Taxation Implications for Auditors Duties

In: Business and Management

Submitted By jamal786
Words 1567
Pages 7
| TAXATION LAW | ASSIGNMENT | | | GROUP MEMBERS: | Jamal Ahmed Khan S0243702Ijaz Ahmad S0206099 | | | SUBMITTED TO:Michael Gallagher | DATE:6th Jan, 2014 | | |

|

TAXATION LAW - ASSIGNMENT

Part A
To find the residency status of John and Susan for the time when they were living overseas. The definition of “resident” in s 6(1) of ITAA 1936 contains four tests to determine whether an individual is a resident of Australia for taxation purpose. i. Common Law Test ii. Domicile Test iii. 183-day Test iv. Superannuation Test
These cases will apply to determine that whether John and Susan are residents of Australia for tax purposes for the period they left Australia to their eventual return to Australia.
Common Law Test:
It is the primary test to determine whether individual is a resident of Australia is the “residence according to ordinary concepts” test. There are two examples are mentioned which explains “reside” as to dwell permanently or for a considerable time; have a one’s abode for a time and other example which explains it as “to dwell permanently or for considerable time; to have one’s settled or usual abode, to live in or at particular place. It is according to the taxation ruling TR 98/17.
There are also some considerable factors for determining the residency for taxation purpose. a. Physical presence b. Regularity and duration of visits c. The person’s nationality d. Purpose if visits e. Family business and social ties
As per these factors and common law test John and Susan are not a resident of Australia and common law test is not applicable in this case.
Domicile Test:
It is the 1st statutory test which also provides the reliable information as per residence of Australia. Domicile is a legal concept according to the domicile Act 1982 (Cth) and…...

Similar Documents

Taxation

...received from someone else for the result of employment. It is still consider as taxable income no matter who the employee received from. Example, waiter’s tips are taxable although it was not paid by employer. The statute ITEPA 2003 Section 336 says that in order to qualify for allowable expense under employment the expenses incurred must be wholly, exclusively and necessary in the performance of duties of the employment. Wholly and Exclusively: Expenses that incurred are because of the activity and for the nature of the work. Example: Someone who works in the clean room have to buy safety wear. If the expenses are double edge it cannot be claimed. Example: Office uniform can be claimed but the normal work wear other than uniform cannot be claimed. Deduction is allowable if the cost can be apportioned between a part that is incurred wholly and exclusively in the performance of the duties of the employment and a part that is not, an apportioned part can be allowable. Necessarily: An expense is said to be necessarily incurred when it is necessary for the performance of the duties of the employment and not because of the requirement of the employer or employee. The expenses can only be allowed if each and every holder of an employment were to incur the same expenditure. Trading Income The term “trading income” comprises of both income from a trade and income from income from a profession or vacation. The “Badges of trade” has been used to indentify between trading and......

Words: 1894 - Pages: 8

Taxation

... I.GENERAL PRINCIPLES ( THE POWER OF TAXATION ( Definitions: 1. Taxation: Power by which the sovereign raises revenue to defray the necessary expenses of the government from among those who in some measure are privileged to enjoy its benefits and must bear its burden. 2. Taxes: Enforced proportional contribution from properties and persons levied by the State by virtue of its sovereignty for the support of government and for public needs. ( Characteristics of Taxes: 1. forced charge; 2. generally payable in money; 3. levied by the legislature; 4. assessed with some reasonable rule of apportionment; 5. imposed by the State within its jurisdiction; 6. levied for public purpose. ( Theories or bases of taxation: 1. Lifeblood Theory Taxes are the lifeblood of the nation. Without revenue raised from taxation, the government will not survive, resulting in detriment to society. Without taxes, the government would be paralyzed for lack of motive power to activate and operate it. (CIR vs Algue, Inc., et. al.) Illustrations of Lifeblood Theory: a. Collection of taxes may not be enjoined by injunction. b. Taxes could not be the subject of compensation and set-off. c. A valid tax may result in destruction of the taxpayer's property. 2. Necessity Theory Existence of a government is a necessity and cannot continue without any means to pay for expenses. a. Marshall Dictum “ Power to tax is the power to destroy” – describes the unlimitedness of the......

Words: 3955 - Pages: 16

Taxation

...closer to a limited liability company (LLC). In the LLP, all partners have limited liability. An LLP combines characteristics of partnerships and corporations. As in a corporation, all partners in an LLP have limited liability, from errors, omissions, negligence, incompetence, or malpractice committed by other partners or by employees. Of course, any partners involved in wrongful or negligent acts are still personally liable, but other partners are protected from liability for those acts. In recent years, the limited liability company has supplanted the general partnership and the limited partnership, because of the limits of liability. But there are still cases in professional practices in which some partners want to be limited in scope of duties and they just want to invest, having the liability protection. 1.3 ADVANTAGES OF PARTNERSHIP 1. Capital – Due to the nature of the business, the partners will fund the business with start up capital. This means that the more partners there are, the more money they can put into the business, which will allow better flexibility and more potential for growth. It also means more potential profit, which will be equally shared between the partners. 2. Flexibility – A partnership is generally easier to form, manage and run. They are less strictly regulated than companies, in terms of the laws governing the formation and because the partners have the only say in the way the business is run (without interference by shareholders)......

Words: 4972 - Pages: 20

Taxation

... PAPER F6 TAXATION (UK) P R A C T I C E & R E V I S I O N K I T FA 2012 BPP Learning Media is the sole ACCA Platinum Approved Learning Partner – content for the ACCA qualification. In this, the only Paper F6 Practice and Revision Kit to be reviewed by the examiner:      We discuss the best strategies for revising and taking your ACCA exams We show you how to be well prepared for your exam We give you lots of great guidance on tackling questions We show you how you can build your own exams We provide you with three mock exams including the December 2012 exam Our Passcard and i-Pass products also support this paper. FOR EXAMS IN 2013 First edition 2007 Seventh edition January 2013 ISBN 9781 4453 6646 3 (previous ISBN 9781 4453 7995 1) ebook ISBN 9781 4453 6949 5 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia Printed in the United Kingdom by Polestar Wheatons Hennock Road Marsh Barton Exeter EX2 8RP All our rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd. We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past......

Words: 86065 - Pages: 345

Taxation

...1 http://www.miteshk.webs.com TAXATION CHAPTER 1: INTRODUCTION The word tax is derived from a Latin word “Taxare “it means to estimate or value. The term tax to a common man means money paid to the Government out of compulsion without deriving any benefit directly by himself or his family members. As per taxation tax means statuary payment to be made b the public and imposed by the Government. Definition: As per Prof. Adams: ¾ From the Stand point of the state, a tax is source of derivate revenue ¾ From the point of the citizen, A tax is a coerced payment ¾ From the Administrative point of view, it is a demand for money by state in conformity to establish rules ¾ From the point view of a Theory, a tax is a contribution from the individual for common expenditure Characteristics of Tax: 1. Tax can be imposed by the Government only 2. Taxes are paid in the form cash only 3. the aim of levying tax is to promote the welfare of the people living in the country 4. the object of tax is to raise revenue to the Government 5. tax is a legal collection 6. payment of tax involves an element of sacrifice 7. it is levied by the Government by virtue of its power confirmed under the Constitution 8. Tax is not a payment for specific service rendered by the Government to tax payer 9. Tax is imposed on income or wealth or on a commodities i.e. either directly or indirectly, but tax is actuallypaid by the individuals. Objects......

Words: 19516 - Pages: 79

The Auditor

...The Auditor Paper 6-8: According to the book, it is incredibly important to successfully complete the CPA exam in the first year. Jack Butler informs us that new staff members can greatly distinguish themselves by passing the CPA exam the first attempt because so few people manage to do so. Other benefits of this would include spending less time studying and more time working, financial benefits of not having to pay for additional attempts, and it is mandatory in order to move up in the company. 9-7: If someone is to leave public accounting and go into industry there are many things to take under consideration. One would be to answer the question of “do you really want to go into industry?” This seems like a simple enough question to consider, but it goes a little deeper. With any major decision it is imperative to consider the things you would like and dislike about the job you would be moving to. One should also consider if the company is a good fit. Finally, someone interested in going into industry they should consider how they are progressing in their current firm first. 14-6: The answer to the question of “is it possible to have both a successful career and a healthy personal and family life,” is really an arbitrary one at best. Of course it is possible, but it all depends on the person and the position. Obviously there are going to be tradeoffs. As indicated in the book, there is the possibility of stress related health issues to consider. There is the......

Words: 574 - Pages: 3

Taxation

...public enterprises and foreign loans. Differentiate taxation from public finance? What are the situs or subjects of taxation? SITUS OF TAXATION- literally means the place of taxation, or the country that has jurisdiction to levy a particular tax on persons, property, rights or business. Basis: Symbiotic relationship. The jurisdiction, state or political unit that gives protection has the right to demand support. The situs of taxation is determined by a number of factors a. Subject matter- or what is being taxed. He may be a person or it may be a property, an act or activity; b. Nature of tax- or which tax to impose. It may be anincome tax, an import duty or a real property tax; c. Citizenship of the taxpayer d. Residence of the taxpayer. SITUS OF PERSONS - Residence tax- place where the person resides - Income Tax- a. citizenship, or the country of which he is a citizen b. legal residence c. place where the income is derived. - Estate Tax- residence of the decedent at the time of his death - Donor’s Tax- residence of the donor at the time of donation - Business/occupation tax- where the business is done or the occupation is engaged in; SITUS OF TAXATION OF PROPERTY - Real Property- location of the property - Tangible personal property- location of the property - Intangible personal property- domicile or residence of the owner What is the meaning of Double Taxation? Double taxation- both taxes where imposed in the same year for......

Words: 694 - Pages: 3

Taxation

...exceed Rs.2,850,000 16.00% 15.   Where the taxable income exceeds Rs.2,850,000 but does not exceed Rs.3,550,000 17.50% 16.   Where the taxable income  exceeds Rs.3,550,000 but does not exceed Rs.4,550,000, 18.5% 17.   Where the taxable income exceeds Rs.4,550,000. 20.00%”; Share this: Sources of taxes in pakistan: Existing Sources of Revenues1. Property Tax 2. Motor Vehicle Tax 3. Entertainment Tax  4. Cinema Tax  5. Capital Gain Tax  6. Professional Tax. 7. Welfare Cess.  8. Hotel Tax. 9. Duty on spirits.  10. License Fee for sale of Foreign Liquor. 11. Permit fee on Liquor.  12. Distillery fee. 13. License fee on denatured spirit.  14. Permit fee on denatured spirit. 15. Assessment fee for sale of liquor. 16. Trade Tax 17. Collection of Income Tax and withholding Tax on behalf of federal Government form motor vehicle owners. |   | Tax system of pakistan Tax System in Pakistan | Federal taxes in Pakistan like most of the taxation systems in the world are classified into two broad categories, viz., direct and indirect taxes. A broad description regarding the nature of administration of these taxes is explained below:Direct TaxesDirect taxes primarily comprise income tax, along with supplementary role of wealth tax. For the purpose of the charge of tax and the computation of total income, all income is classified under the following heads: * Salaries * Interest on securities * Income from property * Income from business or......

Words: 1218 - Pages: 5

Auditor Responsibility

...Under auditor’s legal liability, there were divided into four sources which is liability to clients, liability of third parties under common law, liability to third parties under the federal securities laws, and criminal liability. By refering to the Danial & Associates cases, ABC Bank has no right any legal implication to Danial & Associates because the firm can defense when there are legal claims. Danial & Associates can defense themselves by issuing about the lack of duty to perform. It is because the firm can claim that there wa no implied or expressed contract. For example, based on 1136 Tenants case where the engangement letter between the clients and firm should stated clearly about the audit works. Next, the firm can defense themselve by refering to the nonnegligent performance where auditor can claim that the audit was performance in accordance with auditing standards. Even if there were undiscovered misstatement, the auditor is not responsible if the audit was conducted properly. Contributory Negligence is a defense way where clients own actions that resulted any loss, damages and interfered with the conduct of the audit in such a way that prevented auditor from discovering the cause of the loss. Based on cases, Ultramares Corporation v. Touche (1931) , the third parties relied on the audited financial report which lead to fraudulent created by the client. The Ultramares Corporation suffered the loss because of the fraudulent mispresentation by accountants .......

Words: 288 - Pages: 2

Auditors Duties

...Scenario Smackey Dog Foods Inc.—Scenario Summary Smackey Dog Foods Inc. started in the kitchen of Sarah, Kim, and Jillian’s family home in the suburbs of Chicago. The three sisters initially bought the ingredients for their natural dog food recipes from the local grocery store. They used their dogs and the neighborhood dogs as their taste testers. Their dog food products were so good, the local kennels and veterinary offices were glad to distribute the sisters' products to their customers. Local demand increased significantly. Local pet stores and small grocery stores discovered the products and became distributors. The sisters moved the expanding business into a larger facility and hired a few more workers. Although their competitors’ sales were flat or declining, Smackey Dog Food Inc.’s sales were on a vertical climb! Sales were so good last year that the sisters opened a boutique division named Best Boy Gourmet, specializing in freshly manufactured, one-serving packages meant for consumption no later than 3 days after production. They sell this product at three times the cost of their other products and by special order only through their new website. Demand is high, but waste has been an issue. Sarah is the president and general manager of the operation. Sarah has been very proactive in growing the business. She has met with her banker to discuss expanding the facilities and equipment with another $150,000 loan. Their first loan for $150,000 was secured by the......

Words: 1192 - Pages: 5

Taxation

...Taxation Finance Act 2009 Alan Melville S IT IN TH W EEN ON NO IFT ITI F ED ● ● 15th Annual Edition ● ● Class Tested Over 250 Worked Examples ● Over 250 Exercises and Questions On ACCA, CIPFA, AIA and IFA Reading Lists Taxation Supporting resources For instructors Visit www.pearsoned.co.uk/melville to find valuable online resources • Complete, downloadable Instructor’s Manual For more information please contact your local Pearson Education sales representative or visit www.pearsoned.co.uk/melville We work with leading authors to develop the strongest educational materials in accounting, bringing cutting-edge thinking and best learning practice to a global market. Under a range of well-known imprints, including Financial Times Prentice Hall, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at work. To find out more about the complete range of our publishing please visit us on the World Wide Web at: www.pearsoned.co.uk Taxation Finance Act 2009 Fifteenth edition Alan Melville FCA, BSc, Cert. Ed. Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published 1995 Fifteenth edition published 2010 © Pearson Professional Limited 1995, 1996 © Financial Times Professional Limited 1997, 1998......

Words: 209871 - Pages: 840

Taxation

...INCOME TAXATION GBS 1 OBJECTIVE: The students at the end of the module should be able to distinguish the different kinds of taxes, the nature, scope, basis, theory, purpose, situs, limitations, subject of taxation and escape from taxation, the powers of the sovereign, characteristics of taxes, and the basic principles of a sound tax system, as well as the different taxable income and deductions. Definition of Terms TAXATION – is a power inherent in every sovereign state to impose a charge or burden upon persons, properties or rights to raise revenues for the use and support of the government and to enable it to discharge its appropriate functions. - It is a mode of raising revenue for public purposes. (Cooley) TAX – is a forced burden, charge, imposition or contribution assessed in accordance with some reasonable rule of apportionment by authority of the sovereign state upon person, property, or rights exercised, within its jurisdiction to provide public revenues for the support of the government, administration of the law or payment of public expenses. INCOME TAX SYSTEM OF THE PHILIPPINES • GROSS INCOME TAXATION-where a Final Tax is imposed on the gross amount of specified types of income. Example: Interest, royalty, prize, dividend, capital gain • NET INCOME TAXATION- certain deductions are allowed and subtracted from the aggregates of income not subject ot final tax; the tax is computed based on the resulting net income. THEORY AND BASIS OF TAXATION > necessity to defray......

Words: 16260 - Pages: 66

Auditor

...60,054 50,748 71,344 57,369 6 40,659 6 40,600 Budgeting and Planning 61,227 47,000 73,217 55,000 5 45,645 1 55,500 54,315 46,440 63,932 48,584 11 25,136 10 26,615 General Accounting 40,562 25,584 47,725 30,404 12 19,598 11 25,000 Public Accounting 53,385 15,710 59,645 20,039 14 15,710 14 15,750 Education Mean Last Year 40,617 86,562 81,500 99,014 94,450 Government Accounting 66,197 66,000 74,164 72,000 General Management Finance Internal Auditing Cost Accounting 89,591 65,655 114,361 75,709 71,040 48,000 90,373 55,000 60,382 47,000 74,258 57,564 Personnel Accounting 48,869 39,975 59,251 49,289 Taxation 38,112 19,638 44,926 26,969 10 29,405 Rank Median 4 48,200 11 25,000 1 51,273 8 33,503 8 32,991 3 7 34,000 47,130 3 49,000 4 47,130 2 49,958 9 31,420 13 16,889 2 55,000 5 42,000 9 33,450 13 19,000 Consistent with the overall results, the median compensation in almost all responsibility areas is significantly lower this year as compared to last year. As shown in Table 10, the highest-paying responsibility area internationally is education (median total compensation of $94,450). That’s followed by information systems ($84,049). Last year, the order was reversed, with information systems ($97,500) in the lead, followed by education......

Words: 7143 - Pages: 29

Auditors

...After discussing briefly the primary role of a company auditor, consider why ethics is important to auditors. Evaluate how significant the contribution of auditors to the effective corporate governance of large U.S companies. Introduction: “An audit is the independent examination of,and expression of opinion on, the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligations.” Auditing Standard Guidelines, U.K. Auditor is a very important evaluator of company he reviews and examines financial reports and his report is an important input for taking important decision , hence he needs to be ethical so that company can take true and fair decision . Auditor play a vital role in effecting corporate governance . Role of auditor : In financial accounting, an audit is categorized by the independent assessment of the justice by which a company's financial statements are prepared and presented to and by its management. This task is mainly performed by the skilled, competent, independent and objective persons, known as accountants or auditors. Auditors are on the whole very knowledgeable with every aspect of auditing and they in turn issue a report known as auditor’s report. There are mainly two types of auditors: External Auditors: These auditors are called from outside the company to access and evaluate financial statements of their clients or to perform necessary evaluation than......

Words: 1521 - Pages: 7

Taxation

...Table of Contents Chapter 1 Taxation overview---------------------------------------------------------------- 1 2 General principles ---------------------------------------------------------------- 8 3 Specific principles on gross income------------------------------------------- 12 4 Pension receipts and payments------------------------------------------------- 22 5 Double Taxation------------------------------------------------------------------ 29 6 General deductions----------------------------------------------------------------34 7 Expenditure-------------------------------------------------------------------------38 8 Capital allowances-----------------------------------------------------------------48 9 Leasing------------------------------------------------------------------------------ 60 10 Exemptions------------------------------------------------------------------------- 66 11 Partnership-------------------------------------------------------------------------- 71 12 Farmers------------------------------------------------------------------------------ 76 13 Miners------------------------------------------------------------------------------- 85 14 Exports------------------------------------------------------------------------------ 98 15 Capital gains------------------------------------------------------------------------ 101 16 Hire......

Words: 73195 - Pages: 293