Bank Custodians And Systemic Risk System

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Bank Custodians And Systemic Risk System

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Bank Custodians And Systemic Risk System

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Discuss about the Bank Custodians and Systemic Risk System.

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Introduction:

Kit is a person hailing from Chile and holding a Chilean citizenship and working in Australia. The given case study refers that Kit can be considered liable to pay according to Australian tax pay laws despite holding a Chilean citizenship. For tax consideration he is considered an Australian citizen, nevertheless being in an American company (Chow, 2015). This is because he has his permanent residence in Australia. This is made sure as he is employed in Australia and also owns a house there. Kit’s salary is also credited from an Australian bank. In the same Australian bank, Kit and his wife share a joint account as well. His family, comprising of his wife and kids are residents of Australia as well. All these facts make this evident that as per the Australian Taxation law, Kit can be considered an Australian citizen (Chomik and Piggott, 2016). It is obvious from some facts that Kit has planning to settle permanently in Australia despite having some investments and settlements in Chile. The tax Kit is liable to shall abide by the Australian Law.
The residency of a taxable citizen focuses on his/her residency. As per Australian taxation law, the person himself needs to understand whether he is eligible to pay the taxes for the country or not. The taxation law treats the residents and non-residents in a different manner, so it is critical to find out if the alleged taxable person has his/her permanent owned residence in the country or not. If the residents of Australia has different incomes, are charged for each one of them as per the taxation law (Cortese, 2006). The source of income is not at all considered, whether the revenue is domestic or international if the person is an Australian citizen. There are various laws for taxation applied for several taxes imposed on the citizens. The tax collected by the government is entirely supported by this country’s citizens. The income of an individual from the salary that he gets, the properties that he owns and many other valuable products constitute the basis of calculation of the net assets belonging to the individual (Danon, 2010).

If the person is not an Australian resident, then these laws were his source of income is considered, does not levy on tax paying terms.The tax department can also charge a person if he/she makes an income out of different taxes. The government earns a portion of the citizen’s income, property and transaction commodities as a compulsory involvement in aiding to the government’s policies in building up the social and economic backbone of the country. The state, federal and local rules are followed by the taxation laws, which may be further divided into the direct and indirect tax (Engdahl, 2011). The unique character in compulsory taxes is mandatory taxes which generates only for governmental issues. The non-residents are not liable to pay Medicare taxes. The above payments are not considered as the cost of services. The payments thus taken from the citizens as the tax is not be taken as penalties as the primary goal for taxation is to work as the revenue for public. The regular payment of the taxes makes it easier for the government to fulfil the needs of the public since it can improve its efforts to develop the socio-economic infrastructure of the country. This, in turn, contributes to increasing the gross domestic product and hence makes the country serve its people in a better way.
But Kit is an Australian citizen. That is why he is bound to pay the applicable variable taxes. His global income is considered taxable (Donald and Nicholls, 2014). Though, tax rates are better for residents than the non-residents.
To testify the citizenship of a person, or verifying the residential status of the individual, the following factors must be treated as the basic concept. The reasons why a person can be treated as a resident of Australia are as follows:

If the frequency of the person returning to the country is variable
If the person has family or business ties in Australia
If the person is accompanied by family to different trips to Australia
If the individual is appointed as a regular employee in an Australian company
If the person has personal belongings kept permanently in Australia
If the person has belongings in the Australian banks to a certain extent
If the person, being a migrant, has business established in Australia

These domicile tests configure the citizenship of a person in Australia. Again if the person resides in the country fulfilling his stay for more than 183 days, i.e., more than six months, the person is considered an Australian citizen (Freebairn, 2016).
Kit has been residing in the country for quite a long time, and his family has been residing in the country for more than three years in his owned residence, therefore, making him an Australian citizen. So it is evident that, even though he holds a citizenship for Chile, Kit is also liable to pay the taxes in Australia for his incomes. If any other taxes are liable to him from the country of Chile, he has to pay it accordingly, and the Australian tax paying law shall not interfere in that matter (Warren, 2010).

Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159
This is a case about a land acquisition that contained copper. The primary intention of a company was to get its hand on the land, though it never took out the copper. The company consequently sold the property to another organization and wished to own some shares of the company as a consideration (Freebairn, 2008). The court declared that the income the company had by selling the land was income in future since the company’s intention was to make revenue by selling the land.
This was a case of a company setting up a mining coal business on the property the company had acquired. When the entire coal was taken out by the company, the company determined to sell it. Again, to make it more profitable, they decided to subdivide the land and construct roads and infrastructures over the property (Heng, Niblock and Harrison, 2015). The court detained the profits or incomes that the company had obtained by selling off the land to another organization as they only wanted to make use of the land to its best advantage. The land thus becomes a capital and the income obtained by selling the land is incomes due to capital.
This case held an incident of an organization which obtained an undeveloped land at the Beach of Whit Fords. The organization took the land overlooking a beach and have the right to use it for fishing purposes. There was an offer that was too good to reject that could only be acquired if the problematic shares of the company were sold to another organization. After this was done, the new shareholders also had an intention (Ingles and Stewart, 2013). They wanted to get hold of the land. As soon as they would get a hold on the land, they had decided to subdivide the land and sell it as housing sites to gain profits from it. The taxpayers refused that the profits were usual incomes as soon as the land was subdivided and the lands were sold. But the court had decided against their favor. It was decided in the court that the taxpayers had made the land a site of land development and had set up a business and the profits are thus earned. This profits earned will be liable to be considered as regular income. The court also concluded that as soon as the land was acquired by the company of the new shareholders, it had its objective changed and now the only purpose of the land was to develop, subdivide and sell the land rather than having a non-commercial purpose (Taylor, 2011). Therefore, it had lost its value in the eyes of the court as a non-commercial site, and the incomes that had occurred due to the selling of the land gaining profits were subjected to be considered as quantifiable income which can be taxed upon. So, as per the law of taxation in Australia, the benefits thus gained by the selling of the land was to adhere as a taxable amount in the eyes of the court.

Statham & Anor v FC of T 89 ATC 4070
The case in discussion belongs to the income tax department. It was found that the tax assessed was adjusted in a wrong way. However, it was later found that the income of the estate was adjusted by the commissioner (Rodger, 2008).
The case here was a demonstration of an incident to determine whether there is any intention of making a profit or not. It was related to the fact whether the person was about to draw profit by selling a piece of land acquired by him. The only conflict was if he was subjected to pay the taxes as per the taxation law against the profit he gained because of his income in the profits he made by selling the land (Lakshmanan, 2015).
This was a case of a land containing sand and the organization that was holding the land even after complete extraction of sand from it. The company held the land and waited until the prices hiked to sell it to another taxpayer, in an attempt to increase the returns on the income by selling the land (Palat, 2003). Meanwhile, the land was kept from coming to any use for an extended period. Having sold the land afterward, the tax to be paid as a result formed the crust of the conflict. The court decided that the land was to be sold or used only for commercial purposes and not for any other purpose. The land could only be sold to a person with an intention of making if of commercial use or only to a relative of the owner.

Here, in this case, there is a farmer who is questioned whether to be a taxpayer or not. The farmer was attempting to buy a stretch of land that was disputed and had issues regarding it. Finally, at the end of this deal, the land was offered to the farmer (Prince, 2012).
The case mentioned here deals with the issues of two brothers owning a land. The only issue was that there were a few houses on the acquired land that had to be removed to renovate the property (Parker, 2007). The main confusion that raised due to this issue that whether the owners, in this case, the brothers, were liable to pay the taxes of any kind regarding the land. Lastly, it was decided by the court that the brothers will not be levied to paying any tax regarding the land.

References
Chomik, R. and Piggott, J. (2016). Australian Superannuation: The Current State of Play. Australian Economic Review, 49(4), pp.483-493.
Cortese, C. (2006). Taxation and the Australian Superannuation System: An International Comparison. Australian Accounting Review, 16(39), pp.77-85.
Chow, M. (2015). Australian master tax guide 2015. CCH Australia.
Engdahl, S. (2011). Taxation. Farmington Hills, MI: Greenhaven Press.
Danon, R. (2010). Double taxation conventions. Zu?rich: Schulthess.
Freebairn, J. (2016). Taxation of Housing. Australian Economic Review, 49(3), pp.307-316.
Freebairn, J. (2008). Comment:on ‘The Economics of Superannuation’. Australian Economic Review, 19(3), pp.87-88.
Lakshmanan, J. (2015). Taxation laws. [Place of publication not identified]: Universal Law Publishing.
Palat, R. (2003). Tax planning for salaried employees. Mumbai: Jaico Pub. House.
Ingles, D. and Stewart, M. (2013). Superannuation Tax Concessions and the Age Pension: A Principled Approach to Savings Taxation. SSRN Electronic Journal.
Parker, J. (2007). Tax power for the self-employed. Naperville, Ill.: Sphinx Pub.
Rodger, A. (2008). The Economics of Superannuation. Australian Economic Review, 19(3), pp.75-86.
Prince, J. (2012.). Tax for Australians for dummies.
Warren, G. (2010). Equity home bias in Australian superannuation funds. Australian Journal of Management, 35(1), pp.69-93.
Heng, P., Niblock, S. and Harrison, J. (2015). Retirement policy: a review of the role, characteristics, and contribution of the Australian superannuation system. Asian-Pacific Economic Literature, 29(2), pp.1-17.
Donald, M. and Nicholls, R. (2014). Bank Custodians and Systemic Risk in the Australian Superannuation System. SSRN Electronic Journal.
Taylor, S. (2011). Captured Legislators and Their Twenty Billion Dollar Annual Superannuation Cost Legacy. Australian Accounting Review, 21(3), pp.266-281.

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