Peter Poor, an Australian resident, receives rental income from properties
in Australia, the USA and the UK. The UK and US income is remitted
to Australia on 31 December and 30 June respectively each year. When
converted to Australian currency, before the deduction of overseas tax,
the rents are $400,000 from the UK and $300,000 from the USA, while
the rental income from Australia is $250,000. There are no businessrelated expenses. UK tax deducted amounts to A$200,000, while US tax
deducted is A$90,000.
Calculate the tax payable by Poor for the current income year. You can
ignore the Medicare levy and Medicare levy surcharge for the purposes
of answering this question.
Answers: see [A22.16].
WIG Pty Ltd is a resident private company which has the following
income:
• a domestic trading profit of $700,000; and
• a domestic capital gain of $300,000.
In addition, it has made an A$100,000 loss from the sale of shares in a
company incorporated and trading in Fiji. The shares were bought and
sold within 12 months.
Calculate the company’s taxable income.
Answers: see [A22.17].
[Q22.16]
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[Q22.17]
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International taxation [Q22.20]
© 2020 THOMSON REUTERS 203
A and B are resident individuals and the only directors and shareholders
in ABC Pty Ltd, a non-resident company. Each holds one ordinary
share. ABC’s net profit before tax for the current income year was
$100,000.
Discuss how A and B will be assessed in respect of this income if:
1. it was interest income derived from Panama and no Panamanian tax
was payable;
2. it was trading income derived from Hong Kong and A$15,000
Hong Kong tax was payable;
3. it was interest income derived from New Zealand and New Zealand
company tax of A$34,000 was paid, with withholding tax at 15%
also payable on dividends remitted to Australia; or
4. it was trading income from US and US tax of A$28,000 has been
paid. Assume 15% withholding tax is payable on dividends remitted
to A and B.
Answers: see [A22.18].
Surfup is an Australian resident individual who carries on clothing
manufacturing activities in Bali and in Australia. If, in the 2019–20 year,
Balinese profits were A$30,000 (subjected to Indonesian tax of A$3,000)
and Australian profits were $30,000, what Australian tax would be
payable by Surfup?
How would your answer change if Indonesian tax payable was $9000?
Ignore Medicare levy and the low-income tax offset for the purposes of
answering this question.
Answers: see [A22.19].
ResCo Pty Ltd is an Australian resident company which holds all of the
shares in ForCo Ltd, a company resident in New Zealand. Trading results
for the two companies for the latest income year were as follows:
ResCo ForCo
$ $
Australian source income 20,000
New Zealand source income 20,000
NZ tax 5,000
Interest expense incurred in financing
purchase of ForCo
12,500
[Q22.18]
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[Q22.19]
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[Q22.20]
[Q22.21] Tax Questions and Answers 2020
204 © 2020 THOMSON REUTERS
Calculate the net tax payable by ResCo if ForCo pays dividends of
$10,000 and these are subject to 15% NZ withholding.
Answers: see [A22.20].
A resident individual makes the following profits and losses:
Australia New Zealand
Trading Interest Trading Interest
$ $ $ $
Last year (4,000)
This year (4,000) 20,000 5,000 (3,000)
Calculate his taxable income for the current income year.
Answers: see [A22.21].
A resident private company derives the following:
1. profits of A$100,000 from a branch operating in New Zealand (New
Zealand tax of A$28,000 has been paid); and
2. net dividends of A$85,000 (after the deduction of A$15,000
withholding tax) received from a fully-owned subsidiary operating
in Canada.
What amount, if any, is assessable for the company?
Answers: see [A22.22].
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