Income Tax Act 1997: Income From Salary and Wages

Running Head: TAXATION LAW
Taxation Law
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TAXATION LAW
Table of Contents
Answer to question 1..............................................................................................3
Answer to question 2..............................................................................................6
Reference list........................................................................................................10

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TAXATION LAW
Answer to question 1
Law: According to the Income Tax Act 1936 and Income Tax Act 1997 income from
salary and wages are always taxable which includes salary, wages, any allowances,
commission, bonuses, income from part time or full time work, parental leave pay and
any other related income received under the course of employment. Gross assessable
income for the purpose of tax of an employee includes all cash remunerations from the
employer. Residential individual is are subjected to the Australian tax for the income
arise from all source. Salaries and wages of an Australian resident working in the
overseas for a period of more than 90 days then they are also eligible for exemption
from the income tax. While the foreign resident are taxable for the salary and wages
income which is earned in Australia (Bentley 2019).
Employment income is the money which is received by an individual by his or her
employer which can be paid in hand, bank transfer, cheque payment or nay other
method. Regardless of the money received for the purpose of one or more job, full time
or part time job all income is related to be included in the tax return of the individual.
There are some allowances related to the employment which is generally
provided by the employer. It includes allowances like car, travel, clothing, safety,
working condition and others. It also includes tips, attendance fees, consultation fees or
any benefit received for the service provided. While if the individual receives travel
allowances and meal allowances under any industrial law then it does not forms the part
of the tax return (Carter and Breunig 2019).

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TAXATION LAW
Lump sum payment received which is either received during leaving a job or the
amount arrear from the previous year is assessable in the current income year and
forms the part of the income tax return. Fringe benefit is also considered as the income
in employment.
According to the Income Tax act 1997 under section 6(e) of Australia is that the
tips received by an employee directly from the customer need to be shown in the tax
return of the individual and it is the forming part of the income. While if any expenses
made by the employer towards the employee which is considered as the reward for
work then it does not need to be disclosed in the tax return as it does not forms the part
of assessable income of the individual (Cassidy 2017).
Gifts received from the customer are deductible if it is a voluntary transferred and
it have a monetary value. Gift can include money or property. For claiming deduction an
individual need to keep a proper record of the gifts received with the receipts. For
claiming deduction the monetary value of the gift must be more than $2. Gift from any
family member for any personnel reason and which is not related to any income
producing activities does not forms the part of the assessable income. While if any
interest is received on that money from the Australian bank then it need to be shown in
the tax return.
Issues: Emmi is an accounts student who studies in Holmes Institution while working as
a part time in a restaurant. During the assessment year Emmi has received some
income which consist of tips from customer and salary from the restaurant. She also got
an expensive perfume as gift from a regular customer during the Christmas which late
on she gave that to her mother. Next as she was working in a restaurant, for the