Briefly explain the Australian tax law implications of each of the following scenarios, by citing relevant...

 

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Briefly explain the Australian tax law implications of each of the following scenarios, by citing relevant tax legislation and case law where appropriate. 1. XYZ Ltd is incorporated in UK and distributes watches in the Australian market. Half of the board of directors of XYZ Ltd resides in UK and the remaining board members reside in Australia. The board holds the majority of its meetings in Australia, where it makes high level decisions regarding the company's major contracts, finance, general policies and strategic directions in respect of its business operations. Is XYZ Ltd an Australian Resident for tax purposes and provide the explanation? 2. Jenny establishes a sole accounting practice on 1 July 2012 and sets up a small office with a secretary. On 1 July 2016, her sole practice merges with an accounting firm comprising 60 partners and 500 employees. Should she use cash or accrual accounting before and after merging with the accounting firm and provide the explanation? 3. James received a lump sum payment from the Daily Newspaper in full settlement of an action for defamation. Is this amount assessable income and provide the explanation? 4. AAB Ltd is a marine and boat manufacturer and has incurred costs of $200,000 on feasibility studies for a new marine engine. Will this expense deductible under $8-1 ITAA97? If not, can it be deductible under specific section and the timeframe for the deduction? (Explain critical and key elements of Australian tax law as it relates to tax documentation for legal entities such as companies, trusts, partnerships and sole traders including: the key aspects of income tax law covering concepts of residence and source, related elements of international tax, assessable income, deductions, tax rebates and offsets, and tax accounting). Activity 3 Answer Scenario 1 2 3 4 Tax implications Cite tax law Briefly explain the Australian tax law implications of each of the following scenarios, by citing relevant tax legislation and case law where appropriate. 1. XYZ Ltd is incorporated in UK and distributes watches in the Australian market. Half of the board of directors of XYZ Ltd resides in UK and the remaining board members reside in Australia. The board holds the majority of its meetings in Australia, where it makes high level decisions regarding the company's major contracts, finance, general policies and strategic directions in respect of its business operations. Is XYZ Ltd an Australian Resident for tax purposes and provide the explanation? 2. Jenny establishes a sole accounting practice on 1 July 2012 and sets up a small office with a secretary. On 1 July 2016, her sole practice merges with an accounting firm comprising 60 partners and 500 employees. Should she use cash or accrual accounting before and after merging with the accounting firm and provide the explanation? 3. James received a lump sum payment from the Daily Newspaper in full settlement of an action for defamation. Is this amount assessable income and provide the explanation? 4. AAB Ltd is a marine and boat manufacturer and has incurred costs of $200,000 on feasibility studies for a new marine engine. Will this expense deductible under $8-1 ITAA97? If not, can it be deductible under specific section and the timeframe for the deduction? (Explain critical and key elements of Australian tax law as it relates to tax documentation for legal entities such as companies, trusts, partnerships and sole traders including: the key aspects of income tax law covering concepts of residence and source, related elements of international tax, assessable income, deductions, tax rebates and offsets, and tax accounting). Activity 3 Answer Scenario 1 2 3 4 Tax implications Cite tax law