Muhammad Adil

Miss. Yvonne moved from UK to AUSTRALIA on 1st January 2015. We shall calculate her Tax Assessable income for further tax year after considering below mentioned statements To Calculate the Australian Assessable income of Miss.Yvonne Merrick, First we have to find out her residency status in Australia for tax purposes. As per Australian Taxation office there are four types of test available in their website. If a person falls under any test requirements or conditions he or she will be considered an Australian resident. 1) The resides test 2) The domicile test 3) The 183 days test 4) The Commonwealth superannuation fund test Considering the Situation Miss Yvonne is a RESIDENT PERSON of Australia for the tax year 2017/2018 as per the “The Resides Test”. Such test states that person is said to be resident if he/she     Has the intention to live in Australia for considerable time Has physical asset such as apartment car etc. Has living arrangements Has employment ties Yvonne falls in the above category of test as she has employment ties with Brisbane hospital, has Australian apartment, bank account and she intended to live for long period of time. (austrade.gov.au, 2020) For tax year- Requirement (A) Computation of Assessable income for the year ended 2017/2018 DESCRIPTION Received 1. Salary from Australia 2. Bonus 3. Interest on saving account 4. Dividend from share investment Total Assessable Income for tax purposes Exempt Income Salary earned from UK is $25000 AMOUNT ($AUD) $15,000 $12,000 $2,000 $700 =$29700 Reasons For inclusion or Exclusion of all the receipts: As per Australian Taxation Office, if you have been considered as a resident person of Australia you are required to declare of the following income    Any rental income Employment income in form of Salary or bonus Dividend/share income Above are the reasons of inclusion. As per Tax Authorities, your foreign income could be subject to double taxation if tax is withheld in the country from which you came to Australia. To overcome this, income earned by person from country outside the Australia shall be declared as Exempt Income and will not be counted as taxable income. That is reason of exclusion of Salary income earned from UK is not included in Assessable income of 2017/2018 (treasury.gov.au, 2020) Requirement (B) Advice for Miss. Yvonne Australian Taxation authorities states that If you have already paid tax in the country from which you have earned income means outside the Australia, you may be able to claim a foreign income tax offset. To meet the eligibility criteria to avail foreign income tax offset, you must have fulfill the following two conditions: 1) Have paid the tax on the income you earned outside Australia 2) Have records to prove that the tax has been paid on such income As In the given scenarios it is my advice for Yvonne to avail Income tax offset because she is meeting the above mentioned conditions 1) UK tax of AUD$4,500 was deducted from her UK salary and 2) She must have a documents to prove such tax payment outside the Australia Amount of Tax offset can be used as tax deduction while paying tax liability for the year (taxboard.gov.au, 2020) Steps to Calculate Tax offset as per taxation Authorities of Australia 1. First you need to identify that the entity from which you are earning salary outside the Australia includes in the Research and development entities listings published by tax authorities its website 2. Ensure that your salary is more than $20,000 from receiving from such entity Assuming that the company from which Miss Yvonne received $25,000 is included in the listing R&D entities. Following will be the calculation of tax off set amount as per rate given by tax laws Calculation of Tax off set amount Multiply $25,000 by 43.5% = 10875 This $10875 will be declared as tax off set amount and Yvonne can use such amount as tax deduction while paying her tax liability year ended- (taxinstitute.com.au, 2020) For the year- Computation of Assessable income for the year ended 2018/2019 DESCRIPTION Received  Interest from Bank  Dividend income  Rental income from apartment given on leased Total Assessable income for the year AMOUNT($AUD) $2,400 $900 $26,000 =$29300 If you're an Australian resident for tax purposes, you are taxed on your worldwide income otherwise once you leave the country then only those income will be required to declare which you have earned in Australia. As in the case Miss Yvonne leaves the Australia permeant but still have earnings from Australia. For all those earnings which are mentioned in above table will be taxable for the year ended-. As far as UK salary concerns which was previously declared as exempt income, from year- such income shall not be considered as exempt income because Yvonne leaves the country with permanent intention and cut off her employment ties too therefore her status of Residency of Australia for tax purposes will be lapsed onwards. Tax off set will not be given to Yvonne in this year because she left country indefinite time therefore she cannot use such tax off set as a tax rebate or deduction while paying tax liability of year ended-. (ato.gov.au, 2020) References ato.gov.au. (2020, 09 15). Retrieved from Australian Taxation Office: https://www.ato.gov.au/ austrade.gov.au. (2020, 09 15). Retrieved from Australian Trade And Investment comission: https://www.austrade.gov.au/ taxboard.gov.au. (2020, 09 15). Retrieved from The board of Taxation: https://taxboard.gov.au/ taxinstitute.com.au. (2020, 09 15). Retrieved from Tax Institute: https://www.taxinstitute.com.au/ treasury.gov.au. (2020, 09 15). Retrieved from Australian treasury Government: https://treasury.gov.au/