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1. (Mt) – I nedd help with mh assignment…it is due in 8
Law303 Taxation Law Major Assignment Richard Kouchoo
richard_kouchoo@optusnet.com.au Elite Education Institute (CRICOS Provider Code:
03390A). All rights reserved. Students will submit a short answer or essay style answer
(1,350 – 1,650 words, excluding footnotes and bibliography) reflecting on principles of
taxation in relation to a factual problem applying relevant statutory principles and cases
and providing any appropriate philosophical background for the answer. Question Carla is a
business woman and she is very busy contributing to several businesses and companies.
Carla is a Kiwi (New Zealander) but she spends a lot of time in Australia doing much of her
work here. She probably spends more than eighty percent of the year in Australia. Carla
runs her own law firm in Australia and acts in relation to various kinds of matters. The law
firm is run as a sole trader ongoing concern and the firm attracts about $80,000 in income
per year. It has expenses in the vicinity of $20,000 per year. It has no employees. All of
Carla’s clients are based in Australia, but Carla does work from Auckland, New Zealand
when she is there. Carla is also a consultant with another Australian law firm (Law Firm X
or LFX). She is contracted to provide LFX with advice and to act on behalf of LFX’s clients
when and if required. Carla makes about another $80,000 per year in relation to her work
for LFX. She has expenses in relation to the LFX to amount of about $2000 per month. LFX
compensates Carla in respect of all those expenses. LFX provides Carla with a laptop and a
phone. Carla uses the phone to make both private and LFX related phone calls. The monthly
phone call amounts are estimated by LFX only and they vary from month to month. LFX
contributes to Carla’s air travel tickets from time to time too, and pays for about 50% of her
travels yearly. Carla is also a sole director and secretary of a PTY LTD company (“the
Company”). Carla’s Company is engaged in consulting work with various clients in many
geographic areas in relation to marketing, especially marketing in the Asia-Pacific region
with respect to various Information Technology software products. This is by far Carla’s
most profitable venture and brings her about $1900 per day inclusive of GST. The Company
currently has about $200,000 in its bank account in an Australian bank which money relates
to the sale of 200 Shares in the Company to other shareholders (the shares were initially
estimated at $200 each and Carla sold them at $1000 per share later in September of 2018).
The Company Elite Education Institute (CRICOS Provider Code: 03390A). All rights
reserved. also had an additional $100,000 in its accounts, which it loaned to Carla by way of
an interest-free and GST-free loan in the October of 2018 amounting to $100,000. Carla is
also involved in part-time employment with a governmental law reform advocacy

2. organisation which is a NSW state-sponsored organisation (Law Reform Organisation or
LRO). The LRO provides Carla with an annual salary of $65,000 per year and state-based
superannuation. The LRO provides Carla with a phone and a laptop also. The LRO knows
that Carla is not present all the time in Sydney and so the laptop is used by Carla to do the
work for the LRO when Carla is away. Carla has represented to the LRO that she does not
use the phone, nor the laptop, in relation to any private usage, and uses these only for the
LRO’s purposes. The LRO has also provided Carla with a car for her use — the car was
valued at $25,000 when it was provided to Carla. The LRO’s regulations say that the car
must only be used for work-related purposes, but Carla uses the Car privately as well as for
work. Carla’s boss at the LRO knows that Carla uses the car privately. Assume that Carla’s
healthcare is catered for within Australia. (a) Identify any tax related issues raised in this
scenario and explain these using the provisions of statute, case law and any ATO decisions
or rulings. No calculations are required and you are to provide analysis only. (35%) (b) Use
the case FCT v Applegate (1979) 9 ATR 1899 [text 4.110 or external reference] briefly
contrast your answer to part (a) in respect of Carla’s residency with that of Mr. Applegate’s.
(5%) Elite Education Institute (CRICOS Provider Code: 03390A). All rights reserved. The
facts of the case To start with Carla is a citizen of New Zealand and spends 80% of her time
in Australia earning a living. She runs her own law firm as a sole trader which attracts an
income of $80,000 per year. The expenses from her law firm are $20,000 and it has no
employees at all. All Carla clients’ domiciles in Australia and another interesting aspect is
that when she visits New Zealand, she takes a leave and does not work from there. Another
fact is she works as a consultant in LFX law firm and her income generates about$80000 per
in relation to her work in LFX. Carla expenses in LFX totals up to $2000 per month or
$24000 in year and this subject to internal tax code. An act the law firm reimburses here
and provides with laptop and phone which she uses to make private and LFX work related
calls. Also, her air travel is catered by LFX firm time and it pays 50% of the expenses per
year. Meanwhile, Carla is director and secretary of PTY Ltd where she is a consultant and
her clients resides in Asia pacific regions. The venture attracts about $1900 per which is
inclusive of GST. PTY ltd has $200,000 in Australian bank which is related to 200 shares in
the company funds for shareholders .Carla sold these shares to Australian citizens. Also, she
has a part time job with government law reform agency which is NSW state sponsored .The
LRO pays here $65,000 per year and provides her with a phone, laptop and car for official
duties and uses this both official and private activities . Most importantly, Carla accesses
healthcare services within Australia. Analysis of the law According to Australia tax code, it
identifies two jurisdictional rules when assessment income tax. The first limb arises from
residents who are assessed on their ordinary income based on s6-5(2) and secondly,
foreign residents assessed on their ordinary income that emanates from Australia sources.
Besides, only residents are eligible to Medical levy (ML) and Medical levy surcharge (MLS).
Section 995-1 ITAA 97 defines who is a resident for the purposes of ITAA 36. The literal
meaning and individual gains resident status after dwelling in Australia for a considerable
amount of time. To answer the question on whether Carla is a resident of Australia for
income tax purposes, two tests does apply that is common and domicile test. The common
law test takes into account the actual presence of the payer and family , has home in

3. Australia, the employment and social relationship to mention a few. Therefore, the question
on resident under the common law test is question of fact which court examines in a case to
case basis. In the case of C of T v Miller 91946) CLR 93, the court restated the common law
test b looking at the ordinary meaning and defined it as dwelling in place for a considerable
amount of time. In another leading authority, Leven v IRC 91928) AC 217, the House of
Lords set a new jurisprudence by stating that the a tax payer does not need to have a fixed
place of abode in UK even if he is present for a few days in the county .Thus, the activities
one engages in the country will constitute the fats of the case and can give rise to resident
for purposes of tax. In another persuasive authority in the case Shand v FCT (2003) ATC
2080, the tribunal examined the amount of time a resident spends time between Australia
and Kuwait and returned a verdict that she is still a resident of Australia. From the common
law test, Carla is resident of Australia for income and statutory income due to following
reasons. She has lived Australia for a considerable amount of time, she engages in economic
activities within the meaning of ITAA 97. Thus, Carla she is subject to section 995 -1 ITAA
97 and here income from various activities in the country. Meanwhile, the domicile test
looks at a different approach and one only is eligible to for income tax if he or she is
domiciled in Australia and has a permanent place outside Australia and the central
intention is remain his residence for the time being. The question of Permanent abode was
settled in the case of FCT v Applegate where the tribunal of record defined did not amount
something everlasting and has residence outside Australia. From facts of the case, the
domicile test fits the definition of Carla case and thus she is a resident of Australia since she
has been in the country for a long time. It is also important to note that any tax payer who
has been in Australia for half year of the income becomes the resident of Australia unless
she satisfies the following conditions, her usual place f abode is outside Australia, she not
intending o take the residence of Australia and thus ousts the jurisdictional question. The
jurisprudence emanating from above the Commissioner uses IT 2650 in determining the
residency status and looks at the time one moves to office and the durability of association
like having bank accounts and has links with government. Most importantly, Carla has
incorporated her company is within the jurisdiction of Australia as per the laws of Australia;
any person who registers and incorporates the company in Australia becomes a resident for
income tax purposes. Therefore, Carla is meets the minimum legal requirements and thus
she is eligible for resident purposes and her earning will be subjected to income tax and
other statutory deductions. In this case , FCT has jurisdiction to subject her earning to
income tax assessment and deductions a the source and she will not suffer any double
taxation in her home country. FCT v Appegate(1979) ATR 1899 comparison