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Instructions: case study needs to identify and discuss the tax implications of the various issues raised. In order to produce your case study, you will need to review relevant case and legislation....

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Instructions:

case study needs to identify and discuss the tax implications of the various issues raised. In order to produce your case study, you will need to review relevant case and legislation. The subject manual and set texts are starting points only, you will be expected to use these initial materials to identify potential useful resources. You will then need to review your selected resources to see if they value add to your analysis.

Your case study is not just a list of answers. Your reasons for your conclusions and recommendations must be based on your research into the relevant cases and legislation.

Answered Same Day Apr 22, 2020

Solution

Pulkit answered on Apr 28 2020
141 Votes
Question 1
Part a
Permanent Establishment: The permanent establishment in accordance with the UK Australia Double Tax Agreement means the business whether partially or wholly conducted out from the fixed place. The permanent place includes the place of effective management of business, its
anch office, factory premises, workshop area, and agriculture or forestry belongings.
In case of contracting state the enterprises shall be deemed to be the permanent establishment if it satisfies any of the following conditions:
a) The activities ca
ied out in relation to constructing project or building site in that state or undertakes for more than 12 month in that state in consultancy and supervisory activities.
) Maintain the equipment essential for the business for more than 12 month which is needed for the purpose of rental or others.
c) The manufacturing is done by acting in the state of contracting on behalf of some other contracting state.
The enterprise will not deem to be a permanent establishment only by reason of: (a) fixed place maintenance of business for the purpose of leading the business. (b) The facilities used for the need of storage or delivery where the goods are belonging to enterprises. (c) Processing of the merchandises belonging to the enterprises by some other.(d) stock maintenance for the need of delivery and storage.(e) fixed place maintained for the purpose of purchase of merchandise.
Part b
The profit of the contracting state of the enterprises is taxed in that state only. The apportionment of the profit earned by the enterprises is done in the case of the permanent establishment is situated in some other state and the attributable profit is taxed in the other state up to the part of permanent establishment. The profit is taxed in the same manner as if the other enterprises conducting the similar business of the permanent establishment in other state. The deduction is allowed only for the expenses which are incu
ed for the purpose of permanent establishment only. These expenses include general administrative expenses and other executive expenses whether incu
ed in the contracting state or some other place.

Part C
The permanent place of business can be defined as the place of business where part or the wholly business activities are ca
ied out. Therefore the business ca
ied out through any independent agent,
oker, general agent in the normal course of business will not deemed to have a permanent place of business.
Question 2
Issue: in the given situation the Andrew McSwington regarded as MLB prospect during the off season of America travelled to the Mexico for the purpose of play for 2 month and then come to Australia and play for the season league Adelaide Chomp in the month of December, January and Fe
uary for which he received the sum of $45 000 and join the team later. The payment is made to Andrew McSwington on monthly basis. He is impressed with the culture and ecological environment of Australia and then decided to buy the property of resident home in Glenelg. He plans to stay there and during the series and rented during the remaining period in the year. The taxability of the amount received by Andrew McSwingtonhas with regards to contract income and rental income to be find out in the case.
Rule: The taxability of any person is find out on the basis of his/ her residential status in the country in which the income is accrued or deemed to be accrued or arise during the financial year. For Andrew McSwington’s taxability the residential status must be find out whether the purpose is for holidays or for others.
The person meets any one of the following criteria to be an Australian resident:
· His living pattern and working in Australia prove that his intention is to make the Australia his home.
OR
· Lived in Australia for more than 6 month in an income year and he does not have any other place of resident in some other country and his intention to buy a house in Australia.
The people go to Australia on working and holiday visas and not intention to stay in Australia and would stay in Australia only for the intended purposes and return back to the home country after completion of his assignment. On the other hand if the behavior of the person change and attracted towards the culture of Australia and shows his intention to make the Australia his home but one cannot be an Australian resident if the person lived in the Australia on some rented property for a period of time.
Analysis: The analyses of the case given in the question it is summarized that the Andrew McSwington stayed in the Australia for the 2...
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