Taxation Law Assignment

Part 1:

Alice Jennings in considered an Australian resident based upon the following facts. Despite the absence of physical presence in Australia, her nationality, family ties and specifically the presence of significant permanent assets in Australia identifies her as a resident according to ordinary concepts. According to the ruling of the case Levene v IRC [1928] AC 217, she would be assessed as an Australian citizen for taxation purpose because the data does not provide evidence of her maintaining a permanent place of abode in New Zealand. Therefore, her assessable income1 for the year will be the total of her ordinary income from employment. The assessable income for the year will also include her earnings from property and leases2.

Tom Jennings has the attributes needed to be an Australian citizen for taxation purposes when we consider the first six months of the taxable year. This is based on his nationality, place of residence, family ties and his subjectivity to superannuation schemes. However, upon leaving Australia, evidence suggests that he has taken up a permanent place of abode outside Australia. This as the primary evidence, the domicile test and the 183 days rule can also be applied to identify him as a foreign resident. Based on his permanent place of abode in London, he is more likely to be ruled as a foreign resident in accordance with ruling of the case FCT v Applegate [1979] 9 ATR 899. Therefore as a foreign resident he will only be taxed on income sourced in Australia.

With reference to Scott v FCT [1966] 117 CLR 514, the gift received by Tom was not for personal qualities but rather in relation to the service provided. Therefore it is likely to be ordinary income.

John‘s assessable income would include his gross salary of $24,000 from being a part time clerk. Based on the rulings of FCT v Studdert [1991] 22 ATR 762 and FCT v Hatchett [1971] 125 CLR 494, it is highly likely that deductions will apply to his self-education expenses. The clear nexus between his degree and his field of work supports this conclusion. The expenses are more likely to improve his job proficiency and prospects of promotion. Deductions apply to his textbooks, laptop computer purchase, printer repair and amenities fees as these are necessarily incurred with the prescribed course of education3. However, a deduction is not applicable on his Monash HECS course fees4. Car expenses incurred for travelling between home and work are not deductable as seen in the ruling of FCT v Lunney [1958] 100 CLR 478.

Rita Jennings is clearly an Australian resident for taxation purposes under the ordinary concepts. Thus, she will be taxed on the entire amount she has earned from employment in the year 12/13.