Tax Law Revision Notes
Lecture 2 : Jurisdiction to Tax
Taxable Income
Tax Payable [s4-10 ITAA97] : (Taxable income x Tax Rate) – Tax Offsets
Financial Year 1 July : 30 June
Tax Offsets [s13-1 ITAA97]
Social security benefits
Dividends (franking credits) etc
Taxable Income [s4-15 ITAA97] : (Assessable Income – Deductions)
Assessable Income [s6-1] compromises Ordinary Income [s6-5] and Statutory Income [s6-10] but not Exempt Income [s6-15]
Deductions include General Deductions [s8-1] and Specific Deductions [s8-5]
Australia’s Tax Jurisdiction
Australian Sourced income
Foreign Sourced Income
Australian Resident
Yes
Yes
Foreign Resident
Yes
no
Assessable income includes foreign residents [s6-1]
All ordinary income and statutory income of a ‘foreign resident’ taxpayer derived directly or indirectly from all Australian Sources during the income year and any other amounts specifically included [s6-5(3) & s6-10(5)]
Determining Residency
‘Australian Resident’ is a person who is a resident of Australia for the purposes of s995-1 ITAA36 s6(1) ITAA36 outlines 4 residency tests (only one needs to be satisfied, decided year-by-year)
Assessment period is 1st July -> 30th June
Events after the year has ended can be considered to determine residency
Applegate (1979)
Ordinary Resident Test (primary test)
TP is a resident if he resides in Australia
Dwells permanently or for considerable amount of time
Levene [CS 4.1] – Residency – Temporary Visits abroad
TP was a UK resident, retired and sold his home. Following 2 years he lived in a Hotel (UK), then 5 years (UK/Abroad)
During this time he spent 4/5 months a year in the UK to obtain medical advice
Ruled that until TP leased a flat overseas, he was a UK resident due to his strong ties and trips O/s was temporary
Question of Fact
Lysaght [CS 4.2] – Residency – Moved Abroad
Frequency/regularity (1wk p/month) of his visits to UK along with strong business ties, plus original resident status was enough to
Taxable Income
Tax Payable [s4-10 ITAA97] : (Taxable income x Tax Rate) – Tax Offsets
Financial Year 1 July : 30 June
Tax Offsets [s13-1 ITAA97]
Social security benefits
Dividends (franking credits) etc
Taxable Income [s4-15 ITAA97] : (Assessable Income – Deductions)
Assessable Income [s6-1] compromises Ordinary Income [s6-5] and Statutory Income [s6-10] but not Exempt Income [s6-15]
Deductions include General Deductions [s8-1] and Specific Deductions [s8-5]
Australia’s Tax Jurisdiction
Australian Sourced income
Foreign Sourced Income
Australian Resident
Yes
Yes
Foreign Resident
Yes
no
Assessable income includes foreign residents [s6-1]
All ordinary income and statutory income of a ‘foreign resident’ taxpayer derived directly or indirectly from all Australian Sources during the income year and any other amounts specifically included [s6-5(3) & s6-10(5)]
Determining Residency
‘Australian Resident’ is a person who is a resident of Australia for the purposes of s995-1 ITAA36 s6(1) ITAA36 outlines 4 residency tests (only one needs to be satisfied, decided year-by-year)
Assessment period is 1st July -> 30th June
Events after the year has ended can be considered to determine residency
Applegate (1979)
Ordinary Resident Test (primary test)
TP is a resident if he resides in Australia
Dwells permanently or for considerable amount of time
Levene [CS 4.1] – Residency – Temporary Visits abroad
TP was a UK resident, retired and sold his home. Following 2 years he lived in a Hotel (UK), then 5 years (UK/Abroad)
During this time he spent 4/5 months a year in the UK to obtain medical advice
Ruled that until TP leased a flat overseas, he was a UK resident due to his strong ties and trips O/s was temporary
Question of Fact
Lysaght [CS 4.2] – Residency – Moved Abroad
Frequency/regularity (1wk p/month) of his visits to UK along with strong business ties, plus original resident status was enough to