International Tax Corner | China Tax & Investment Consultants Ltd

International Tax Corner

Glossary

Australia

Key Dates for Australian Fiscal Year (Tax Year) [read]

Exemption

Exempt (adjective) or exempted (verb); see Tax-exempt and Zero-rated below.

Fiscal year

Hong Kong SAR

Ordinary resident and temporary resident for purpose of personal assessment [read]
Reporting by Trust Companies and Trusts under Hong Kong's CRS rules [read]
Recent Developments in Hong Kong's Exchange of Information Rules [read]

Inclusive Framework

members of the OECD/G20 Inclusive Framework on BEPS [read]
output legitimacy deficit [read]

Pension and tax saving in the U.K.

Tax on the private pension [read]
Tax relief on pension contributionst [read]
Comparing UK pension with others [read]

Taxable periods

A jurisdiction may adopt the term "taxable period" if its fiscal year or tax year does not coincide with the calendar year. Find them for the following jurisdictions: Hong Kong, Japan, Singapore, and the United Kingdom; [read]
See also Fiscal year.

Tax-exempt goods

An item or activity that should have been taxable but for the specific provision that provides that it is not taxable. "Exempted from tax" has the same end result as "not liable to tax" in that the taxpayer is not required to pay the tax, but they differ.
"Not liable to tax" is opposite to "liable to tax", and vice versa. "Tax-exempt" falls under the sphere of "liable to tax" if it had not been for the specific provision to the contrary.

Trust by types

There are four major categories of trust: bare trust, discretionary trust, inter-vivos trust, and testamentary trust.

- bare trust

A simple trust, where the beneficiary (or beneficiaries) has an immediate and absolute right to both the capital and income of the trust. The property is held in the name of the trustee (or trustees), but the trustee has no discretion over the assets held in trust. The trustee of a bare trust is a mere nominee, in whose name the property is held. Except in the case of bare trusts for minors, the trustee has no active duties to perform. The trustee must simply follow the (lawful) instructions of the beneficiary in relation to the assets held in trust. A bare trust can be express or implied.

- discretionary trust

A discretionary trust, in the trust law of England, Australia, Canada and other common law jurisdictions, is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in the trust instrument by the settlor. Discretionary trusts serve a useful function, despite their original source of popularity (tax savings) having diminished in most countries. They still continue to be used for these reasons, among others:

to protect improvident beneficiaries against creditors – as the beneficiary has no claim to any specific part of the trust fund, none of the trust fund is vulnerable to attachment by the trustee in bankruptcy of any beneficiary
to exercise control over young or improvident beneficiaries (i.e. just like the one set up by the late HK Singer Anita Mui)
to create flexibility to react to changes in circumstances
in certain jurisdictions, a discretionary trust can be used to protect family assets from forming part of any divorce settlement.

- Living trust vs testamentary trust

A living trust is also known as an inter vivos trust. A living trust is one that takes effect during the lifetime of the settlor, which can either be revocable or irrevocable. In contrast, a testamentary trust (or will trust) is one that takes effect following the death of the settlor.

- Taxation of trust in the United Kingdom [read]

Trust is not a tax-saving tool in the United Kingdom, but a living trust can avoid the probate process in the event that the settlor passes away.

United Kingdom

Domiciled vs non-domiciled resident [read]
Statutory residence test (SRT) [read]
UK resident property structures: what are the options? [read]

United States

A guide to US income tax treaties [read]
I Got 99 Problems and They’ re All FATCA [read]

Zero-rated goods

Value Added Tax (VAT) ... For a “zero-rated good,” the government doesn't tax its sale but allows credits for the value-added tax paid on inputs (input credit). If a good or business is “exempt,” the government doesn't tax the sale of the good, but producers cannot claim a credit for the VAT they pay on inputs to produce it.
For zero-rated exports, the input VAT is refundable. For example, VAT is a tax levied on goods and services consumed in the UK. When goods are exported they are 'consumed' outside the UK and to impose VAT on such goods would be contrary to the purpose of the tax. Therefore, the supply of exported goods is zero-rated provided the following conditions are met: i) evidence (either official or commercial) you must hold to prove entitlement to zero-rating; ii) time limits in which the goods must be physically exported from the UK; and iii) time limits in which you must obtain evidence of export to support zero-rating.
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