Tax Claim Advise Letter - Case Study Example

The nature of your employment means that you spend more than half the year outside the country. To determine your residency, the Australian tax office applies some test to ascertain whether you fall under its jurisdiction for tax purposes namely the residency: ‘resides test’, domicile test, 183 day rule and the superannuation test. This is addressed under subsection 6(1) of the Income Tax Assessment Act 1936. According to the first test, whether a person is an Australian resident is a matter of fact and degree1 that depends on the circumstances of each case.

However, some factors are considered. One and that is relevant to your scenario is the nature and extent of family and business ties that a person has established in Australia. According to the documents you have provided us, you have established a business, and indeed you have been the exclusive importer of widgets into Australia. In reference to the domicile test, a person is a resident in Australia if they have a domicile in Australia unless the commissioner becomes satisfied that person’s permanent place of residence is abode is outside Australia.

Under the above two test, you qualify as a resident. However, you do not satisfy the 183 day test that applies to an expatriate and requires that they must have been present in Australia for more than 183 days. In Taxation Ruling IT, it was held that where a person temporarily leaving Australia, if they satisfy the first test, that is residency in the ordinary sense, then there is no need to go any further and they are residents for income tax purposes. Consequently, you are a resident for income tax purposes.

Having addressed residency, we turn to your tax liability under the Income Tax Act. To compute taxable income, the tax law makes a distinction between income and capital receipts. Your taxable income shall include your PAYG payment from Compass, dividends from west point, capital assets gain from the sale of the estate, termination of the distribution agreement and business income from the distribution of widgets. Under the PAYG system, tax is deducted by the employer from the gross salary, who pays it to the ATO.

This would cover your tax liability if you had no other source of income. Nevertheless, one must file returns if the amount exceeds $6000 of taxable income. If there is non-salary income, one, however, receives credit for tax paid under PAYG. With regards to your PAYG payments, your employers have already deducted the tax due. Total taxable income should be as calculated in appendix 1. Notice that the allowances; both laundry and uniform are deducted to arrive at your taxable income because these two occupation related expenses that are incurred to earn your taxable income.

to add, the Skin care products purchased due to flight attendant role amounting to 629.00 is also deductible. Also notice that the fridge benefits have not been added since they are treated differently since they are taxed at the rate of 46.5%, and the tax year is different, as it runs from 1st April t0 30th may. Dividends received from Westplains ltd are also added to arrive at your taxable income as shown in appendix A. Notice that the amount added includes the flanked amount and flanking credits.

This system applies to prevent double taxation. This is because the company pays a divided at the corporate rate and the dividend is