1 1 LAW 315 TAXATION LAW SPRING SESSION 2013 Assessment task – Take Home Test Instructions: This...

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1 1 LAW 315 TAXATION LAW SPRING SESSION 2013 Assessment task – Take Home Test Instructions: This assignment counts for 15% of the total marks for this subject and has a maximum word length of 2000 words (footnotes are not included in word count). The assignment is to be attempted individually. The marks for each scenario/question are of different value. Please note that you must acknowledge all sources of information. Plagiarism will not be tolerated and you will be penalised if you commit plagiarism. Please see pages 7-9 of the Subject Outline and the Faculty site for additional information in relation to acknowledgement, referencing, plagiarism and format of work. http://www.uow.edu.au/content/groups/public/@web/@law/documents/doc/uow XXXXXXXXXXpdf Date Due: No later than 4.00 PM Monday 2 September, 2013 The purpose of this exercise is for each student to explore the application of taxation law learned during weeks 1 to 5. Please note that extensions of time for submission of this completed task will only be granted in exceptional circumstances. Please see the reference on page 8 of the Subject Outline and the Faculty site in relation to Special Consideration, Extensions, Late Submission of Written Work and Penalties. http://www.uow.edu.au/content/groups/public/@web/@law/documents/doc/uow XXXXXXXXXXpdf Copy: Students must keep a copy of their answers in case the originals go astray. In your answer, refer to case law and legislation when necessary to support your answer. 2 2 Question 1 Juan is a Puerto Rican resident employed by a Puerto Rican company. Juan is sent to Australia to work on a short-term project to assist with the establishment of a branch of this company in Australia. Juan worked in Australia for 30 days. Throughout this time, Juan continued to receive a salary from his employer. The salary was paid into his Puerto Rican bank account. During the year Juan earned A$155,000 from his employment. Required: Advise whether Juan has to pay Australian Tax on any of his salary? In your answer, refer to case law and legislation when necessary to support your answer. [5 Marks] Question 2 Are all receipts of a taxpayer that carries on a business income in nature? In your answer, refer to case law and legislation when necessary to support your answer. [4 Marks] Question 3 On 1st October 2012, company EndX Pty. Ltd. purchased a new car for $45,000, inclusive of GST. Registration amounting to $450 was paid before delivery on 1st October XXXXXXXXXXThe car was made available to Mick, a company employee. Due to lack of storage facilities at the company premises, Mick took the car home to be garaged each night. Expenses incurred by the company on the motor vehicle for the 2012/2013 fringe benefits years were as follows: Stamp Duty $700 Repairs and Maintenance $800 Fuel and oil $500 Supply and fitting of air conditioning for business purposes $2,000 According to the employee’s log book, the car travelled 50,000 kilometres in the period 1st October 2012 to 31st March 2013 of which 30,000 kilometres was for business-related travel. The employee paid the company $1,200 towards the cost of fuel for private use. The company is electing to use the operating cost method to value the car fringe benefit. Required: Determine the fringe benefits tax payable by the employer company in respect of the car fringe benefit for the 2012/2013 fringe benefits tax year. All expenses were inclusive of the Goods and Services Tax. In your answer, refer to legislation when necessary to support your answer. [6 Marks]

David · Accepted Answer

LAW 315 
TAXATION LAW 
SPRING SESSION 2013 
Assessment Task – Take Home Test 
Question 1 
In the given Case, Juan is a resident of Puerto Rico and is in employment in the same 
country. For a short-term project of setting up a branch he was sent to Australia. He had been 
in Australia for 30 days. During this period Juan received salary from his employer. The 
salary was paid in his Puerto Rican Bank Account. The salary amounted to $ 155,000.  
Assumption: Juan is a temporary resident in Australia as defined in ss 995-1 (1) of the 1997 
Act. The Section provides that a person is said to be Temporary Resident if: 
a) The person is granted a temporary visa under the Migration Act, 1958.  
b) The person as per Social Security Act, 1991 is not an Australian Resident. 
c) As per Social Security Act, 1991 the spouse of the person is not an Australian 
resident. 
Section 768-910(1) of the Income Tax Assessment Act, 1997 provides that the an ordinary 
income that is derived from a source other than an Australian source whether directly or 
indirectly is non-assessable non-exempt (NANE) income.  
However, Section 768-910(3) of the Income Tax Assessment Act, 1997 provides exception to 
the above section 768-910(1).  
Sub division – 768-R of the Income Tax Assessment Act, 1997 provides that income is 
exempt from Australian Tax on foreign sources income other than the one received in 
employment.  
Income received by Juan fell under the exceptions since, the income is received during the 
course of employment. Hence, it can be said that the income is taxable under Australian 
Taxation.  
If Australian Tax is levied on the Income of Juan, Juan can claim Foreign Tax credit against 
his Puerto Rican Tax as per Double Taxation agreement subject to the limitations.  
However, it should also be considered that the income has been received in Puerto Rican 
account and not in Australia. Hence, it should not be taxable in Australia.  
References: 
1. Amount that you do not pay tax on 2013; Non-Assessable Non- Exempt Income, 
Individual Tax Return Instructions 2013, Available at: 
http://www.ato.gov.au/Individuals/Tax-return/2013/Completing-your-
return/Amounts-that-you-do-not-pay-tax-on/?anchor=P111-10424#P111-10424 
2. Foreign Income Exemption for Temporary Residents – Introduction, International Tax 
(Last Modified 28 November, 2012). Available at: 
http://www.ato.gov.au/General/International-tax/In-detail/Other-foreign-income-of-
Australian-residents/Foreign-income-exemption-for-temporary-residents---
introduction/ 
3. David V Hunt; Temporary Residents: Taxation Institute of Australia; Tax issues 
surrounding this new class of Taxpayers.

1 1 LAW 315 TAXATION LAW SPRING SESSION 2013 Assessment task – Take Home Test Instructions: This assignment counts for 15% of the total marks for this subject and has a maximum word length of 2000...

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