Taxation : Indirect Sources and Resident

Describe about the Taxation for Indirect Sources and Resident.

Answer:

1:-Tax Consequences of Mary Jackson:-       

Mary Jackson is assumed to be an Australian resident and all her incomes, earned from direct or indirect sources within or outside Australia are assessable under Australian Taxation Act. Mary is an employee under Elite Retail and ordinary source of income is mainly the salary and other allowances, paid by her employee (Anthoine 2013).

3) Elite Retail has given the laptop and mobile phone to Mary for work purpose. The costs of these items will not be considered as taxable for Sharon.

4) The telephone bill of Mary, paid by her employer, will be considered as fringe benefit for Mary and should be included in her taxable income. She can claim deduction for the 50% of the telephone bill, as 50% of the telephone usage was work related (Bull 2014).

Tax Consequences for Elite Retails:-

1) Salaries & wages, paid by any employer, is deductible as work related expenses for taxation purpose. The company can claim deduction for Mary’s annual salary as work related expense from the taxable income (Taylor and Richardson 2012).

2) The expenses, paid by the company, for transfer of Mary’s Furniture is a living away from home allowance fringe benefit, which is paid to employees for the additional expenses, incurred in case of transfer. The company is entitled to claim this expense as a fringe benefit (Hung et al. 2013).

7) The allowance, paid to Mary for covering professional subscription, can be claimed as deduction under residual fringe benefit.

8) If the employer provides loan to employer at lower rate in comparison to benchmark interest rate, then it will be considered as loan fringe benefit. In this case, Elite Retail can claim deduction for the loan, provided to Mary also as loan fringe benefit (Taylor and Richardson 2013).

2:- Net Capital Profit under Normal Circumstances:-

In consideration to the aforementioned aspects, the net capital loss or gain on the rental property sale that is computed under:

Considering the above table, it is observed that Fred needs to pay decreased tax if he implements discounted technique. For this reason, the net capital gain of Fred’s rental property sales for the recent year s observed to be $130000.

Net Capital Profit under Alternative Solution 1:-

Reference List

Bull, R.J., 2014. Accounting in business. Butterworth-Heinemann.

Burkhauser, R.V., Hahn, M.H. and Wilkins, R., 2015. Measuring top incomes using tax record data: A cautionary tale from Australia. The Journal of Economic Inequality, 13(2), pp.181-205.

Kiyotaki, N. and Moore, J., 2012. Liquidity, business cycles, and monetary policy (No. w17934). National Bureau of Economic Research.

Krever, R. and Mellor, P., 2016. Australia, GAARs–A Key Element of Tax Systems in the Post-BEPS Tax World. GAARs–A Key Element of Tax Systems in the Post-BEPS Tax World (Amsterdam: IBFD, 2016), pp.45-64.

Taylor, G. and Richardson, G., 2013. The determinants of thinly capitalized tax avoidance structures: Evidence from Australian firms. Journal of International Accounting, Auditing and Taxation, 22(1), pp.12-25.