Responses to this assessment task must not exceed 1,500 words. IMPORTANT • You must cite relevant...

Question

Responses to this assessment task must not exceed 1,500 words.
IMPORTANT
• You must cite relevant cases, legislative references, and tax rulings (where relevant) to support your answers.
• Your response must also provide reasons that explain and support your answers.

• Responses that merely state the facts and decisions in the cases without any analysis of the issues raised will not earn much marks.
• Relying on the PPT slides and lecture notes to answer this question will not earn you much marks. Students are expected to read the relevant sections of the prescribed textbook to answer the issues raised in this case study satisfactorily.
• DO NOT copy the question or the instructions above in your answers
BUSL320 Taxation Law and Practice
Assignment

Question
Rod McLean aged 37 lives in Manly and works as a computer–systems engineer. He is employed at the Macquarie Park office of Softmicro Ltd, a US company that specialises in the development of information systems. In March 2017 Softmicro won a tender contract to install a new computer system for RST Ltd, located in Hong Kong. As a result, on 1 April 2017, Rod was posted to Hong Kong for one month to a
ange installation of the system. Due to technical difficulties in the installation, Rod’s stay was extended by a further three months. Initially, his salary of $8,000 per month was paid into the Manly
anch of his Westpac bank account. However, from 1 May 2017 his salary was paid into an account he opened at the Kowloon
anch of the HSBC Bank, in Hong Kong.
Upon completion of his work in July 2017, RST Ltd presented Rod with a return airline ticket to holiday in Paris, together with a voucher to cover his expenses whilst in Paris valued at $8,000. RST Ltd also offered Rod a three-year consulting job with the company with an annual salary of 100,000 and a car.
As an incentive to join RST Ltd, and to compensate for his leaving Softmicro and having to move permanently to Hong Kong, he was offered $40,000. This was to be paid in two instalments - $20,000 on joining the firm and $20,000 after one year of service.
Rod accepted the offer on 1 September 2017.

Prepare a report advising Rod as to the assessability of the above amounts in Australia for the tax years 2018/19 and 2019/20.

taxation-assignment-sgcjhyzx.docx

Preeta · Accepted Answer

In Australia financial year start from 1st July and ends on 30th June. In the tax year 2016-17, Rod McLean stayed in manly, Australia till 31st March, 2017 and went to Hong Kong since April, 2017 and stayed there after. So for the taxable year 2016-2017, Rod McLean stayed for 9 months and stayed away for 3 months. He was staying in Manly and it can be assumed that he is originally a resident of Australia. As per the resident rule in Australian taxation, if a person is resident of Australia and has a permanent account number in Australia then he does not need to go through any other test (Woellner et al. 2010). Therefore, Rod McLean will be resident for tax purpose in the year 2016-2017. The tax for this year will eventually be paid in the years 2018-19. Rod McLean received the salary throughout the whole year from Softmicro Ltd, which was a US company engaged in the development of information system. In fact the company won a tender in March, 2017 for Hong Kong and sent him to China for completes the installation process of information technology. The stay was supposed to be for one month but the work got delayed due to technical difficulties and Rod McLean had to stay for three more months. 
Tax to be paid in 2018-19:
The salary of $8,000 per month was paid throughout the whole year. But till the month of April the salary was received in the Manly branch of his Westpac bank account. But for the month of May and June the salary was paid into the Kowloon branch of the HSBC Bank, in Hong Kong. So for two months the income can be considered as foreign income. As per the Australian Taxation Law, for the resident of Australia, foreign incomes are to be taxable. If taxation is paid in foreign country then some offset is granted while paying tax in Australia.

Responses to this assessment task must not exceed 1,500 words. IMPORTANT • You must cite relevant cases, legislative references, and tax rulings (where relevant) to support your answers. • Your...

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