Taxation Law Assignment

This assignment consists of two (2) parts. Part A consists of a problem solving scenario (1,000 words) and Part B is a research assignment (3,000 words). You must complete Part B.

Part A -

Julie is 22 years old and was born in Vancouver, Canada. On 2 September 2015, she arrived in Brisbane on a 12-month working holiday visa. Prior to arriving in Brisbane Julie had always lived with her parents in Canada.

Julie had worked in Vancouver prior to leaving for Australia and had been saving for her travel. She did not own any significant assets in Canada, only personal possessions such as clothes and a few electronic items. She left most of this with her parents while she was in Australia.

Julie stayed in a hostel in Brisbane for 2 weeks after arriving, visiting the Gold Coast and Sunshine Coast and other tourist attractions. She then travelled to Bundaberg in Queensland to work as a fruit picker on a farm for three months. She lived with other backpackers in a hostel.

With her savings she then travelled around North Queensland, the Northern Territory and Western Australia for three months staying in hostels.

When her savings started to run out Julie found work in a Perth coffee shop. Julie shared rented accommodation with friends she had met while backpacking. She was in Perth for three months.

On 16 June 2016 Julie decided to return to Vancouver and moved back into her parents' house. She wanted apply for a working holiday in the United Kingdom so started working and saving for her next adventure. After six months she started travelling again.

Required:

Discuss with reference to legislation, case law and/or rulings whether Julie would be considered a resident of Australia for tax purposes for the income year ended 30 June 2016. You do not need to consider the temporary residency rules.

During the year-ended 30 June 2016 Julie had the following transactions:

• Salary from employment in Canada prior to 31 August 2015 equivalent to AUD$5,500.
• Salary paid by a fruit grower in Bundaberg AUD$6,000.
• A $250 prize for winning the annual watermelon eating contest in Bundaberg.
• Interest on her Australian bank account of $180.
• Interest on her Canadian bank account equivalent to AUD$200, from which $20 withholding tax had been deducted by the Canadian bank prior to crediting her account on 1 March 2016.
• $220 from the sale of excess clothing, sleeping bag and other personal items on ebay prior to Julie leaving Australia.

Required:

Based on your conclusion on Julie's residency, and discussing the source and derivation of income principles, state which amounts would be included in her assessable income for the year. You do not need to consider the consequences of any Double Tax Agreements.

Part B -

You are required to prepare a written research assignment that addresses one of the provided topics below. The purpose of the task is for you to demonstrate high level critical reflection and analytical reasoning skills in the context of the application of Australian taxation law and taxation law policy. You must undertake academic research which demonstrates the following:

• An in-depth your understanding of how the specific tax law applies,
• The policy context of the law and if relevant how other jurisdictions deal with similar issues,
• Critical reflection as to whether the law achieves its stated purpose, aligns with principles of good tax policy or could be improved/amended. These critical reflections should be supported by the research you have undertaken as well as your own independent thought.

Topic Choices -

1. Self-Assessment system - Discuss and critically evaluate the extent to which Australia's self-assessment encourages individuals to comply with the taxation legislation. You should include a discussion on the components of the self-assessment regime and how each component contributes to taxpayer compliance.

2. Work-related allowable deductions - Discuss and critically evaluate the extent to which Australia's deduction regime for individual taxpayers satisfies the principles of a good tax system (specifically simplicity and fairness). You may like to compare and contrast this with the deduction system in New Zealand.

3. Negative Gearing - Discuss and critically evaluate the extent to which tax deductible negative gearing impacts upon savings and investment decisions. Your paper should clearly outline what is meant by negative gearing from a tax perspective and how the Australian tax system treats negatively geared investments. You should include an evaluation of whether negative gearing from a tax perspective should be removed.

4. Company tax rate - Discuss and critically evaluate the Federal Government's policy of lowering the company tax rate to 25%. You should discuss potential advantages and disadvantages and any alternatives.

5. Small Business Concessions - Discuss and critically evaluate the Small Business CGT Concessions in Australia. You should include a discussion of the overall policy objectives and your evaluation of whether regime currently meets these objectives or whether further amendments are necessary.