Question one (20 marks)
Lin” rel=”nofollow”>in is an auditor who works for the Australian subsidiary of a global shippin” rel=”nofollow”>ing company. Lin” rel=”nofollow”>in
moved from Malaysia to Australia with his spouse and children several years ago and
purchased a home in” rel=”nofollow”>in Melbourne for the family to live. His job occasionally requires an
extended overseas assignment, but ultimately he in” rel=”nofollow”>intends to settle in” rel=”nofollow”>in Australia.
In July 2015 he was posted to the Sin” rel=”nofollow”>ingapore subsidiary of his company for a defin” rel=”nofollow”>inite period
of two years with a possibility it might extend a further two years. Lin” rel=”nofollow”>in was keen to take this
option if it arose because the pay and workin” rel=”nofollow”>ing conditions were good. Lin” rel=”nofollow”>in took a two year
lease on an apartment in” rel=”nofollow”>in Sin” rel=”nofollow”>ingapore for himself to live in” rel=”nofollow”>in, while his family remain” rel=”nofollow”>ined in” rel=”nofollow”>in
Melbourne where his children go to school.
Durin” rel=”nofollow”>ing his short holiday breaks his family would travel to stay with him in” rel=”nofollow”>in Sin” rel=”nofollow”>ingapore. Lin” rel=”nofollow”>in did
not return to Australia durin” rel=”nofollow”>ing the in” rel=”nofollow”>income year.
The Sin” rel=”nofollow”>ingapore subsidiary paid Lin” rel=”nofollow”>in an annual salary in” rel=”nofollow”>in Sin” rel=”nofollow”>ingapore dollars equivalent to
AU$200,000. Most of his savin” rel=”nofollow”>ings were sent home to support his family and to make
accelerated payments on the family home loan. Durin” rel=”nofollow”>ing the year he purchased some
Commonwealth Bank shares for AU$50,000 and sold them for AU$100,000.
Lin” rel=”nofollow”>in has asked for your advice on whether:
(i) he is a resident of Australia for in” rel=”nofollow”>income tax purposes in” rel=”nofollow”>in the period durin” rel=”nofollow”>ing the
in” rel=”nofollow”>income year to 30 June 2017; and
(ii) the effect this decision might have on his in” rel=”nofollow”>income tax liabilities in” rel=”nofollow”>in Australia
Explain” rel=”nofollow”>in the alternative residency arguments usin” rel=”nofollow”>ing quality legal references, and form an
opin” rel=”nofollow”>inion as to which is the better view from the facts.
Explain” rel=”nofollow”>in how he would be assessed on his salary and capital gain” rel=”nofollow”>ins if he was a resident and
alternatively if he was a non-resident.
Question two (20 marks)
In 2015 Win” rel=”nofollow”>innie, an Australian resident in” rel=”nofollow”>individual, sold her horse breedin” rel=”nofollow”>ing busin” rel=”nofollow”>iness based in” rel=”nofollow”>in
the south eastern suburbs of Melbourne.
The purchaser of the busin” rel=”nofollow”>iness did not want to buy the land. The real estate comprises 10
hectares which cost her $1m in” rel=”nofollow”>in 2005.
Win” rel=”nofollow”>innie put the entire real estate up for auction but it failed to reach her reserve price of
$10m and was passed in” rel=”nofollow”>in. Her real estate agent had suggested the reserve was a fair market
value but at the moment no buyers were in” rel=”nofollow”>interested in” rel=”nofollow”>in such a large parcel of land.
She sought advice from agents and accountants who suggested that smaller blocks of land
would be more affordable for home buyers. Potentially, 10 vacant one hectare blocks would
sell for $2m each and would require min” rel=”nofollow”>inimal costs to subdivide.
However, Win” rel=”nofollow”>innie was also advised that 50 townhouses could be built at a cost of $100,000
each and they could sell for $1m each.
ACC30005 Taxation assignment page 3/4
In July 2016, Win” rel=”nofollow”>innie in” rel=”nofollow”>installed office cabin” rel=”nofollow”>ins on the site and personally managed the entire
construction, sales and marketin” rel=”nofollow”>ing activities. 50 townhouses on equal size and value blocks
were constructed and by 30 June 2017 half of these had been sold for a total of $25m.
Advise Win” rel=”nofollow”>innie of the possible in” rel=”nofollow”>income tax consequences of the $25m real estate sales this
You should discuss any alternative views based on the facts, usin” rel=”nofollow”>ing quality legal references.
Determin” rel=”nofollow”>ine the assessable in” rel=”nofollow”>income resultin” rel=”nofollow”>ing from each alternative view.
Fin” rel=”nofollow”>inally, provide your opin” rel=”nofollow”>inion on which you thin” rel=”nofollow”>ink is the better or correct outcome.

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