Assessable Income and Expenditure Information Report 2022

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Table of Contents
Introduction:...............................................................................................................................2
Assessable Income and Expenditure Information:.....................................................................2
Part A: Income from Employment:............................................................................................3
Part B: Income and Expenses from business:............................................................................4
Income from Business:...............................................................................................................5
Part C: Income from Rental Property:.......................................................................................8
Dependent Tax offset:................................................................................................................9
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11

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Introduction:
The report is associated with analysing the different types of transactions that are
reported by taxpayer to understand their inclusion in the tax return as income and determining
those expenses that will be allowed for deduction. The report is prepared by focusing on
different sources of taxation laws to ascertain whether Eric will be held assessable or not for
the invalid and invalid carer tax offset. The report will be computing the overall taxable
income of Eric will be considered assessable in agreement with the given provision of “ITAA
1997”.
Assessable Income and Expenditure Information:
Before computing the taxable earnings of Eric it is essential to have an understanding
of assessable income. The assessable earnings is a subject of assessment and it is added into
the taxable pay. The taxpayers should understand that ordinary income amounts to “income
in agreement with the ordinary conception” and it is treated chargeable within legislative
provision of “sec 6-5 ITAA 1997” (Smith, 2014). The case facts of Eric furnishes that he
held a joint term deposit with Linda his spouse in ANZ bank account and derived an interest
of 500 from that account. Interest constitute an “ordinary income” under “sec 6-5 ITAA
1997”. The commissioner in “Riches v Westminster Bank Ltd (1947)” explained that
interest is regarded as the return which streams from the advancing of money and the capital
sum that is not impacted by imbursement of interest (Smith, 2018). Likewise, the interest
which Eric has earned jointly with his wife in ANZ bank is included for assessment as
“ordinary income” under “sec 6-5 ITAA 1997”.
Expenditure that is paid by the taxpayer for management of tax affairs is given the
permission for deduction in “sec 25-5 (1) ITAA 1997”. A payment of $400 was paid to a

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registered tax agent by Eric to prepare for his tax return for tax year of 2018. Therefore, the
tax agent payment is a permissible tax deduction in “sec 25-5 (1) ITAA 1997”.
Part A: Income from Employment:
Under “sec 6 (1) ITAA 1936”, earnings that is made by the taxpayer from individual
effort generally involves receipts that is earned through working as employee in an
employment. As noted in “McNeil v FC (2007)” whether or not the amount is an income is
dependent on the quality for those that receives the amount and it is not regarded as the
character of expenditure by other person (Diewert & Lawrence, 2015). This is important until
the payments which is received carries adequate nexus with the income of the recipient
employment and professional service and not on personal level. Eric earned a gross wages of
$7,800 from his employment. The gross wages of Eric is an earnings from personal exertion
under “sec 6 (1) ITAA 1936”. Denoting to “McNeil v FC (2007)” the gross wages which is
received by Eric carries adequate nexus with his income from employment and professional
service. Under “sec 6-5 ITA Act 97” it will be taxable as “ordinary income”.
There are common issues whether the payment made to the employee constitutes
allowances or reimbursement. Under the “sec 15-2 (1) ITAA 1997” allowance involves usual
“salary or wages” and hence it is not a “fringe benefit”. It is taxable to the employee
ordinary income. While reimbursement is not a salary and wages. It was established in
“Roads and Traffic Authority of New South Wales v FCT (1993)” usually, a reimbursement
is characterised as imbursement made for the actual expenditure.
A shift allowance of $2,000 was received during the year by Eric. Referring to “sec
15-2 (1) ITAA 1997” allowance involves usual “salary or wages” and hence it is not a
“fringe benefit”. It is included in the taxable earnings of Eric for tax purpose. Eric was also
reimbursed for work related software fees by his employer (Wales, 2017). The