Week 3: Residence and Source Ch 9; GST Ch 7

Question 1

Why is this chapter significant?

Answer 1

Looks into implications of being resident vs non resident and how its treated with tax and what sources are taxed

Question 2

What does the general jurisdictional rules look into?

Answer 2

That there must be some territorial link between Australia and either the taxpayer or the source of the income in order for Australia to exercise its taxing rights.

Question 3

What are residents assessed on?

Answer 3

Assessed on ordinary & statutory income from ALL sources (Aus + foreign)

Question 4

What are resident individuals subject to?

Answer 4

subject to

ML and MLS

Question 5

What are Non-residents Assessed on?

Answer 5

Ordinary & Statutory income from all Aus sources

Question 6

What are non resident individuals NOT subject to?

Answer 6

ML or MLS

Question 7

What is the definition of resident split into?

Answer 7

Individuals and Companies

Question 8

what are the 4 tests involved When deciding whether an individual is a resident?

Answer 8

1. Resides test
2. Domicile and permanent
   place of abode test
3. 183-day test
4. Commonwealth
   superannuation test

Question 9

What are the 3 tests for companies for definition for resident to be met?

Answer 9

1. Incorporation test
2. Central management
   and control test
3. Control of voting power
   test

Question 10

What is the resides test?

Answer 10

Individual is a resident of Australia if the person resides in Australia

Question 11

If you satisfy the _____ test, then you do ____ need to consider the other “secondary” tests.

Answer 11

resides, NOT

Question 12

What taxation ruling factors help determine whether a person resides in Australia?

Answer 12

• if a taxpayer’s family is living with him/her in Australia then this supports inference that taxpayer resides in Australia.
• maintain assets in Australia
• Social and living arrangements

Question 13

What does domicile and permanent place of abode test?

Answer 13

Individual is a resident in AUs if peron’s domicile is in Australia, unless comissioner is satisfied that the person’s permanent place of abode is outside Australia

Question 14

What does ‘permanent’ mean?

Answer 14

‘more than temporary or transitory’ NOT “everlasting”

Question 15

What are the 2 types of domicile?

Answer 15

Domicile = legal relationship between person and country.

2 types of domicile- domicile of origin (country of birth/domicile of parents)
Person desires to reside in a new country changing nationality will signial a change in domicile.

Question 16

What are the 2 cases related to domicile and abode test?

Answer 16

FCT v Applegate (1979)

FCT v Jenkins (1982)

Question 17

What is the 183 day test?

Answer 17

individual is a resident of Australia if he has actually been in Australia, continuously or intermittently, during more than one-half of the year of income

Question 18

What is commonwealth superannuation test?

This TEST CAN BE IGNORED IN THIS UNIT

Answer 18

An individual is a resident of Australia if he or she is:

• a member of a superannuation scheme established under the Superannuation Act 1990
• an eligible employee for the purposes of the Superannuation Act 1976, or
• spouse, or a child under 16, of a person covered by either of the above

Question 19

When is a company a ‘resident’ in Australia?describe 1st principle.

Answer 19

if it is ‘incorporated in Australia’
- even if controlled by foreign shareholders

-managed overseas/carries business overseas

Question 20

When is a company a ‘resident’ in Australia? Describe 2nd principle

Answer 20

if it ‘carries on business in Australia’ and has either:

its ‘central management and control’ in Australia, or

its voting power controlled by shareholders who are residents of Australia

Question 21

What does source mean regarding companies?

Answer 21

Depending where source of income (q of fact) comes from determines whether company is a resident of Australia

Question 22

What are the 4 types of general source rules?

Answer 22

Services Income

Business Income

Interest Income

Rental Income

Question 23

What is business income?

Answer 23

Where goods are sold/business is transacted

Question 24

What is interest income?

Answer 24

Loan – where the loan agreement is entered into and the money is lent

Business contract – where the contract was made

Question 25

What is Rental Income?

Answer 25

Fixed property – where the property is located

Moveable property – where the lease agreement was entered into

Question 26

What does the GST Chapter look into?

Answer 26

To understand basic operation of gst regime in aus and how it interacts with income tax rules.

Question 27

What % amount is GST payable?

Answer 27

flat rate of 10% on supplies of most goods and services by registered entities and on importations of goods

Question 28

When are input tax credits available?

Answer 28

for GST charged on certain acquisitions and importations made by registered entities

Question 29

What entities are gst applied to?

Answer 29

entities that are registered for GST (in the case of importations, GST also applies to unregistered entities)

Question 30

When can an entity “may” be registered for gst?

Answer 30

if it is carrying on an enterprise

Question 31

When “must” an entity be registered for GST?

Answer 31

if its ‘GST turnover’ meets the ‘registration turnover threshold’ (generally $75,000) , (current or projected

Question 32

Which entites must register for gst regardless of whether it meets GST turnover threshold?

Answer 32

Taxi drivers

Representatives of incapacitated entities

Resident agents acting for non-residents that are registered or required to be registered for GST

Question 33

What is GST charged on?

Answer 33

Taxable supplies

Taxable importations

Question 34

What is GST NOT charged on?

Answer 34

Input taxed supplies

GST-free supplies

Non-taxable importations

Question 35

Registered entities are entitled to input tax credits for GST charged on:

Answer 35

Creditable acquisitions

Creditable importations