Bloggs was born and educated in Australia and works as a carpenter.  Bloggs recently married a person from Italy, who is in Queensland on a student visa completing a Masters degree at an Australian University.  The student (now married to Bloggs) originally arrived in Brisbane on 1 May 2019. Bloggs has now been asked to consider working overseas for 18 months in the UAE office of his employer Australian company.  Bloggs' new role will include travel overseas from the UAE to Europe and Asia, as well as Australia at least quarterly.  Under the arrangement Bloggs will be employed by the Hong Kong office of his Australian employer company and his salary will be paid part into his UAE bank account and part into his Australian bank account.  The contract for Bloggs' new position in the UAE was signed in Brisbane.  His spouse, on completion of the Masters degree in Australia, has been offered a job with a large consultancy firm in Brisbane, which will commence in June 2021.  Bloggs is currently renting a house in a Brisbane suburb with his spouse and will be giving up that lease.  Bloggs also owns a car which will be left for a cousin to drive and maintain in Brisbane.  The only other assets Bloggs has are superannuation from the employer and also employee shares.  Bloggs has an Australian bank account into which his pay is credited.  Whilst in the UAE, Bloggs will be given rental accommodation by the employer and will open a bank account in the UAE to receive the pay, be a member of various expatriate and social organisations and will join a class to learn the Arabic language. Bloggs' spouse however will be unable to work in Dubai so intends to return to Italy and work there and visit Bloggs every 6 weeks in Dubai. Both Bloggs and the spouse leave on 24 April 2020 for the UAE.

REQUIRED

1.  Is Bloggs a resident or non-resident of Australia for taxation purposes for the year ending 30 June 2020?

2.  If the spouse of Bloggs is a resident of Australia for taxation purposes what additional steps, if any, could Bloggs take that may be relevant to the question of tax residency or source of income?

3. What will be the source according to Australian taxation law of the employment income of Bloggs when he commences work in the UAE?

In your answer you are to refer to the relevant legislation, tax rulings and case law.

You are required to submit one WORD document (not PDF) containing all parts of your Written Assessment with the document name as your student name with student number (e.g. Peter Smith s001234)

Full details of the assignment task are available on the Assessment page on the Revenue Law Moodle site. Please ensure that you read all of the information given on the Assessment page on this site.

The following criteria will generally be used to grade the assignment:

1. Your ability to identify the relevant facts of the case;

2. Your ability to develop these relevant facts into a logical argument;

3. Your ability to demonstrate an understanding of the key issues decided by the case;

4. Your ability to identify resulting changes from the case - for example, did this case clarify the law, or change it? In what way?

5. Clarity of communication, which will include, but not be limited to the development of a clear and logical structure, the use of headings and so on. Please note that the assignment should be limited to 2500 words, excluding referencing.

6. Correct referencing. Please note that you are required to follow the Australian Guide to Legal Citation version 4 and adopt footnote referencing.

Betty runs a small retail business as a sole trader. Betty also works part-time as an accountant for a public accounting firm and derives additional income from a rental property. Betty's personal records for the year ended 30 June 2020 reveal the following (all numbers are GST exclusive):

Receipts

$99,000 Retail Sales

$30,000 Net Salary (after employer had withheld tax instalments of $15,000)

$15,000 Rental income from an investment property

$5000 Exempt income from serving in the Army reserve

$21,000 Dividend franked to 60% received from an Australian resident public company

$17,000 Dividend received from a Chinese resident company, net of 15% tax of $3,000 was withheld in China pursuant to the Australia-China Double Tax Agreement

$8,000 Net business income received from Panama. $2,000 was withheld pursuant to the Panama income tax legislation

$1,000 Medical expense refunds from Medicare

$7,000 Employment income from working in Senegal - see note (a)

$10,000 Value of fringe benefit received from being an employee of the public accounting firm

$20,000 Net capital gain from the sale of shares acquired during the 2019-2020 income year

Payments

$3,000 Rates and Insurance on investment property

$10,000 Interest on money borrowed to purchase the investment property

$10,000 Salaries of employees working in the retail business

$6,000 Doctor’s fees

$1,000 Dentist fees

$30,000 Maintenance of the rental property, which consisted of $10,000 to paint the outside of the house due to wear and tear and $20,000 to upgrade the kitchen with better fittings

$5,000 Borrowing expenses relating to a new loan on the rental property, which is used exclusively for income producing purposes. The loan is for 6 years and commenced on 1 April 2020

$2,500 Travel between work and family home

$2,000 Rates on family home

$11,000 Purchases of trading stock

$1,000 Legal fees paid to a solicitor to collect outstanding trade debts

$1,000 Legal fees paid to a solicitor for preparing a lease of the investment property

$2,000 Donations ($1,000 to the Red Cross and $1,000 to the Brisbane Football Club)

Additional Information

(a) Betty earned $7,000 working in Senegal from 1 March 2019 to 31 May 2020. Betty did not pay tax in Senegal.

(b) On 1 August 2019 Betty lent $2,000 to an employee who was subsequently declared bankrupt on 19 January 2020. Betty ‘wrote the debt off’ on 30 June 2020. Betty has occasionally lent money to employees.

(c) Betty has a carry forward prior year trading tax loss of $15,000 and an ‘unabsorbed’ capital loss of $25,000 from the 2019-2020 income year.

(d) Betty and all members of her family are members of a Private Health Fund and do have private hospital insurance.

(e) Betty's business is considered a small business for tax purposes and the business returns income on a cash basis. Betty's trading stock on hand at the end of the year was valued at $27,000 (at cost price), $28,000 (at replacement price), $29,000 (at market selling value). Opening stock was valued at $35,000 using the replacement value.

(f) Accounting Depreciation was calculated at $15,000. The Tax Depreciation Schedule shows depreciation for the income year as $22,000.

Required

Calculate Betty’s taxable income and income tax payable for the year ended 30 June 2020.

Explain the treatment of each item.

You are required to submit one WORD document (not PDF) containing all parts of your Written Assessment with the document name as your student name with student number (e.g. Peter Smith s001234)

The following criteria will generally be used to grade the assignment:

1. Your ability to identify the key issues.

3. Accurate numerical answers, where relevant.

4. Clarity of communication, which will include, but not be limited to the development of a clear and logical structure, the use of headings and so on. Please note that the assignment should be limited to 3000 words, excluding referencing.

5. Correct referencing. Please note that you are required to follow the Australian Guide to Legal Citation version 4 and adopt footnote referencing.