HI5028 TAXATION
TRIMESTER 1, 2015
INDIVIDUAL ASSIGNMENT 1
Assessment Value: 20%
Instructions:
• This assignment is to be submitted in accordance with
assessment policy stated in the Subject Outline and Student
Handbook.
• It is the responsibility of the student who is submitting the work, to
ensure that the work is in fact her/his own work. Incorporating
another’s work or ideas into one’s own work without appropriate
acknowledgement is an academic offence. Students should
submit all assignments for plagiarism checking on Blackboard
before final submission in the subject. For further details, please
refer to the Subject Outline and Student Handbook.
• Answer all questions.
• Maximum marks available: 20 marks.
• Due date of submission: Week 6.
Question 1 (5 Marks)
Fred, an executive of a British corporation specialising in
management consultancy, comes to Australia to set up a branch of
his company. Although the length of his stay is not certain, he
leases a residence in Melbourne for 12 months. His wife
accompanies him on the trip but his teenage sons, having just
commenced college, stay in London. Fred rents out the family home.
Apart from the absence of his children, Fred’s daily behaviour is
relatively similar to his behaviour before entering Australia. As well
as the rent on the UK property, Fred earns interest from
investments he has in France. Because of ill health Fred returns to
the UK 11 months after arriving in Australia.
Requirement
Discuss whether Fred is a resident of Australia for taxation
purposes.
Question 2 (5 marks)
Explain why the receipts in Egerton-Warburton & Ors v DFC of T
(1934) 51 CLR 568 were assessable, but the receipts in IRC v
Ramsay (1935) 1 All ER 847 were treated as capital amounts.
Question 2 (10 Marks)
Angelina is married to Bradley. They each have two houses: ‘house
A’ and ‘house B’. Angelina and Bradley each own a 50% interest in
house A. Bradley owns an 80% interest in house B and Angelina
owns a 20% interest in house B. As Angelina and Bradley are both
busy actors who lead their own lives, they quite often live apart.
This year the sold both house A and house B. Angelina wants to
nominate house A as her main residence and Bradley wants to
nominate house B as his main residence. Advise Angelina and
Bradley as to how the main residence exemption will apply to them
assuming that (ignoring the exemption) a capital gain of $1m was
made on the sale of each house.
REQUIRED:
Advise Angelina and Bradley on the capital gains tax
consequences regarding the abovementioned transactions
for the 2014/2015 income year.