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Assignment on Taxation Law (Solution)

   

Added on  2021-06-15

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Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID
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TAXATION LAW1Table of ContentsArthur Murray (NSW) Pty Ltd v FCT (1965)............................................................................2Facts:......................................................................................................................................2Issue of the Case:...................................................................................................................3Conclusion:............................................................................................................................3Answer to A...............................................................................................................................4Answer to (i):.........................................................................................................................4Answer to (ii):........................................................................................................................5Answer to iii:..........................................................................................................................6Answer to B:..............................................................................................................................6Answer to Part B:.......................................................................................................................7Answer to A:..........................................................................................................................7Answer to B:..........................................................................................................................8Answer to C:..........................................................................................................................8Answer to D:..........................................................................................................................8Answer to E:...........................................................................................................................9Reference List:.........................................................................................................................10
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TAXATION LAW2Arthur Murray (NSW) Pty Ltd v FCT (1965)Facts:The facts, in this case,are that the taxpayer is running the business of providing dancingclasses and takes fees from those that need to get dancing tuitions from the taxpayer on thebasis of each hour. It can be evident from the case that core tuition classes which wereaccessible to the interested ones were in different hours; 5, 15 and 30 as per their need.Further, the appointment of the taxpayer was required to be taken for the tuitions in the timeperiod of one year(Braithwaite, 2017). Interested persons who joined classes from thetaxpayer must make payment in advance of the overall fees in two means which were;instalments and lump sum amount. Along with this, variable discounts sum were offered bythe taxpayer on urgent payment made on tuition courses. The taxpayer on the reported receiptof fees by crediting the Unearned Deposits of the non-rendered lesson services in thecompany’s books of account.The total sum has been credited to the account book stand in anorder with the dancing courses that have been taught from time to time moved the entireamount by placing Earned Tuition Account on the credit side (Katic and Leigh, 2016).Additionally, the returns of income tax was documented by the corporation on the basis offoot notes, stating that the obtained sum was provided on advance basis which were not heldas assessable income at the time of receipt. The commissioner of tax on performing the suitable evaluation and analysis assumed that thefees earned from providing tuitions were found as income in the hand of the receiver(taxpayer) at the time when the fees were actually derived. The treatment of the prepaid amount of course fees will be done as income gained by thetaxpayer,and the same sum was recorded in the books of accounts after the completion ofdance classes when impairment was done by the taxpayer to the students. In addition to this,there was rarely any inclusion of tuition fees paid in advance in the assessable income of thetaxpayer (Cao and et al., 2015). At the period of conducting the calculation of assessableincome,it was held that that the chargers were inclusive in the taxpayer’s taxable incomewherein the taxpayer earned the income. According to the verdict of the court of law, thetaxable income was gained as an advance fee for tuition by the taxpayer in the year when theservices were rendered. By considering the laid “section 25 (1) of the ITAA 1997”, the totalsum which was paid in advance as the fees for lessons mutually formed ordinary income.
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TAXATION LAW3The problem related with the case:In the present case, the issue is that if or if not the amount paid in advance of prepaid feeswas obtained by the taxpayer was found as earning (Vegh and Vuletin, 2015). The presentissue engaged in this cited case if to identify or if not the amount paid in advance that wasobtained by the taxpayer was referred as taxable income.Conclusion:The conclusion can be drawn that, the main intention was to earn a better understanding ofwhether the advance fees have the traits of income and perhaps it might be referred for thepurpose of assessment. As per the taxation commissioner’s verdict, the fees for tuition wasobtained as a prepaid sum by the taxpayer in regards to the services which were not providedyet. On the other hand, the amount paid in advance cannot be referred for assessmentpurpose. By considering the law court decision, there might be a contract between the taxpayer andlearner that the prepaid sum would not be refunded. However, in the current case the taxpayermade the advance fees refundable that was obtained when the tuitions were notrendered(Jacob, 2018). It was also stated by court’s decision that, the same fees will not beincluded by the taxpayer in the financial year when the fees were obtained, as there was ahighlikelihood that the in case if no lessons would be provided to learners then the fees mightbe refunded to them. The decision of the taxation commissioner found that the taxpayerreceived the fees for providing tuitions on an advance basis , which will retain no traits ofincomes until the tuitions are taught to the students. Answer to AAnswer to (i):Under the “section 6-5 of the ITAA 1997”, the profit margins held by the taxpayer in returnfor their rendered services will be assessed as income (Faccio and Xu, 2015). Moreover, theincome receipt as per the section would be entitled to tax on the basis of fundamentalconcepts given by the “section 6-5 of the ITAA 1997”.Generally, there are two key processes that are considered while computing income meant fortaxation; earnings and the receipt methods. Further, an individual taxpayer in context withsuitability might not select these methods. Taxation ruling of TR 98/1” is a standard which isinvolved when income was been determined by making use of either earnings method or the
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