Assignment on Taxation Law Doc
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Added on 2020-03-28
Assignment on Taxation Law Doc
Added on 2020-03-28
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Running head: TAXATION LAWTaxation lawName of the StudentName of the UniversityAuthors NoteCourse ID
TAXATION LAW1Table of ContentsAnswer to question 1:.................................................................................................................2Issue:..........................................................................................................................................2Rule............................................................................................................................................2Application:................................................................................................................................2Conclusion:................................................................................................................................6Answer to question 2:.................................................................................................................6Issue:..........................................................................................................................................6Laws:..........................................................................................................................................6Applications:..............................................................................................................................6Conclusion:..............................................................................................................................10Reference list:...........................................................................................................................11
TAXATION LAW2Answer to question 1:Issue: The current issue deals with the Aussie Ltd being a subsidiary company of theMeranti Ltd where Aussie Ltd incurred advertising expending for launching an attack on themedia with the objective of demanding repeal against the government decision of imposinghigh import duty on the yearly sales. Rule a.“8-1 of the ITAA 1997”b.“subsection 51 (1) of the ITAA 1936”c.“Income tax ruling of ID 2001/83”d.“FC of T v Snowden and Wilson Pty Ltd(1958)” e.“Magna Alloys and Research Pty Ltd v. FC of T(1980)”f.“Herald and Weekly Times Ltd v. FC of T(1932)” Application: From the present case, it is found that Aussie Ltd functioned as the subsidiarycompany of the Meranti Ltd being the manufacturers of the high quality furniture with muchreduced cost. The furniture manufactured by Meranti Ltd was exported to the Aussie Ltd thatenjoyed highest degree of success in terms of the large volume of sales. Following the casestudy, it was found that the federal government imposed huge amount of import duty on theyearly sales of imported furniture that was done by Aussie Ltd since the company sold thosefurniture in the Australian market. As a result of this, the government decision of imposingimport duty has considerably effected the business and revenue generating capacity of AussieLtd. Subsequently Aussie Ltd launched a media attack with the objective of repealing thegovernment decision and sought petition in the parliament against such the import duty. As a
TAXATION LAW3result of this the company incurred an expenditure of $2 million as a demand for revokinggovernment decision.As defined under the “section 8-1 of the ITAA 1997” an individual taxpayers isallowed to make claim for allowable deductions related to losses and outlay up the extent thatthey are occurred at the time of gaining and producing the taxable income (Barkoczy 2016).There is also an exception to the rule, which states that where an expenditure is of a capital innature or possessing the characteristics of private or domestic in nature are not allowed asallowable deductions. In order to consider the legal expenditure in the form of allowabledeductions the taxpayer is required to explain that the expenditure was related or significantto the production assessable income (Braithwaite 2017). Denoting the judgement of the “Hallstroms Pty Ltd v Federal Commissioner ofTaxation (1946)”, in determining the deductibility of the legal expenditure to be consideredas allowable under “section 8-1 of the ITAA 1997”, it is obligatory to understand the natureof the expenditure (Saad 2014). It is noteworthy to denote that the nature and the characterpossessed by the legal expenditure follows the benefit that is sought by the taxpayer inincurring such expenditure. As it was held in “Herald and Weekly Times Ltd v. FC ofT(1932)” legal expenditure are usually considered as deductible if such expenditure isoriginated from the regular activities of the taxpayer’s business (Lang 2014). Furthermore, asnoted in the case of “Magna Alloys and Research Pty Ltd v. FC of T(1980)” the legalexpense are usually regarded as deductible if the legal actions that has been taken has moreperipheral association to the business of the taxpayer revenue producing activities (Miller andOats 2016). In the present context, it can be stated that the legal expenditure incurred by AussieLtd can be regarded as deductions under “section 8-1 of the ITAA 1997” that are allowable
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