Determine The Liability For Tax In Australia

Mary Pallaras ran her own consultancy company. Mary was an employment facilitator with a large employment agency company, Greater Union Employment Services Pty Ltd. She left this job in 2012 to look after her father when he became very ill. Unfortunately he passed away in November 2013. In January 2014 Greater Union offered Mary work on a consultancy basis, which she accepted. She set up her own Company, Pallaras Employment Consultancies Pty Ltd, and accepted work referred to her by Greater Union on a set rate per client basis. Mary was married. Ronald, her husband, was a photographer running his own photography business. He was also designated the company secretary and manager of Pallaras Employment Consultancies.

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Whilst employed by Greater Union Mary undertook a migration agents course at Victoria University, which Greater Union paid for. In January 2015 Greater Union offered Mary the opportunity to expand her consultancy business. They wanted to take advantage of the free trade agreement with China and knew Mary had a qualification in migration agency. She accepted the offer. To be able to undertake the consultancy Mary would need to move to China for an indeterminate period to establish the required contacts and procedures. She and her husband left Australia for Beijing on 2 April 2015. They hoped they would be able to return to Australia around September – November 2016. Whilst away Mary and Ronald would lease out their house. They took a 12 month lease on a property in Beijing.

As the consultant for the Pallaras Employment, Mary receives a salary of $80,000 a year. Her husband, as company secretary and manager also receives a salary of $80,000. They are both shareholders of the company, each holding 1 share. Any income of Pallaras Employment not distributed as salary, and after all other expenses are paid, is distributed as unfranked dividends to Mary and Ronald. The house they own is leased out for $450 a week. Pallaras Employment earned around $10,000 from other consultancy work from friends of Mary and Ronald, and others referred to them by clients Greater Union had referred to them. The only consultancy to be done whilst Mary and Ronald were overseas will be for Greater Union. The salary from Pallaras Employment for each of Mary and Ronald is paid into their joint bank account. Rent received whilst they are overseas will also be paid into this account. They have set up a joint bank account in china into which their salary will be paid whilst they are in China. Mary has also been asked by Victoria University to deliver a series of lectures over two 6 week periods at Beijing University, to students undertaking a management degree run by Victoria University in Beijing. She is to be paid $24,000 which will be paid to her Australian bank account.

Mary wants to know the income she will be liable for tax on in Australia for the 2014/15 and 2015/16 income years. If you feel you need further information from Mary to be able to adequately answer her query, inform her of the information you require and why it is required.

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