1. Distinction between income and capital S6-5
* A capital receipt is not ordinary income. E.g. tree producing fruits. If I sell tree and makes a profit, it is a capital receipt because it is the sale of the profit making structure. If sell fruits, that is ordinary income. 2. Ordinary income comes home to the recipient: Income must come in and derived from an external source. * Generally a saved outgoing cannot be ordinary income and the taxpayer cannot be the source of his/her own income: Cooke v Sherden. * E.g. Growing your own vegetable is not ordinary income because it is not derived from an external source. But if you swap your vegetables for your neighbour’s eggs, it could be ordinary income if you are carrying on a business. 3. An amount must be characterised as ordinary income in the hands of the recipient. 4. Ordinary income has sufficient connection with an earning activity 5. Ordinary income is money or money’s worth (able to be converted into cash) * Even if a receipt is connected with an income producing activity, it must either be money or something that is capable of being converted into cash in order to be ordinary income. 6. Compensation for an amount which would’ve been ordinary income has the character of income (compensation receipt principle)An amt received as compensation for lost income is itself income: Carapark; Heavy Minerals; Phillip * Compensation for loss of capital asset is not income: Glenboig; Californian Oil Products; Van Den Berghs * Week 3 Residency
Australian resident – taxed on worldwide income.
Non resident – only taxed on Australian sourced income * 1. Common law test - “reside” in Australia
* 2. Statutory test – domicile test
* 3. Statutory test – 183 day test
* 4. Statutory test – Commonwealth Superannuation fund test * Reside
* Facts – Tp a resident of UK. Went o/s and only came back 5 mths per yr. whilst o/s, only lived in hotels. Gave up his home and only lived in hotels when came back to UK. Did this from 1919 to 1925. In 1925, finally leased a flat in Monte Carlo. * Held: Still a resident of UK until 1925 even though he was in UK for less than 6 mths. His o/s stay was only a temporary purpose. Looked at the dictionary meaning of reside – “To dwell permanently or for a considerable time, to have 1’s settled or usual abode, to live in or at a particular place”. * Behaviour: intention of coming to aus; family and business or employment ties(Peel); maintenance and location of asset; social and living arrangement( Gregory) * 2. Permanent place of abode
* “Place of abode” – the physical place where a person lives (Levene, Lysaght, Hammond) “ Permanent” - Doesn’t mean everlasting or forever: Applegate—不知道在国外多久，not resident; Jenkins:知道呆多久，permanent place of abode * Australian resident if satisfy any of the following (see s 6(1)): * Incorporated in Aust. * Company resident
* Carry on business in Aust and central mgt and control in Aust.----Koitaki * Carry on business in Aust and voting power controlled by Australian resident shareholders * A company is resident if it carries on business in Aust and central mgt and control is in Aust. * Central mgt and control means decisions about broad company policy and financing policy and business strategies made at directors’ meetings. * Voting Right :
* If carrying on a business in Aust and voting power is controlled by Australian resident shareholders, the company is a resident. Control of voting power – more than 50% Not resident in Aust in person consider: personal exertion income哪里签合同(more important if special skill or knowledge is required Mitchum) ；Place where performance occurs (most important-Cam&Sons); Place where payment is made * METHODS OF ACCOUNTING: Cash accounting (靠自己-Carden); Accruals basis( 靠别人—Henderson) * Week 4 income from:...
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