The International Finance Name

Running head: INTERNATIONAL FINANCE
International Finance
Name of the Student
Name of the University
Author Note

1
INTERNATIONAL FINANCE
Table of Contents
Question 1: Assessable Income........................................................................................2
Identification of Material Facts.......................................................................................2
Relevant Legal Issues....................................................................................................2
Application of the Taxation Principles............................................................................3
Total Assessable Income of Emmi.................................................................................5
Question 2: Capital Gains Tax...........................................................................................5
Identification of Material Facts.......................................................................................5
Relevant Legal Issues....................................................................................................6
Application of the Relevant Law.....................................................................................7
Capital Gains of Liu........................................................................................................9

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INTERNATIONAL FINANCE
Question 1: Assessable Income
Identification of Material Facts
The situation is related to the computation of the assessable income of Emmi
under the provisions of ITAA 1936 and ITAA 1997. She has been studying accounting
at Holmes Institute and is also working part-time at a restaurant. As a part of her
employment, she has earned various amounts in the form of tips and allowances. It also
includes the annual income received from the job and gifts received from her parents
and employer. The relevant amounts to determine her assessable income are as
follows:
$335 cash received from customers in the form of tips;
$25000 received from her employment in the Crown Melbourne Restaurants;
$250 worth perfume received as a gift from a regular customer. However, this perfume
has been given to her mother;
$380 received from the employer as a part of the entertainment events paid by the
employer; and
A Christmas gift of $15000 received from her father.
Relevant Legal Issues
According to section 51.35 of ITAA 1997, payments made to a full-time student at
a school, college or university are not exempt from Income Tax under item 2.1A of the
table in section 51.10. These payments also include the payment made by an entity or
an authority on the condition that the student will continue to be an employee of the
entity when required. It also includes related to the labour of the student. The relevant
legislations for the payments received by Emmi are as follows:
As held in the case of Calvert v Wainwright, voluntary payments received by a person
constitutes an incidence of employment and is a part of the ordinary income of an
individual under section 6-5 of ITAA 1997 (Classic.austlii.edu.au. 2020). According to
the rules of the ATO, assessable income is the income of an individual on which tax can
be levied, if it is proved that the assesse has earned more than the tax threshold income
(Ato.gov.au 2020). Tips form a part of the assessable income suggested by the ATO;
The income received by an individual as a part of the services provided by them
constitutes the ordinary income of an individual;
As suggested by the rules of the ATO, gifts received by an individual as a part of a
special occasion do not form a part of the assessable income of an individual
(Ato.gov.au. 2020). As held in the case of Scott v FCT and Hayes v FCT, the gift cannot
be taxed if it is received by an individual from a personal relation out of love;
However, the ATO suggests that the gifts may be taxable if they are received as a part
of the business-like activity or related to the income-earning activities of the employee
or contractor; and
Similarly, gifts received from related people on a special occasion are not to be taxed in
the hands of the recipient.