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Assignment - Taxation Law (Solution)

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Added on  2021-06-18

Assignment - Taxation Law (Solution)

   Added on 2021-06-18

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TAXATION LAWSTUDENT ID:[Pick the date]
Assignment - Taxation Law (Solution)_1
Question 1The given facts indicate that Hilary receives three payments on account of the story,manuscript and expedition photographs respectively. The objective is to ascertain byreference to case laws and relevant statutes (especially s.6-5) if the payments are termed asincome on account of personal exertion.Story related paymentA hefty sum of $ 10,000 has been offered by newspaper despite she lacking any meaningfulwriting experience. This action on the part of the newspaper provides clear hint that it is notseeking writing of Hilary but the contents of her story. These contents are of interest to thenewspaper since they have potential commercial value as these pertain to the life of thefamous mountaineer Hilary. Further, only Hilary has these details, hence this information canbe gained only from her. The act of writing is the medium through which Hilary is sharingher personal story with the newspaper. Hence, the real asset of value which is justifying $10,000 payment is the information about Hilary’s life. This stance is upheld by theproceedings of a similar case i.e. Brent vs Federal Commissioner of Taxation(1971) 125CLR (Barkoczy, 2015). Hence, considering that writing does not have any commercialvalue, any the proceeds from story would fail to be recognised as income from personalexertion.Manuscript related paymentConsidering the above conclusion that writing does not produce anything which has anycommercial value, hence the commercial worth of the manuscript does not come from thepersonal exertion and skill of Hilary as a writer. This worth is derived from the fact that themanuscript has information about Hilary’s life which would interest the audience. Sincewriting acts a transfer mechanism, hence proceeds from manuscript would fail to berecognised as income from personal exertion (Gilders et. a., 2016).Photograph related paymentIt is apparent that Hilary does not process any extraordinary photography skills and hence thebuyer is not interested for buying these as these are clicked by Hilary. But the buyer isinterested, since the subject matter captured by the photographs is valuable as it highlights the1
Assignment - Taxation Law (Solution)_2
expeditions done by famous mountaineer Hilary. The activity of clicking photographs doesnot produce any income here and hence the given receipts fail to be recognised as incomefrom personal exertion (Deustch et. al., 2016).First writing and later deciding to sellNow there is an intention change on part of Hilary since she decides to write the storywithout any offer but only after completion decides to sell. The tax treatment remainsunaffected by this intention change since through writing the assessable income is not beingderived. Hence the motive driving the activity of writing does not play any role hereconsidering the futility of the writing activity. Thus, proceeds would still fail to be recognisedas income from personal exertion (Sadiq et. al., 2016).Question 2The statutory formula presented in section 9, FBTAA 86 is listed as follows (Woellner,2014). For making use of the above formula, the input value related discussion is carried out below(Barkoczy, 2015).A – The base value of vehicle in this equal would be taken as the purchase value ofthe car since no depreciation can be charged on the car as of now. Hence, A = $50,000.B – The statutory percentage is delinked with the distance travelled and would beconsidered as 20% or 0.2.C – This information has already been presented in the data provided. Hence, C= 183D – The given assessment year which has been considered for this computation hasonly 365 days. Hence, D = 365.E – In according with the statutory formula, any operating expenses related to car thatare spent by the employee would be paid back by the employer and hence deducted.2
Assignment - Taxation Law (Solution)_3

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