This summarizes a business law case study involving an individual named Tom. Tom signed a two-year contract to be a plantation manager in Brunei from 2016 to 2018. He was offered a potential one-year extension. While in Brunei, Tom accessed bank accounts in both Australia and Brunei. Upon returning to Australia in 2018, Tom started his own accounting practice. The case study raises issues regarding Tom's tax obligations and residency status related to his overseas employment, rental income, and new business. It also provides rules under Australian taxation law regarding these issues including residency tests, reporting income sources, and business registration requirements.

1. Business Law Case
Studies
Business laws deal with the set of laws that are highly functional in
resolving the domestic or foreign matters of business through a series of
official materials, meetings, and other commercial agreements. Business
lawyers help their clients glide through the allegation and other relevant
matters of trade with their in-depth knowledge of the commercial laws. A
business law student without properly dealing and understanding of the
intricacies of business law case study would not be able to help their clients
in future.
CASE STUDY :1

2. Question: 1- In June 2016 Tom had signed an agreement in Sydney with
XYZ Ltd to act as the company’s plantation manager in Brunei until June
2018. At the time of signing the agreement, Tom was advised that it was
possible that at the end of his two year contract the company would offer
him a one year extension. Tom advised the company, at the time of
signing, that he had no definite view of accepting or rejecting the possible
extension but would consider it at the end of his two year posting. He
rented his house in Sydney for two years. He arrived in Brunei on 1 July
2016. He and his family resided in a large house they leased near the
plantation, which was provided as part of his employment package. His
younger daughter Mary, aged 9, accompanied him and his wife to live in
Brunei, where she attended boarding school. His older married daughter
Anne, aged 23, remained in Australia with her husband. While in Brunei,
Tom and his wife joined the local bridge and golf club. He also rented a
holiday apartment at a nearby beach resort for two years. During the time
the family was in Brunei, his wife took a part-time job teaching English.
In June 2018, Tom was offered a one year extension of his contract, but
decided to reject it and returned to Sydney on 10 June 2018. While in
Brunei, the rent from his house in Sydney was paid into his interest earning
Australian bank account, which he accessed using his Australian credit
card. His salary was paid into an interest earning bank account that he had
opened in Brunei. He drew upon his Brunei bank account from time to time
at local ATMs in Brunei.
On returning to Australia, Tom decided to open an accounting practice as a
sole practitioner. His wife assisted him, by acting as the receptionist.
Fortunately, he was able to provide a service to a client shortly after
beginning business. He billed this client for fees of $8,000 on 27 June
2018, but did not receive the cash payment from his client for these
services, until July 2018. This was the only client he billed for the year
ended 30 June 2017.
Answer :
Issue
The first issue, which has been raised in this context, is about the rental
property issue that is being faced by Tom. While working for the company
in Brunei, he rented his house in Sydney for two years. Hence, the first
issue emphasizes residential rental properties. The second issue, which is
being faced by Tom, is tax liability from bank interest earning. Additionally,

3. Tom was also facing problems relating to the tax liability of a salary
account in Australia. Tom while residing in two years in Brunei used his
Australian credit card for the salary purpose and for the rental earning
purpose he used his Australian bank account. The third issue which has
been highlighted in the context of Tom after returning to Sydney after two
years is that he started his own business of accounting practice and
worked as a sole practitioner. Therefore, the issue here is that Tom
provided service to the client and billed a fee of $8,000 on June 27, 2018.
However, in lieu of the same he did not obtain the cash based payment for
these services from his client until July 2018.
Rule
The rule of Residential rental properties under the taxation law includes
that when a person rents out his property, he needs to show up all his
income and report on the tax return. Contextually, in the tax return, the
visibility of the rental income is considered to be essential, as it proves that
the owner of the house has a good intention and wants to make money
legally from the property. However, if the owner does not show up the
income earned from the rental house, then the earning would be
considered to be illegal. This rule is based on the case of property rental
income;. A gross income of an individual is perceived to be legal and is
valued after making up various kind of remuneration into it. If the resident
of Australia resides anywhere, he is liable to pay all the taxes from the
income that he generates every time.The income is based on earning
made from each source and none of them can be exempted. If it happens
that it can be called as tax evasion. Therefore, the employment income is
included in the tax proceedings and a person having any source of income
must have to report for it in the tax return. As per 183-day test rule with
respect to residency in Australia, it can be stated that an individual has to
be either continuously or occasionally in the country for being perceived as
a constructive residence. This is unless an individual can prove that his/her
residing place is outside Australia. Additionally, it may also be in the case if
the individual has no plan to settle in the country. It must be noted with
respect to this particular rule that an individual must be satisfied that his or
her residing place is outside Australia, however, the first statutory test of
domicile needs to assure that the individual is a permanent resident outside
Australia. In this context, a domicile is referred as the place, which on the
basis of law is considered to be the permanent home or something that is
perceived to be more than a residing property. Hence, an individual may
not have a fixed residence, but based on the Australian law, he/she is
always observed to be domicile. This allows an individual to reside in two
places.

4. An individual may be even earning the interest income. The main concept
in the context is that a person needs to show up all the income of his/her
earnings. The Australian taxation office refers that if they find any such
person, stating the interest income and interest earned reported by the
financial institution differs, then a notice is to be served to the individuals.
Therefore, the taxation rule infers about reporting the sources of income
from everywhere in the tax return.
When a person establishes any kind of firm in Australia, there are some
laws and regulations, which are to be followed. Moreover, on the basis of
the Division 207 and Subdivision 210?H of the Income Tax Assessment
Act 1997, a company is liable to pay off all the corporate taxes against its
income. Proper registration of the firm and the lodge of it in tax returns
make the firm valid and legal. The firm prior to settling up the firm must
have to understand the laws, which comply with the tax. A business or a
firm is registered only when it is proven that it has followed all the
procedures in a legal way. In addition, there are various legal registrations,
which are important to accept prior to establishing a business entity.
Hence, to make all the important registration of the firm, the owner needs
to consult with the tax advisers, who can make them understand the legal
processes involved in registration of the company. Additionally, as the firm
hires new employees in the organization, it is essential to record the entire
payroll related to each and every employee, who has been paid;;.
Therefore, these are the following rules as well as the regulations that are
considered in the taxation process and a firm to maintain its legality needs
for maintaining all the important processes. It is clear from the Australian
Taxation Office if a person is found to be avoiding any kind of tax rules and
regulation then he/she is liable to be charged with penalties. This may lead
the business to be at risk. Payments that have been made to a taxpayer in
the form of inducement to return to work or to provide services

5. CASE STUDY :2
Question: 2- You are working as a tax consultant in Mayfield, NSW. Your
client is an investor and antique collector. You have ascertained that she is
not carrying on a business. Your client provides the following information of
sales of various assets during the current tax year:
(a) Block of vacant land. On 3 June of the current tax year your client
signed a contract to sell a block of vacant land for $320,000. She acquired
this land in January 2001 for $100,000 and incurred $20,000 in local
council, water and sewerage rates and land taxes during her period of
ownership of the land. The contract of sale stipulates that a deposit of
$20,000 is payable to her when the contract of sale is signed and the
balance is payable on 3 January of the next tax year, when the change of
ownership will be registered.
(b) Antique bed. On 12 November of the current tax year your client had an
antique four-poster Louis XIV bed stolen from her house. She recently had
the bed valued for insurance purposes and the market value at 31 October
of the current tax year was $25,000. She purchased the bed for $3,500 on
21 July 1986. Although the furniture was in very good condition, the bed
needed alterations to allow for the installation of an innerspring mattress.
These alterations significantly increased the value of the bed, and cost
$1,500. She paid for the alterations on 29 October 1986. On 13 November
of the current tax year she lodged a claim with her insurance company
seeking to recover her loss. On 16 January of the current tax year her
insurance company advised her that the antique bed had not been a
specified item on her insurance policy. Therefore, the maximum amount
she would be paid under her household contents policy was $11,000. This
amount was paid to her on 21 January of the current tax year.

6. (c) Painting. Your client acquired a painting by a well-known Australian
artist on 2 May 1985 for $2,000. The painting had significantly risen in
value due to the death of the artist. She sold the painting for $125,000 at
an art auction on 3 April of the current tax year.
(d) Shares. Your client has a substantial share portfolio which she has
acquired over many years. She sold the following shares in the relevant
year of income:
(i) 1,000 Common Bank Ltd shares acquired in 2001 for $15 per share and
sold on 4 July of the current tax year for $47 per share. She incurred $550
in brokerage fees on the sale and $750 in stamp duty costs on purchase.
(ii) 2,500 shares in PHB Iron Ore Ltd. These shares were also acquired in
2001 for $12 per share and sold on 14 February of the current tax year for
$25 per share. She incurred $1,000 in brokerage fees on the sale and
$1,500 in stamp duty costs on purchase
(iii) 1,200 shares in Young Kids Learning Ltd. These shares were acquired
in 2005 for $5 per share and sold on 14 February of the current tax year for
$0.50 per share. She incurred $100 in brokerage fees on the sale and $500
in stamp duty costs on purchase.
(iv) 10,000 shares in Share Build Ltd. These shares were acquired on 5
July of the current tax year for $1 per share and sold on 22 January of the
current tax year for $2.50 per share. She incurred $900 in brokerage fees
on the sale and $1,100 in stamp duty costs on purchase.
(e) Violin. Your client also has an interest in collecting musical instruments.
She plays the violin very well and has several violins in her collection, all of
which she plays on Your client also has a total of $8,500 in capital losses
carried forward from the previous tax year, $1,500 of which are attributable
to a loss on the sale of a piece of sculpture which she sold in April of the
previous year.
Required:
Based on this information, determine your client’s net capital gain or net
capital loss for the year ended 30 June of the current tax year.
Answer :

7. In case and individual taxpayer acquired an vacant or empty land for the
purpose of investment or private use, the requirement is to consider the
land as a capital asset and it is subject to capital gain tax when the
taxpayer sells it (Harding 2013). According to the Australian Taxation
Office, the taxation treatment of the vacant land acquired by the taxpayer in
the form of capital asset needs to be treated like other assets for capital
gain purpose. For this reason, it is the obligation on the taxpayer to keep
record of all the data and information related to the cost of the land. At the
same time, the taxpayer needs to keep the records of related expenses of
the land that are council rate and interest rate on the loan. These expenses
are not subject to income tax deduction as they need to be included in the
cost base related to the land at the time of the computation of capital gains
or losses while selling the land (Grudnoff 2015).
It can be seen from the provide scenario that the taxpayer signed a
contract for selling the vacant land for $320,000. Some of the ongoing
expenses reported by the taxpayer related to the land are water and
sewage rates, land tax and local council at the time of the ownership of the
land. According to Section 104-10 (1), the occurrence of CGT event A1 can
be seen at the time of selling the land (Mahar 2016). Thus, under Section
102-5, ITAA 1997, the taxpayer will be needed to show the capital gain net
amount in his taxable income.
Requirement [b]: Antique Bed
The definition of Collectable can be seen under Subdivision 108-B.
According to Section 108-10 (2), a collectable can be defined as the object
that the taxpayer uses for the purpose of personal enjoyment and use
(Dabner 2015). As per Section 118-10 (1), ITAA 1997, a collectable will be
subjected to exempt from CGT taxation when its value is $500 or less than
$500. It can be seen from the present scenario that someone stolen the
antique bed from the building of the taxpayer. Later, it has been observed
that the taxpayer did not include the stolen antique bed in his specific
matters’ list in the insurance policy. Section 104-25 (1) indicates towards
the occurrence of CGT event A1 when someone destroy or damage the
asset. In this situation, the compensation receipt related to the stolen
antique bed lead to the occurrence of CGT event A1 due to compensation
received for the stolen antique bed (Boccabella 2015).

8. Requirement [c]: Painting
Prospective functioning of CGT can be seen and it can be applied at the
time of the occurrence of the CGT event related to the purchased assets
on or after the date of 20th September 1985. In case of most of the CGT
events, the presence of exemptions can be seen related to the obtained
assets before the date of 20th September 1985 (Jacob 2018). For this
reason, the assets are exempted from CGT assets in case they are
purchased after CGT event. It can be seen from the provided situation that
the taxpayer obtained the painting on 2nd May 1985 and the painting has
been sold by the taxpayer in the present taxation year for $125,000. In this
case, it is needed to consider the pre-CGT asset as subject to exemption
from CGT event as the taxpayer obtained it before CGT introduced or
before 20th September 1985 (Evans et al. 2014).
Requirement [d]: Shares
CGT is applicable for the investors or the individual taxpayers in case of
the capital gains that the taxpayer has acquired from units or shares at the
time of the occurrence of the CGT event; particularly, at the time of the
selling of the asset by the taxpayer. In this context, it needs to be
mentioned one needs to do the taxation treatment of units or shares of the
company along with the managed funds as the same manner like the other
assets related to the capital gain tax purpose (Kania 2013). The treatment
of profits made by the taxpayer due to the sale of the shares needs to be
done as ordinary income. It can be seen in the provided scenario that the
taxpayer has reported capital gains from shares and they were acquired in
Build Ltd, Common Ltd and PHB. After this event, reporting of loss can be
seen from the side of the taxpayer from the sales of the shares of Young
Kids Learning. For this reason, in this situation, the taxpayer has the option
of setting off the capital loss due to the sales of shares of Young Kids
Learning against the capital gain due to the sale of Common Ltd, PHB and
Build Ltd (Daily, Kieff and Wilmarth Jr 2014).
Requirement [e]: Violin
Subdivision 108-C deals with the personal use assets. According to
Section 108-20 (2), personal assets are the assets that are considered as
the non-collectable assets and the taxpayers acquire these assets for
personal use and enjoyment (Evans and Krever 2017). Furniture, boat,
electricity goods and any items of household are this kind of asset. Land
and building cannot be included under personal use assets. Section 108-30
states that it does not include the personal use asset’s cost of ownership.
As per Section 118-10 (3), there is a requirement to ignore the cost base of
persona asset having value $10,000 or less (Dabner 2015). The

9. requirement for the taxpayer is to keep record of information of the assets
having value more than $10,000. It can be seen from the provided scenario
that the violin was purchased for $5000. It needs to be considered as the
personal use asset as it has been bought for the purpose of private use
only. It is evident that the cost of the violin is less than $10,000. For this
reason, the sale of the violin along with the derived capital gain can be
ignored as it is a personal use asset and is subjected to exempt from CGT

10. CASE STUDY :3
Question: 3- There is a constant quarrel between Ankita and Aniket due
to which there is a marital discord between two. As a part of settlement
the husband agrees to pay sum of Rs. 50,000 per month as maintenance
allowance of his wife. Provided she stays separately. Does the wife has
a claim to get that amount.
Ans :
The given case is under the chapter of consideration, which means the
promises executes the work at the desire or under the direction of the
promisor. Consideration is essential for the validity of an agreement i.e. in
other words an agreement made without consideration is void. However
section 25 (1) that is natural love and affection; deal with the exception
of this rule.
In this set case there is a quarrel between Ankit and Ankita due to which
there is a marital discord between two. As a part of settlement the
husband agrees to pay for the maintenance allowances to his wife
provided she stays separately.
Case : Rajlucky V/S Bhootnath
An agreement was entered into by a husband with his wife during quarrels
and disagreements, whereby the husband promised to give some
property to wife. But after this he refused to perform the action and here
the agreement was held to be void.
Judgement :
As mentioned above an agreement was entered in to by a Ankit with his
wife Ankita during their quarrels, whereby the husband agrees to pay the
maintenance allowances to his wife provided she stays separately. In the
above case the agreement held to be void because, under the
circumstances, there was no natural love and affection between parties.
As per the exceptions under the consideration section 25(1) love and

11. affection states that agreement has to be made out of natural love and
affection and it should be between the parties standing near relationship
to each other. As we seen in this case nearness of relationship, however
does not necessarily import love and affection. Therefore there is no
consideration made by husband hence it is only an agreement and not a
contract. Therefore it is a void agreement hence husband need not have
to pay compensation for the separation.

12. CASE STUDY :4
Question: 4- X in consideration of Rs. 5,00,000 from Y agrees to
murder Z while borrows the money from K who knowingly lends
money to Y can K recover this amount.
Ans :
The given case is under the chapter of Fraud which means the active
concealment of a fact by a person having knowledge or belief of the fact.
Fraud arises when there is a false representation of a fact made with the
knowledge that is false or without belief in its truth or reckless not carrying
whether it be true orfalse.
In this set case X in consideration of Rs. 5,00,000 from Y agrees to
murder Z while borrows the money from K who knowingly lends money to
Y can K recover this amount.
Judgement :
As mentioned above in this case x in consideration of Rs. 5,00,000 from
Y agrees to murder Z while borrows the money from k knowingly lends
money to Y. in this case K is not eligible to recover the amount, because
according to section- 17 Fraud arises when there is a false
representation of a fact made with the knowledge that is false or without
belief in its truth or reckless not carrying whether it be true orfalse.
Here, Person who takes a risk even he knows that what he does may be
dangerous is comes under the fraud. K knows the fact behind landing
money from him which is dangerous event therefore K is fraud under
section- 1.
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