17 Aug 2009

Australian sourced Income

by Darren

In Australia it is important to identify the source of income as foreigners are only taxed on income sourced within Australia. Source rules take into account a number of factors for example the sale of goods in Australia will take into account the place where the sales contract was entered as well as where the goods were purchased, produced or manufactured. In cases where income has multiple sources, the dominant factors need to be determined and If necessary, the income must be apportioned. The below are specific types of income and a guide to their general source: Wages or salary, professional fees - The source of remuneration is where the duties or services are performed. Trading or business profits - The source of profits is generally determined by reference to the place where the business trades or provides services. Interest - The source is generally the place where the loan contract was made or the credit was given. Dividends - The source of a dividend is where the company made the profits for the dividend to be paid. In the next entry on Australia we will examine different types of income that are sourced in Australia and see how they are taxed for a resident as well as a non-resident.
15 Aug 2009

China’s Residency Rules

by Darren

Individuals: An individual resident for Chinese Tax law purposes is one who has a domicile in China or individuals without a domicile that have resided within China for greater than 1 year. These residents are taxed on their worldwide income. A non resident is someone who does not have a domicile in Chian and has not live ineth boundaries of China for more than 365 days. Business: The enterprise income tax law defines a chinese resident enterprise as either an enterprise that is incorporated in China or is incorporated outside China but has its place of management based in China. Place of management in China means the management of the business' operations, personnel, accounting and property are exercised within China. Any business that is a resident of China wil be taxed on its worldwide income within China
14 Aug 2009

ATO - Business Tax Break

by Darren

The Australian government has offered an additional tax deduction for businesses purchasing new plant and equipment up to 31 December 2009. This incentive is part of ensuring businesses can meet the challenges posed by the economic downturn. This incentive is eligible for businesses purchasing assets by 31 December 2009, which are used in Australia and whose annual turnover is less than AUD $2 million. Your business structure can be in the form of a company, partnership, trust or even a sole proprietor. If your annual turnover is less than AUD $2 million then you can claim 50% of the cost of the asset as a deduction in the current year. If you turnover exceeds AUD $2 million and you bought assets prior to 30 June 2009 then you are entitled to claim a deduction of 30% of the cost. Finally for those assets purchased between 1 July 2009 and 31 December 2009 a 10% of the cost is an allowable deduction. The cost of the asset that is purchased includes the actual amount paid for the asset (excluding GST) and the costs of installation, delivery or any improvements that are made to the The best thing about this tax break is that it has no impact on deductions for your claim to a deduction for an depreciation. For full details of the incentive please refer to the Small business and general business tax break section of the ATO website.
12 Aug 2009

Australian Tax Office Compliance Program

by Darren

The ATO on an annual basis issues a document for all taxpayers detailing the compliance program for that specific tax year. The document identifies the ATO's approach to tax compliance across the various taxpayer groups - individual, micro enterprises, small to medium enterprises, large businesses, NPO's, governemnt organizations and tax practitioners.
11 Aug 2009

Will a foreigner ever be Japanese?

by Darren

The answer to this question under immigration law is.... almost impossible. However under tax law you can be treated the same as a Japanese national in just 5 years... Is that beneficial? Under Japanese tax law if you are a Japanese tax resident then you will be taxed on your worldwide income. This is not necessarily a good thing if you are earning in a low tax country such as Singapore of Hong Kong. So what makes you a Japanese tax resident? Firstly your are a resident if you maintain your home in Japan or have resided in Japan for a continuous period of 1 year or more. Next you are classified as a permanent or non-permanent resident. You are a non-permanent resident if you are not a Japanese national, and have lived in Japan for 5 years or less in the last 10 years. You are a permanent resident if you are a Japanese national, or have lived in Japan for greater than 5 years in the last 10 years. Generally, a permanent resident is subject to income tax and inhabitant tax on worldwide income while a non-permanent resident is subject to income tax and inhabitant tax on income sourced in Japan and foreign income paid in or remitted to Japan. Japan applies the concept of place of head office or main office to determine if your company is a Japanese tax resident or not. A foreign incorporated business that has a branch established in Japan will not be treated as a resident of Japan. This is important when applying the double tax agreements. Generally, there are no significant differences in calculating taxes for a branch (foreign) or a domestic Japanese company. However, some differences exist due the different legal nature of each. I will provide you with a detailed explanation over the next few months of the implications of tax residency in Japan for you as an individual and as an entrepreneur setting up a company
08 Aug 2009

Uncle Sam’s Residency Rules

by Darren

In the USA it is important establish whether you are resident or non-resident because as a resident you would be subject to tax on your worldwide income. However as non-resident you are not entitled to certain deductions and allowances that are provided to citizens and permanent residents. You would be classified as a tax resident if you are a US citizen, green card holder. In addition if you live in the US with an intention to make it your home you will be classified as a US tax resident. This is where you have lived in the US for greater than 183 days of a particular year. If you don't meet the above criteria you are treated as a non-resident for tax purposes. If you operate your business through a company or a partnership it will be treated as a resident if you created it under the law of the United States. The concept of control and management which we saw in Australia and Singapore do not apply under US tax law. In the coming weeks and months I will focus on the tax implications for you as a non resident individual, partnership or company.
07 Aug 2009

Sole Proprietor charged with GST Fraud

by Darren

A sole proprietor in Singapore has been convicted for GST fraud. The defendant was charged for fraudulently claiming GST refunds amounting to $122,182.48 from IRAS - Inland Revenue Authority of Singapore.
06 Aug 2009

The merlion, the durian and the resident

by Darren

Moving on to the city state of Singapore. While the tax policies are vastly different the concept of residency is similar to that in Australia. For you to be classed as an individual tax resident in Singapore you must reside in Singapore. Generally if you are physically present or employed (except for a director of a company) in Singapore for 183 days or more during the year you would be considered a tax resident. In more detail, if you: Have family ties in Singapore; Have accommodation available in Singapore; Are in Singapore for an intended long term; Then you would be considered a tax resident. If you have established a home outside Singapore then you would not be considered a tax resident in Singapore. Finally the frequency and regularity and duration of visits Singapore and the purpose of such visits are also taken into consideration. A company is resident in Singapore if the control and management of its affairs is exercised in Singapore. If you as a director of a company, manage and control your business and hold your board meetings in Singapore then the company will be deemed resident. Control and management does not mean the day to day operations of the business.

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