QUESTION 1 (25 marks)
AusCo, an Australian company instructs Mr Liang, a Chinese lawyer, who is located
in China, to provide them with a report on various aspects of the consumer law in
China. AusCo is situated in Australia. AusCo requires the information for their
manufacturing business, which is operated exclusively in Australia. AusCo
manufactures robotic kangaroos. AusCo is considering exporting its robots to China,
as the Australian market is completely saturated. Mr Liang researches and drafts the
report in China, and then forwards it to AusCo in Australia. Mr Liang charges AusCo
a professional fee for the report.
Required:
a. Briefly consider whether or not there is a taxable supply by Mr Liang for
Australian GST purposes?
b. Would your answer to question (a) above, change, if Mr Liang (located in
China) merely gives the information over the telephone to AusCo (located in
Australia) in a conference call, as the information is already in Mr Liang’s
possession?
c. AusCo (an Australian company, located in Australia) now applies for a loan
from ABC bank (also located in Australia). ABC bank instructs Mr Liang to
provide a written report to the bank on consumer law in China, for the
purposes of assessing the above loan application. Mr Liang (who is based in
China) researches and drafts the report in China for ABC Bank. Mr Liang then
forwards it to ABC Bank in Australia. Mr Liang invoices ABC Bank for the
fee. Briefly consider whether or not there is now a taxable supply by Mr Liang
for Australian GST purposes?
Note: You are required to set out your reasons for your answers in the above question,
including brief references to any relevant legislation, case law, and tax rulings.
QUESTION 2 (25 marks)
Billie Bob Billington is considering purchasing a second warehouse on a separate
piece of land in New South Wales (NSW), costing a total of $880 000, for the purpose
of storing his goods, which form part of his stock in trade in his retail business.
Alternatively, Billie is considering adding 3 extra, large, rooms on to his house, and
using those rooms to store the goods for his retail business. His house is also located
in NSW, and is currently valued at $2 500 000.
Required:
Advise Billie Bob Billington on the advantages and disadvantages of the two
proposals that are currently under consideration, by critically taking into account any
tax implications that are associated with the different proposals.
Note: You are required to set out your reasons for your answers in the above question,
including brief references to any relevant legislation, case law, and tax rulings.
