The paper "Assessability of Income" is a wonderful example of an essay on finance and accounting. Every year, Megan is involved in a number of activities that generate money for her with the major portion being the money derived from her mining activities. Her mining activities are mostly carried on outside Australia during a given year given that she spends nearly 8 months outside Australia. She has also received an amount of $75,000 for her not to work for any other mining company. She has also derived some money from designing mining equipment which she sells together with the copyright thereof.
She also carries out some freelance activities and other activities not related to mining that she considers a hobby. In addition, she received Christmas gifts that are of substantial amounts. The differing kinds of receipts that Megan receives raise an issue of whether they are all assessable for tax purposes in Australia or not. The assessability or not of her earnings in Australia will depend on a number of factors including whether the money derived from her activities amount to income or not.
We also need to consider whether she is an Australian resident for tax purposes given the amount of time she spends outside Australia. As such, this paper is aimed at advising Megan on the assessability or non-assessability of the income she earns from the various activities she involved in during the year. Below is a detailed explanation of the various issues raised regarding her various income-generating activities. To determine whether the $180,000 salary Megan earns from her employment by the Australian mining company is assessable, the issue to be determined is whether she is an Australian resident for tax purposes.
It is worth noting that she spends almost eight months outside Australia in earning this salary. However, it is also worth noting that she also sacrifices $20,000 salary to superannuation. The ruling in IT 2650 provides four tests of tax residency. These tests include the residence according to ordinary concepts test in which we consider whether the amount of time she spends in Australia is reasonable enough for her to be considered an Australian resident for tax purposes.
Given that she spends most of her time outside Australia during the year, the time spent in Australia is not a considerable amount of time for her to be considered an Australian resident. Another test of residency is the domicile test.