ACCA Advanced Taxation (ATX) Practice Exam

What must a tax adviser do to prepare for a client's significant tax changes due to relocation?

1. Adjust the client's previous tax returns

2. Ensure knowledge of international tax laws

3. Focus only on domestic implications

4. Neglect previous advisers’ knowledge

The correct answer is: Ensure knowledge of international tax laws

To effectively prepare for a client's significant tax changes resulting from relocation, a tax adviser must ensure they have comprehensive knowledge of international tax laws. This understanding is crucial because moving a client’s tax residence can create various tax implications that differ significantly across jurisdictions. Factors such as residency rules, foreign tax credits, and double taxation treaties may affect the client’s tax obligations and entitlements. The tax adviser must be able to navigate the intricacies of international taxation, which often includes understanding tax liabilities in both the departing and the new country. There may be specific compliance requirements, such as notifying tax authorities of the change in residency or adhering to reporting obligations for foreign income, assets, or investments. A solid grasp of these laws not only helps in advising the client on their current situation but also in planning for future tax-efficient strategies. Additionally, it is also important for the adviser to integrate relevant information from previous advisers rather than neglect it, as continuity and knowledge of the client’s past tax situation can provide insights into potential carry-forward losses or deductions that may be advantageous in the new jurisdiction. Focusing solely on domestic implications fails to account for the reality that many clients have complex international tax matters after relocating, which can lead to significant unintended consequences and potential non-compliance with tax