LAW3130 Taxation Law.

Qld Legumes Ltd (QLL) is a company incorporated in Australia. It owns and operates a large chick pea farm and processing facility in Queensland. The head office is in Roma, Queensland. QLL has a subsidiary incorporated in Hong Kong, Legume Marketing Pty Ltd (LMPL), which provides marketing services to QLL.

LMPL has an office in Hong Kong and the company’s two directors are resident in Hong Kong. The Hong Kong office also has a marketing manager and administration staff who manage the day-to-day activities of LMPL. The directors and marketing manager were appointed by the managing director of QLL.

Chick pea sales contracts are negotiated by LMPL’s marketing manager. LMPL’s directors hold meetings in Hong Kong during which they sign the sales contracts. Prior to LMPL’s directors signing the sales contracts, the contracts are emailed to Roma where the managing director of QLL reviews them. The contracts are only signed by LMPL’s directors after they get approval from QLL’s managing director. Any policy or strategic decisions are also referred to the managing director of QLL prior to implementation.

Task: 1

Discuss with reference to legislation, case law and/or rulings (where relevant) whether QLL or LMPL would be considered residents of Australia for income tax purposes?

No Comment.