set for 2010/15 for motor vehicles which are private and are above 2500 cc is 54 cents per kilometer (Taxation Determination, 2011) Part B i. Juliette is an English dancer and has engaged into a contract to work in Australia for a dancing company is contributing towards the income of Australia. Further, she has a contract for 2 years during which she will stay in Australia and in the mean time gets married to a person from Australia thereby making her the resident of Australia as she will spend her entire life there. Juliette had to leave Australia in the mean time as the ill health of her mother forced her to leave for England and stay with her till she passed away one final day. The charter of Australia prescribes certain norm which an individual has to meet to be considered as a resident of Australia. Meeting all of the criteria mentioned in the Charter makes a person be a local resident. The charter requires that the individual should be contributing towards the superannuation of Australia. Juliette confronts to these criteria as she is working for a company based in Australia and is helping to generate income for the country. Further, the longevity of the contract and the contribution towards the economic gross domestic product matches the first criterion required for an individual to be a resident of Australia. The second criterion requires that the individual should have stayed in Australia for a minimum period of six months. Juliette matches these criteria as she had stayed in the country for the same duration. This can be seen from the fact that she arrived in Australia on February 1 but had to return back on February 28 due to the ill health of her mother. This makes her duration of stay to be one month. She again returned back to Australia on May 1 and returned back to England on October 15 due to the ill health of her mother. This makes the duration of her stay to be five and a half month. This makes it a total of 6 and a half month stay in Australia. She again returned back on April 15 and stays back for her entire life. Since, the accounting year ends on 30th June so the period before that needs to be considered for the duration of stay. This helps to identify the period of stay as 1st July to October 15 making it three and a half months. She further stays from April 15 to the rest of her life. This makes the period to be 2 and a half month till the accounting year ends on June 30. This makes the total stay in Australia for the financial year to be 6 months. This matches the criteria required for the person to be a resident of Australia and complies with the requirements. Thirdly, it is important that the person has the domicile or is the permanent abode of Australia. This criterion is matched by Juliette as marrying Romeo who is an Australian earns Juliette the domicile of that country. Further, they decide to stay in Australia will ensure that she earns the local resident certificate as her husband is already a resident of Australia. This helps to meet the third criteria stated by the Australian government which will help to ensure a local citizenship for Juliette. Lastly, it is important that the person looking for a resident of Australia has a permanent dwelling place in Australia or spends a considerable time in Australia. This criterion is matched by Juliette as she marries a resident of Australia and will be spending the rest of her life in Australia. Also, the fact that she has a dwelling in Australia due to her marriage with Romeo ensures the fact that she is a resident of the country. The fact that Juliette adheres to the requirements as stated by law to be a resident of Australia make her a resident of Australia and will be taxed according to the tax structure prevalent in the country. This makes her a local resident of the country and she needs to ensure that she complies with all the requirements of the country. ii. Juliette will have to pay taxes for the money which has contributed towards the income of the economy and has helped the economy to grow. The Australian government uses a progressive tax structure and Juliette will be taxed according to the tax structure she falls in. To calculate the taxable income for Juliette it is important to ascertain the income generated by the individual in Australia and which helped towards the economy. Juliette needs to bring forward the earning she has earned in the country. While calculating the taxable income it is important to ascertain the value creation the income generated by the individual had on the economy. While calculating the taxable income for Juliette it is important to ascertain the income generated in the country and income earned from abroad. Both of the income needs to be compiled and the deductions allowed before the taxable income is ascertained. In this case Juliette is a resident of Australia as she matches the entire criterion so calculating the taxable income for her will include all the earnings and value generated by her. Juliette will have to pay tax on the $70,000 which is paid to her on a half yearly basis the entire sum for the year to be $140,000. Further, the fact that the income is generated within Australia by using the resources within the country makes it important to be considered in the gross domestic product. This income also helps to improve the circulation of money in the economy and generates towards more employment and helps to build the economy it has a value for the economy. To generate an income of $140,000 Juliette had to use the economic resources of the county making it a taxable income. Juliette will also have to pay tax on the interest she earns form abroad as it is a remittance to another country. If Juliette had not parked the resources in New Zealand and used it in Australia it could have helped in the growth on the economy. This could have also let towards the growth and development by generating more jobs and opportunities makes it an important consideration for taxable income. This makes it important that Juliette pays tax on $24,000 she earns as interest as it could have helped the economy otherwise. Juliette won’t be allowed to deduct the expense of $1,000 per month on mobile expenses as the amount is spent outside the country. This helps to generate more resources and growth for the other country instead of Australia. Had the expenses being spent in Australia would have been considered as an expenses but since it is done in some other country and contributes towards the GDP of that country it is out of purview of the Australian economy. This helps to identify the fact that Juliette will have to pay taxes on the money generated and contributing towards the GDP of Australia. This makes the taxable income for Juliette to be 140000 + 24000 = $164,000. Juliette will have to pay taxes on the income of $164,000 which will be decided on the basis of the tax rate prevalent in the country. Presently the tax rate for Australia for the financial cycle 2010/11 states that Juliette will have to pay tax as $17550 plus 37 cents for every dollar above $80,000. This makes the total tax to be $48,630. Juliette will have to pay the above mentioned tax on her entire income as she falls in the higher bracket and being a resident of Australia is liable to pay the tax prevalent in the country. References Board Members, The Board of Taxation, Australian Government, 2011, retrieved on April 11, 2011 from http://www.taxboard.gov.au/content/Content.aspx?doc=about/board_members.htm Current Activities, The Board of Taxation, Australian Government, 2011, retrieved on April 11, 2011 from http://www.taxboard.gov.au/content/Content.aspx?doc=current_activities/default.htm Confidentiality, taxpayers Charter: The Board of Taxation, Australian Government, 2011, retrieved on April 11, 2011 from http://www.ato.gov.au/corporate/content.aspx?menuid=0&doc=/content/25915.htm&page=4&H4 Commonwealth Consolidated Act, Income Tax Assessment Act,1997- Sec 15.2, 2011 retrieved on April 11, 2011 from http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s15.2.html Income Tax, Income Tax Assessment Act,1997, Australian Government NTLG, Superannuation Technical Sub-group minutes, 2010, retrieved on April 11, 2011 from, http://www.ato.gov.au/v/content/00255533.htm Taxation Office, The Board of Taxation, Australian Government, 2011, retrieved on April 11, 2011 from http://www.ato.gov.au/ Taxpayer Charter, The Board of Taxation, Australian Government, 2011, retrieved on April 11, 2011 from http://www.ato.gov.au/corporate/content.aspx?menuid=0&doc=/content/25915.htm&page=8&H8 Taxation Determination, The Board of Taxation, Australian Government, 2011, retrieved on April 11, 2011 from http://law.ato.gov.au/atolaw/view.htm?Docid=TXD/TD20105/NAT/ATO/00001&PiT=99991231235958 Read More