Contract of Sale-
Judy entered into a contract of sale of property for future purpose in relation of her tax affairs.
Judy had advisable regarding following information:
- Judy has acquired property on 1October 2016 direct from developer as new residential premises for amounted $4,40,000 (inc GST)
- At the time of acquisition of property it included stamp duty too f $21,470, legal costs of $990 and building inspections of $550.
- Judy took minor renovation for her modifications of kitchen which amounted to cost $6600 after the damages made by tenants (Bacina, 2017).
Agreement – distributor terminator agreement between judy Somerville and textile inc., they came into agreement on 1 September 2018.
Textile inc. is the manufacturing company which manufacture the textile product having patent of their designs. They hire distributors for distributing their product in American market more and more. In agreement they agree at rights of exclusive distributor on textile product of that company.
This agreement is made in laws of Victoria, Australia.
Judy is no more sell out textiles as a parent company to local Australian retailers as the contract gone restrain and did settlement.
After the sett off of the contract or agreement between them instead of that she face-off first newspaper advertising as an expense till 30th September 2020 and also paid expenses as redundancy of employees amounting to $7500 till 30th June 2020. Judy has unsold stock of $12500 of textile inc. in stock which she had unable to sold and textile inc. refused to taken back.
Judy had a Tullamarine Business Centre which she rented it for one office service on lease commenced on 1 November 2019 for 12 months. Tullamarine Business Centre offered leisure fit our service and 2 month rent free valued Dollar 12000.
Judy studying at the institute of Aviation where she looking for future purpose into Flight Operational and Airport Planning Management within the airline where she currently works. Judy also stating that her HECS/HELP DEBTS already been finish off from her prior studies (Bacina, 2017).
Judy has raised $70,000 Victorian State Bank in early 2020 at an interest rate of 7.35 per annum for her business. As the loan granted by bank Judy has made a drawing of $10,000 as for her personal use of business for BMW.
Judy is a sole trader in her business and her accountancy charges for financial year 20-21 $5500.
As our firm did registration of Judy’s GST as on 1st September 2018 and also on cash basis.
At the time of signing agreement, at that time they came in agreement for forever. They only end agreement whenever any wrong action is done.
In an agreement it is mentioned that before 3 year a distributor has no rights for doing business of that product away from suppliers and not engage any other employee to do so. With this they are not allow to entice any employee or contractors (Duggan, 2015).
On 30 June 2020 termination is made, and in termination judy has bearing losses, on that losses supplier is paying 49,950 Australian dollar to distributor in Australian bank account nominated by the Distributor. After that judy has no longer selling textile to Australian retailers.
Advantage of cash accounting method in GST
- Cash outflow from business is easy to know
- Suitable for small business having hand cash transactions.
- It helps in mange cash flow from business (Rao, et al., 2018).
Cash accounting method suitable for-
- Small business having aggregate turnover of 10 million dollar.
- Any enterprises having GST turnover of 2 million dollar or less.
- Account for income tax in cash basis
- A government schools
- Charitable institute
- Gift deductible entity
GST on non-cash basis suitable for-
- To get true financial position
- Helpful where dealing in large amount of money.
- When dealing in multiple products (Chung, 2018).
Australian taxation office ruling– the commissioner of taxation is ruled and control over Australian taxation office. a ATO regulated by commonwealth taxation law in the foam of authoritative interpretative guidance and ruling. This also takes decision related to tribunal and court statement.
The commission of ATO is not allow to force any person to pay tax, they cannot penalize anyone without the permission of court.
The binding ruling includes-
- Public ruling- ATO makes rules which is easily understand by tax payable. They make a systematic arrangement which include taxation ruling, income tax ruling, good and services tax ruling, taxation determination, product ruling and class ruling.
- Private ruling- ATO make clear about tax to every individual so they can able to pay tax easily. It makes specific arrangement of application of tax. Tax payer may not get trust on public ruling easily but they trust private ruling easily. In future Private ruling may converted into public ruling without concerning to any tax payer and without taking guidance from anyone. Interpretive decisions are the published version of private ruling.
- Oral ruling- it takes the simple tax affair of individual tax payer. It only talks about simple method relation to taxation (Skapinker, 2018).
Issues which are not binding on ATO commissioners-
- Practice statement (LAPS)- it provides guidance to ATO staff. It maintains and coordinate the staffs in proper manner in a particular matter.
- Decision impact statement- this statement makes the outline for judging on ATO view. It helps in taking decision properly without having any confusion.
- Taxpayer alert- it warns tax payer to pay taxes on time, without emerging tax planning issues. It gives notice before the due date of paying taxes.
The ATO published guideline, media releasing, statement, bulletin and concentrative documents. It makes the manual detailing in the practical operation of a taxation law and it also make useful guide line books. It gives more and more guidance and ruling on every aspect including interpretative decisions. It available according to ATO advice and guidance. ATO data-base is used in ruling, determinations, decision impact statement etc, on all tax matters.
Australian taxation law- legislation
ATO legislation including principle legislation, amending legislation and regulation.
- Local government legislation- local government legislation is the body created by state government or territory legislation. The rates of property are imposed by state or northern territory legislation. This power implies under local government act 1993.
- Commonwealth legislation- it ensures that law which impose taxes are only dealing in imposing of taxes. Each tax is having one subject matter- for example, income tax, custom duty, excise duty, goods and service tax, fringe benefit tax, and other indirect taxes. The main commonwealth acts concern- the payment of income by individual, company and the payment of goods and service tax.
- State and territory legislative- the three key state and territory tax regimes are stamp duty, payroll tax, land tax. The power of the states and territories to tax is limited by the Australian constitution. To ensure sufficient revenue these jurisdictions impose other taxes.
Legislation and Citation of Case Laws-
It is a legal database, in which tax matter listed on tribunal decision and Australian court. It listed alphabetically of all the complication on recent case law decisions. Legal data base is the case of law, court and tribunal decisions.
Decision impact statements- ATO published decision impact statement (DIS) to inform our views on the implementation of decisions in our commodity.
Registration of GST
GST registration can be done ones by mobile phones or by CA or by registered agent or by BAS.
Registration can be done only one time and for your business ones the registration can be done then its called STANDARD GST REGISTRATION.
HOW TO REGISTER
First of all we people have AUSTRALIAN BUSINEES NUMBER and it only gets when we will register our business for the first time or whenever at later time before made register on standard GST.
Ones having ABN then can register for GST
- FROM BUSINESSS PORTAL
- FROM PHONE 13 28 66
- FROM YOUR REGSITERED Tax agent or bas agent
- Finishing the Add New Business Account (NAT 2954) FORM
WORKING OUT YOUR GST TURNOVER
GST TURNOVER is total amount of income which we earn from our business as a earnings not your profit EXCLUDING OR MINUS
GST included in sales of your customer
Sales that are not for payment and are not taxable
Input sales tax you made
Not related with the enterprise run
Sales are not in connection of Australia
CITATION OF CASE LAW
CASE LAW RELATED to JUDY SOMERVILLE V/S SCOTT JACKSON DATED 30th June 2020
As the Judy is a sole trader of her business and she had started her business as single trader of textiles, as she having some tax related problems so she winding up her business of textile and she had made an investment in property of $440000 including GST and other costs.
As Judy has bear up other expenses or she had did other expenditures in financial year 2019-2020 an she cleared out her all HELP DEBTS and took a loan of amounting $70000 and do drawings of $10000 for her depositing of BMW.
Judy had investment in property amounting dollar 440000 including GST and other costs.
Now just to evade from valuation of taxation of GST or just to evade herself from the surveillance of officers she shut down her business and to stop arrears.
Now as per the cited case law obligations Judy registered under Accrual method or Cash basis as her turnover is less than 2 million dollar so she comes under the category of enterprise and are not liable to take input tax credit and also not liable to Pay GST.
But if we talk about her investment and rental property which she rented for single office services and also given 2 months rent free of dollar 12000 then she is liable to pay tax on income generated indirectly from indirect sources.
As per the obligations talk about cited case laws then there is lots of obligations regarding case law of Judy Somerville v/s Scott Jackson as herein there is a capital gain also which we could described hereinafter that.
As a tax is not withheld with capital gain, we have to calculate it how much tax we have owe and how much funds we have set aside to cover up the amount.
All assets whatever Judy has purchased or acquired during the time period she had purchased it has to kept in mind are subject to CGT unless it mentioned (Harvey & Lea, 2019).
Mostly personal assets are Exempted under CGT including home car and personal assets
CGT also doesn’t apply to depreciating assets only used alone for business purposes for instance enterprise equipment or rental property (Vann, 2015).
As judy someville is an Australian Resident so she is liable for CGT all over the world in anywhere in the world.
As Judy Somerville is an Australian Resident and she is liable for variety of concessions as she had small single sole trader of her business so she had actively deserve the concessions like Rollover Retirement Exemption ,15 year exemption etc.
(i) As the bank extract given us Income Statement of Individual Non Business for year ending 30thJune 2020-
As they showed that the period during which the payment shall be made from 1/07/2019 to 30/06/2020
The amount of tax withheld $19812 in lump sum
The gross payment $ 82252
And other fringe benefits till 31st march is $22581
It concludes that as per the income statement the revenue expenditure is amounted to $82252 and the amount of tax pending in lump sum is $19812 and also did other fringe befits on employees she had earned but she showed the income statement as revenue expenditure also showed that still there is a pending of taxation amount as we show that already she had made payment of gross amount of $82252 as a liability (Harvey & Lea, 2019).
(ii)Register of Judy Somerville Fixed Asset
As per annexure F it describes the fixed asset of Judy Somerville as mentioned her fixed asset like
Purchased on 1/09/10 amount to its original cost 4230 for her private use at 20%
As its given that its opening and closing value and also wants calculation as per DV
Now if we talk about the depreciated value of computer as we know that as per we bring the asset for personal use the value of that asset depreciate and by calculating it by different methods the scrap or salvage value of asset already gets deducted and we got the approximate value of our personal asset as we analyse the round of figure of it (Vann, 2015).
- Printer and Furniture
The same calculations and analyses done accordingly.
So far, we come on the last part of the conclusion if we do analyses on all the above facts and figures concluding all the relevant matters and annexures which shows journal of Judy and scott Jackson regarding their business and other taxation matters somehow there brutally we should consider that as-
- Per the Bank extract given under annexure a which shows the Debit ands credit of Judy which shows her asset as well as her liabilities which both are equal and the expenses and the revenue which she earned and spent as fringe benefits of others.
- Talk about regarding her bank statement which ,mention somewhat about her due arrears and opening and closing end of her business and further information regarding relevant other matters and expenditures where she had did and also showed at what amount of certain assets she had received and what amount how much amount should be calculated as per their income statement and other taxation rules which applied on it (Bacina, 2017).
- We already discussed in the above facts about her income statement now shall talk about her dividend statement as she took dividend amount too so she has gain capital gain on it and she also liable to pay tax because she had windup her business to evade her extra surplus income gained from other sources to made evasion of tax so she could start investing her surplus amount in different- different sectors so that she could save her surplus amount from the catche eye of officers and also she had reduced her other help debts already from her source of aviation business from which she had earned, also she took a loan of $70000 from which she had deposited $10000 for her personal benefits of her enterprises which also could concluded or included inside it.
- So after analyzing everything it should be cleared that Judy is liable to pay tax and also liable to pay capital gain as CGT because she is resident of Australia and being a resident of Australia she had to pay due arrears and CGT applies on whatever she have because for her it is must whether she leaves here or in any corner of world. So nobody will evade herself from the Taxation part of it.
Bacina, M. (2017). Smart contracts in Australia: Just how clever are they?. Bulletin (Law Society of South Australia), 39(10), 22.
Duggan, A. (2015). The Trials and Tribulations of Personal Property Security Law Reform in Australia. Sask. L. Rev., 78, 257.
Rao, J., Tiwari, P., & Hutchison, N. E. (2018). No Way to Say No: Stakeholder analysis for compulsory purchase for public infrastructure project in Australia. Property Management.
Chung, E. (2018). Withholding tax on property transactions. REIQ Journal, (Sep 2018), 32.
Skapinker, D. (2018). Property: 2018 NSW contract for sale and purchase of land and the’GST at settlement’measure. LSJ: Law Society of NSW Journal, (45), 76.
Harvey, R., & Lea, G. (2019). Property law: 2019 edition of the contract for the sale and purchase of land. LSJ: Law Society of NSW Journal, (62), 68.
Vann, R. J. (2015). Royalties in Australia: Task Technology and Seven Network Cases. TAX TREATY CASE LAW AROUND THE GLOBE.