Tax Consequences Study of Eliza Samples †MyAssignmenthelp.com

Question: Discuss about the Tax Consequences Study of Eliza. Answer: An individual who is a non-resident of Australia can be paid or credit franked dividends or unfranked dividends from the companies that are located in Australia. However, under such circumstances they are taxed in a different manner from the resident shareholders. If a resident company of Australia pays dividend to the foreign resident the unfranked portion of the each of those payments will be subjected to final withholding tax (Robin 2017). As stated by the Australian taxation office an overseas resident can be individual, company, partnership, trust or the superfund. The case study of Eliza introduces the scenario of tax consequences for associated with the transactions that has been incurred by her in the current income year. The case study brings forward an evidence that Eliza additionally received rental income from the lease of her Australian residency. The Australian taxation office has stated that dividends are generally subjected to taxation depending upon the residential status of the recipient (Woellner 2013). The present situation bought forward in the case study states that Eliza received a fully franked dividend from the Global AIH which is considered as the Australian organization. An Australian resident company that has decided to join the imputation system of Australia might credit the franked dividend to the shareholder (Coleman and Sadiq 2013). As noticed in the current study, Eliza received an entirely franked dividend since the entire amount of the dividend carries franking credit. Since Eliza has moved out of Australia for a period of five years and as a result she will be considered to be a non-resident of Australia. As a general rule, if an individual is non-resident of Australia, the franked portion of the dividends received by a person or credited will be subjected to exemption from the Australian income tax and withholding taxes (Morgan et al., 2013). Eliza being the non-resident of Australia the sum of franked dividend that is received by her from the Global AIH will be subjected to exempted income as well as the withholding sum of tax. On the contrary, Eliza will not be allowed to offset franking tax associated with the sum of franked dividend received. As a result, Eliza is disallowed to the use the amount of franking credit to lower the tax that is owed on the other income generated in Australia and shall not be entitled for any refund of tax from the franking amount of credit. Additionally, it has been noticed that Eliza has also received rental income from her property that is leased in Australia. According to the definition of the Australian taxation office on the receipt of rental income from renting the property will be under obligation of maintaining the record and must ascertain the expenditure which can be claimed as the permissible deductions (Kenny 2013). The taxpayer will be required to pay tax on the rental income produced from the rental property and should include those incomes in their tax return. As such, the receipt of income by Eliza from the rental property leased in Australia would be required to be included in the tax return which would attract tax liability. As stated under section 8-1 of the ITAA 1997 an individual can claim a deduction for the losses or outgoings which a person incurs with the objective of generating assessable income (Krever 2013). As per section 8-1 (1) of the ITAA 1997 a person can deduct from their assessable income any loss or outgoings up to the extent that such expenses are incurred in gaining their taxable income or it is necessarily gained in carrying on or of a business for the purpose of gaining or generating their taxable income. In the present situation Eliza can bring forward the claim of allowable deductions in respect of the amount of interest charged on sum borrowed to finance her share purchase in Global AIH and other associated investments through which she generates taxable income. It is evident that Eliza has borrowed a sum of $100,000 to purchase shares and as a result of this she incurs an interest of $5650 as the expense for the sum borrowed. In respect of section 8-1 of the ITAA 1997 Eliza can claim allowable deductions since the expenses were incurred in gaining taxable income. References Coleman, C. and Sadiq, K. (n.d.).Principles of taxation law 2013. Kenny, P. (2013).Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths. Krever, R. (2013).Australian taxation law cases 2013. Pyrmont, N.S.W.: Thomson Reuters. Morgan, A., Mortimer, C. and Pinto, D. (2013).A practical introduction to Australian taxation law. North Ryde [N.S.W.]: CCH Australia. ROBIN, H., 2017.AUSTRALIAN TAXATION LAW 2017. OXFORD University Press. Woellner, R. (2013).Australian taxation law 2012. North Ryde [N.S.W.]: CCH Australia.