ASSIGNMENT TERM

LAWS19033: Assignment Term

LAWS19033: Assignment Term

Introduction

This paper will be discussing the taxable laws in Australia. There is a case present in this paper which will be discussed and it has two parts that are answered in the last section of the paper. Resident taxpayers are generally taxed on worldwide income, with an offset forforeign tax paid on foreign income up to the amount of Australian tax payable on that income. Australian residents in certain lines of work overseas (e.g. aid, charity or government work) for a continuous period of 91 days or longer are exempt from Australian tax on their foreign earnings from that continuous foreign service period if the earnings are generally taxable in the country where sourced and are not exempt from tax by reason of a tax treaty in the foreign country. Nonresidents in Australia are taxable only on Australia-source income. Temporary residents are taxable on their worldwide employment income and on Australian source investment income.

Australia Income Tax Rates 2010 - 2011

Residence - For tax purposes, an individual is resident if he/she ordinarily resides in Australia or satisfies 1 of the following statutory tests: is domiciled in Australia (unless the Commissioner of Taxation is satisfied that the individual's permanent home is elsewhere); has spent more than half the tax year in Australia (unless the Commissioner of Taxation is satisfied that the individual's home is elsewhere and he/she does not intend to take up residence in Australia); or is a contributing member (or the spouse or child younger than 16 years of such a member) to the superannuation fund for officers of the Commonwealth Government. A "temporary resident" for tax purposes is an individual who meets all of the following criteria: holds a temporary visa granted under the Migration Act 1958; is not an Australian resident within the meaning of the Social Security Act 1991; and does not have a spouse who is an Australian resident within the meaning of the Social Security Act 1991. Filing status - Each taxpayer must file a return; joint returns are not permitted.

Taxable income - Taxable income for personal income tax purposes includes income from employment, business income, certain capital gains and passive income such as dividends, interest and rental income.

Capital gains - Capital gains derived from the disposal of assets acquired after 19 September 1985 are included in assessable income. For assets acquired after 1 October 1999 and held for more than 1 year, individuals are taxed on capital gains at their marginal rate on half the gain. For assets acquired before that date, individuals may choose between the new system and the old system, introduced in 1985, under which they are taxed at their marginal rate on the entire gain, indexed for inflation.

Deductions and allowances - Business expenses may be taken as deductions if they are necessarily incurred in gaining or producing assessable income. Expenses of a capital, private or domestic nature are not deductible. Residents in Australia are allowed some tax rebates, including a rebate for dependents and certain personal expenses...