PART B Double Tax Agreements (a) Assume the year is 2017. Hemp Products Ltd (HPL) uses...

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PART B Double Tax Agreements (a) Assume the year is 2017. Hemp Products Ltd (HPL) uses hemp fibre to manufacture various clothing garments at its factory in Geelong (72 kilometres south-west of Melbourne), Australia. The company also has a range of cosmetic products using Hemp oil. The company grows the hemp on a large farm it owns near Geelong. The company sells its products in Australia through retail outlets as well as online. HPL also sells some of its products online to consumers in New Zealand (NZ). All orders are processed at HPL's Geelong head-office and products are also despatched from its Geelong distribution centre. HPL is an Australian resident company for tax purposes. HPL is a wholly owned subsidiary of a company registered in the Netherlands. HPL is intending to sell its products through retail outlets in NZ. To ensure the goods can be delivered to its NZ customers in a timely manner, in May 2017 a large industrial building is leased in Sydenham, Christchurch, NZ which will store a full range of their products. It is intended that garments (and other products) purchased online by NZ customers will be despatched from the Sydenham building. Mateo, who lives in NZ, is employed full-time on a fixed-term 5 month contract by HPL. His role initially is to travel through New Zealand to promote HPL's products. This includes attending trade fairs and other events to raise an awareness of HPL's products (including their sustainability credentials). All enquiries to purchase HPL's products will be dealt with by HPL's Geelong office. REQUIRED: HPL seeks your advice on the taxation implications (if any) of profits derived from its New Zealand operations. Your answer should include consideration of the Australia-New Zealand Double Tax Agreement. You are not required to consider the goods and services tax (GST) implications of this structure. (b) In addition to the information outlined in (a) above, in June 2017, Maria, an employee of HPL who lives in Geelong, is sent to Christchurch by HPL to set up the Sydenham building (and computer systems) as a distribution centre. She lives in Christchurch for 2 1/2 months before returning to HPL in Geelong. Maria is tax resident in Australia. REQUIRED: ACCT358-1981 TERM TEST 11 Advise Maria of the tax implications (if any) that arise from the time spent in New Zealand. Your answer should include consideration of the Australia-New Zealand Double Tax Agreement. (c) Assume that the year is now 2019. A number of NZ retail outlets now sell HPL's garments. In addition, HPL has expanded its product line to include Hemp towels, sheets and writing paper. The Sydenham building is very large and only partially used for storage of HPL's ACCT358-1981 TERM TEST 12 products. Accordingly, HPL decide to use the excess space to display their various products. These products are also available for purchase direct to the public. Due both to its expected expansion in New Zealand and increased demand in Australia for its products, HPL leases a large block (100 hectares) of farmland in Golden Bay (near Nelson), New Zealand which will also be planted in hemp. REQUIRED: HPL seeks your advice on the taxation implications (if any) of profits derived from its NZ activity. Your answer should focus on consideration of the Australia-New Zealand Double Tax Agreement. You are not required to consider the goods and services tax (GST) implications of this structure. PART B Double Tax Agreements (a) Assume the year is 2017. Hemp Products Ltd (HPL) uses hemp fibre to manufacture various clothing garments at its factory in Geelong (72 kilometres south-west of Melbourne), Australia. The company also has a range of cosmetic products using Hemp oil. The company grows the hemp on a large farm it owns near Geelong. The company sells its products in Australia through retail outlets as well as online. HPL also sells some of its products online to consumers in New Zealand (NZ). All orders are processed at HPL's Geelong head-office and products are also despatched from its Geelong distribution centre. HPL is an Australian resident company for tax purposes. HPL is a wholly owned subsidiary of a company registered in the Netherlands. HPL is intending to sell its products through retail outlets in NZ. To ensure the goods can be delivered to its NZ customers in a timely manner, in May 2017 a large industrial building is leased in Sydenham, Christchurch, NZ which will store a full range of their products. It is intended that garments (and other products) purchased online by NZ customers will be despatched from the Sydenham building. Mateo, who lives in NZ, is employed full-time on a fixed-term 5 month contract by HPL. His role initially is to travel through New Zealand to promote HPL's products. This includes attending trade fairs and other events to raise an awareness of HPL's products (including their sustainability credentials). All enquiries to purchase HPL's products will be dealt with by HPL's Geelong office. REQUIRED: HPL seeks your advice on the taxation implications (if any) of profits derived from its New Zealand operations. Your answer should include consideration of the Australia-New Zealand Double Tax Agreement. You are not required to consider the goods and services tax (GST) implications of this structure. (b) In addition to the information outlined in (a) above, in June 2017, Maria, an employee of HPL who lives in Geelong, is sent to Christchurch by HPL to set up the Sydenham building (and computer systems) as a distribution centre. She lives in Christchurch for 2 1/2 months before returning to HPL in Geelong. Maria is tax resident in Australia. REQUIRED: ACCT358-1981 TERM TEST 11 Advise Maria of the tax implications (if any) that arise from the time spent in New Zealand. Your answer should include consideration of the Australia-New Zealand Double Tax Agreement. (c) Assume that the year is now 2019. A number of NZ retail outlets now sell HPL's garments. In addition, HPL has expanded its product line to include Hemp towels, sheets and writing paper. The Sydenham building is very large and only partially used for storage of HPL's ACCT358-1981 TERM TEST 12 products. Accordingly, HPL decide to use the excess space to display their various products. These products are also available for purchase direct to the public. Due both to its expected expansion in New Zealand and increased demand in Australia for its products, HPL leases a large block (100 hectares) of farmland in Golden Bay (near Nelson), New Zealand which will also be planted in hemp. REQUIRED: HPL seeks your advice on the taxation implications (if any) of profits derived from its NZ activity. Your answer should focus on consideration of the Australia-New Zealand Double Tax Agreement. You are not required to consider the goods and services tax (GST) implications of this structure.

Answer rating: 100% (QA)

a Under the AustraliaNew Zealand Double Tax Agreement DTA the taxation implications for HPLs profits derived from its New Zealand operations would depend on the type of income and the presence of a pe... View the full answer