Week 3: Residence and Source Ch 9; GST Ch 7 Flashcards
Why is this chapter significant?
Looks into implications of being resident vs non resident and how its treated with tax and what sources are taxed
What does the general jurisdictional rules look into?
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.
What are residents assessed on?
Assessed on ordinary & statutory income from ALL sources (Aus + foreign)
What are resident individuals subject to?
subject to
ML and MLS
What are Non-residents Assessed on?
Ordinary & Statutory income from all Aus sources
What are non resident individuals NOT subject to?
ML or MLS
What is the definition of resident split into?
Individuals and Companies
what are the 4 tests involved When deciding whether an individual is a resident?
- Resides test
- Domicile and permanent
place of abode test - 183-day test
- Commonwealth
superannuation test
What are the 3 tests for companies for definition for resident to be met?
- Incorporation test
- Central management
and control test - Control of voting power
test
What is the resides test?
Individual is a resident of Australia if the person resides in Australia
If you satisfy the _____ test, then you do ____ need to consider the other “secondary” tests.
resides, NOT
What taxation ruling factors help determine whether a person resides in Australia?
- 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
What does domicile and permanent place of abode test?
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
What does ‘permanent’ mean?
‘more than temporary or transitory’ NOT “everlasting”
What are the 2 types of domicile?
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.
What are the 2 cases related to domicile and abode test?
FCT v Applegate (1979)
FCT v Jenkins (1982)
What is the 183 day test?
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
What is commonwealth superannuation test?
This TEST CAN BE IGNORED IN THIS UNIT
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
When is a company a ‘resident’ in Australia?describe 1st principle.
if it is ‘incorporated in Australia’
- even if controlled by foreign shareholders
-managed overseas/carries business overseas
When is a company a ‘resident’ in Australia? Describe 2nd principle
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
What does source mean regarding companies?
Depending where source of income (q of fact) comes from determines whether company is a resident of Australia
What are the 4 types of general source rules?
Services Income
Business Income
Interest Income
Rental Income
What is business income?
Where goods are sold/business is transacted
What is interest income?
Loan – where the loan agreement is entered into and the money is lent
Business contract – where the contract was made
What is Rental Income?
Fixed property – where the property is located
Moveable property – where the lease agreement was entered into
What does the GST Chapter look into?
To understand basic operation of gst regime in aus and how it interacts with income tax rules.
What % amount is GST payable?
flat rate of 10% on supplies of most goods and services by registered entities and on importations of goods
When are input tax credits available?
for GST charged on certain acquisitions and importations made by registered entities
What entities are gst applied to?
entities that are registered for GST (in the case of importations, GST also applies to unregistered entities)
When can an entity “may” be registered for gst?
if it is carrying on an enterprise
When “must” an entity be registered for GST?
if its ‘GST turnover’ meets the ‘registration turnover threshold’ (generally $75,000) , (current or projected
Which entites must register for gst regardless of whether it meets GST turnover threshold?
Taxi drivers
Representatives of incapacitated entities
Resident agents acting for non-residents that are registered or required to be registered for GST
What is GST charged on?
Taxable supplies
Taxable importations
What is GST NOT charged on?
Input taxed supplies
GST-free supplies
Non-taxable importations
Registered entities are entitled to input tax credits for GST charged on:
Creditable acquisitions
Creditable importations
