Taxation – ACC304

Class Assignment – Semester 2
Robert and Kate Andrews, two Australian citizens, have been living in New Zealand since 1 February 2012.
Robert went to New Zealand to start up an office in Auckland for his employers. When he left Australia, Robert took with him his wife, Kate and their two daughters Emily and Jessica, and he rented the family house in Nerang on the Gold Coast.
Robert was not sure when he would come back to Australia as the term of his assignment was indefinite. However, after a promising start, business in Auckland did not fare as well as predicted and the office was closed. Robert and his family decided to return to Australia where they arrived on 15 January 2016.
For the few weeks after their return to Australia, Robert and his family stayed in their family house in Nerang.
During that period, Robert took up a few contract jobs while he was looking for a long term employment opportunity.
In the meantime, Robert became aware of a Real Estate business opportunity in Byron Bay on the northern coast of New South Wales. After considering alternative options, Roberts decided to take the plunge and acquired the business for $350,000. The contract was signed on 25 March 2006.
Information regarding the 2016 Income tax year
Business
The data related to the real estate business for the period 1/4/2016 to 30/6/2016 is as follows:
Income:
Commissions received on sales
$80,000
Rental property agent fees
$45,000
Total income
$125,000
The above figures correspond to income earned and credited to accounts. All rental property agency fees were collected on 30 June 2016. Among commissions, an amount of $12,000 relates to sale contracts on two properties which were signed in late June. The contracts will be settled and the commissions received on 10 July 2016.
Personal Income
Foreign source income
While living in New Zealand, Robert received the following income from New Zealand sources:
Employment income : NZ $30,000 (equivalent AU$ 27,000), from which tax of NZ$8,000 (equivalent AU$7,200) was deducted Interest from savings account : NZ$990 (equivalent AU$891) net of 10 % withholding tax
After Robert’s return to Australia, a further NZ$450 (AU$405) was credited to his bank account in New Zealand. This amount is net of a 10% withholding tax
Australian source income
Employment income while on the Gold Coast: Gross pay: $8,000; PAYG amounts deducted: $1,200
Robert also got injured while working on the gold coast and got compensation amounts from his employer attributable as follows:
– Loss of wages: $1,000
– Personal injury – pain and suffering – $500
Robert has always been a member of the Australian Army Reserve Force. When he came back to Australia he immediately recommenced his duties as a reservist member. For the period ended 30 June 2015 he had received $1,500 as payments for do duties as a reservist.
On 27 June 2015 Robert went to the Gold Coast Jupiters casino and won $25,000.
Required:
1. On the basis of the facts provided in the case, determine whether Robert was a resident of Australia for tax purposes during the 2016 financial year. If so, indicate for which period, Robert is likely to be considered a resident.
2. Please also quantify and disclose the total amount that would be included in Robert’s assessable income in Australia for the 2016 financial year.
In your answer you must provide references to the relevant sections of the ITAA 1936 and ITAA 1997, case law, Tax Rulings or Tax Determinations. Criteria and marking guide Criteria that will determine the mark given in relation to assessment item 2 will be: ? identification of all issues that arise in the question ? discussion of theory that underlies those issues ? identification of relevant sections of legislation ? identification of relevant case authorities ? application of the law to the facts that arise in the question ? mastery of referencing.
Characteristics indicative of the respective levels of achievement in the assignment are as follows. Sometimes not all features will necessarily be present in any one assignment for that particular grade. Evaluation criteria These criteria are a general guide as to the standard expected at the various levels. It is not necessarily the case that all these criteria will be met at a particular standard as there may be a superior performance on one of the criteria and not so satisfactory performance on another. High distinction standard ? The answer is very well written and clearly expressed. ? There is a demonstrated appreciation and understanding of the issues involved. ? The answer is well structured and logically organised. ? Demonstrated mastery of referencing system. ? There is evidence of a comprehensive analysis of the issues. ? Conclusions are backed by well-reasoned arguments demonstrating a detailed insight and analysis of issues. ? Comprehensive coverage of all relevant issues. ? References are made to the appropriate legislation for particular issues. ? Statutory provisions are analysed and interpreted correctly. ? The legislation is applied to the particular fact situation in a competent manner. ? Consideration is given to the operation of the common law. ? There may be consideration of issues not raised in the tutorials and answer guides. Distinction standard ? The answer is well written and expressed. ? The answer is structured and logical. ? The issues have been reasonably well identified and appreciated. ? There is correct use of referencing. ? Issues have been analysed. ? Reference is made to all appropriate legislation, although the analysis and interpretation is not as detailed and reasoned as for the high distinction standard. ? The effect of the common law is considered. ? There is a comprehensive coverage of the issues. ? Occasional errors of law and legal reasoning may still be present.
Credit standard ? The answer is generally well written and expressed. ? The answer is structured and sequential. ? Referencing is satisfactory. ? Issues are identified and addressed. ? There has been an attempt to analyse some of the issues. ? The coverage of issues is reasonably comprehensive often with a good treatment and analysis of particular points. ? Errors of law and incorrect reasoning may sometimes be present. ? Statutory interpretation may require improvement. ? Depth of treatment is often lacking in some of the issues. Pass standard ? The answer is able to be followed and understood. ? The answer could perhaps be better organised and structured. ? The referencing may need improvement. ? Issues may need to be identified and addressed in more depth. ? Analysis when present may be incorrect. ? Some familiarity with the legislation and its application is demonstrated. ? Sometimes the conclusions reached are simple. ? There may be several errors of law. ? There may be quantities of material of marginal relevance included in the answer. Fail standard ? The answer may be significantly short of the required length. ? The written expression is poor and difficult to understand. ? The answer is poorly organised. ? There has been a failure to identify and address the issues in the question. ? Referencing is generally inadequate. ? There is a lack of familiarity with the legislation and its appropriate application. ? The reasoning and application demonstrated is poor. ? Frequently there is much irrelevant material.