Australian Taxation Law: Concepts and Cases

This assignment delves into the complexities of Australian Taxation Law. It requires a thorough understanding of various tax principles, including income tax, GST, capital gains tax, and international taxation. Students are expected to analyze relevant case law and demonstrate their knowledge of how these legal precedents shape the application of taxation laws in Australia.

Running head: AUSTRALIAN TAXATION LAW
Australian taxation law
Name of the University
Name of the student
Authors note

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Answer to Question 1
Answer of Question i)
Aviation companies reward their loyal customers with flight points under Taxation
Ruling of TR 1999/6. Under this taxation ruling, companies in aviation sector reward their
customers by providing flights points. The fact is that rewards or points that are provided by
companies in aviation sector are not treated as taxable income under Taxation Ruling of TR
1999/6 (Barkoczy, 2016). Nonetheless, there can be implementation of fringe tax benefits on
rewards or scenarios. Such tax benefits can be imposed under the following situation and they
are listed below:
 If the employees are rewarded with flight points for some type of arrangement.
 Employer and employees share a relationship of family. Employees receives rewards
or flights points from employers in relation and in context to their employment.
Therefore, frequent flyer rewards received by business analyst in relation to work
related travel by organization would not be subjected to taxation and neither it will be treated
for fringe taxation benefits.
Answer of Question ii)
The amount that is received as a compensation by an individual or entity are not
considered for the purpose of taxation or it is not assessed as under taxation income. Under
the given scenario, crane-hiring company is receiving amount for customers as compensation
for damage due to supplying damaged crane (Blakelock & King, 2017). Here, compensation
is paid at time of providing service and receivers of compensation are liable to charge for
taxation. Some of crucial points that can be reflected here are as follows:

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 Refurbishing the damages assets part are done by amount of compensation that is
received by hiring company. Utilization of received compensation amount is done by
refurbishing the assets damaged arts.
 Entities receiving compensation amount should have assets that would be dynamically
utilized in their business process and they should be in capital form.
 Assets of entities must be depreciable and estimated depreciation should be
determined concerning assets that are in record.
In the given scenario, there has been damage to customers capital assets and in this
regard, crane hiring company has received the compensation value. If the above conditions
are fulfilled, then the amount is not included for taxation purpose and they are not taxable
income.
Answer of Question iii)
Cash or gift in kind received by individual does not form part of income component
according to Australian Taxation Office. Such component are exempted and they form
neither part of non-assessable income nor part of non-exempted income. When computing
income tax on an individual, value of small gifts received does not form part of computation
and hence they are excluded (Campbell et al., 2016). On other hand, some big gifts received
by individual would be assessed for income tax purpose in the event when they are able to
convert into cash.
Therefore, nightclub mangers of an alcohol suppliers has received free package of
Free Overseas holiday. Hence, for computing nightclub manager income tax, it is essential to
include the package received by him.

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Answer to Question iv)
Canoe club for buying additional canoes raised excess funds and this extra amount
was returned to their members. When calculating income tax, extra money raised for buying
canoes are not included in the same. The reason this part of funds would not be included in
calculating income tax is that, as they have not been raised as an alternative funds raised that
members provided. Funds raised was not for acquiring purpose and it did not display separate
requirement (Nossaman & Wyatt 2016).
Answer of Question v)
The Taxation Rulings TR 1999/17 includes the gains or gifts received by sportsperson
for performing fairly and due to their best performance on field. According to taxation rule,
the amount that is received by sportsperson as gifts or any cash received by them are subject
to taxation. In addition, if such receipts of gifts or cash accumulate form part of their income.
Therefore, as per normal taxation concept, payment received by Australian footballer by
Australian television for best and fair performance should be included in their income tax
calculation (Kingston, 2015).
Answer of Question vi)
Taxation Ruling of TR 95/22 depicts components such as allowance, reimbursing
employees and construction. Building of employees and construction include the following
components according to Taxation Ruling of TR 95/22.
 Carpenter, apprentice and trainees
 Labour involved in carrying out construction of building\
 Project manager in the construction site is engaged in constructing building and many
activities

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 Working supervisor in construction sites
There has been clear definition of expenses that would occur in building qualification
for building apprentice. Definition has been in context of building construction and labour as
compensation.
Answer of Question vii)
Deductions are authorized in context of shot-time expenses of an artiste person at the
time of calculating income tax.
 Some expenses for suggested meals
 Education people relating to software and modules
 Inclusion of travelling costs
 Fees incurred in providing short-term course relating to art subject
Only if the expenses in the course of art management is incurred for short time period,
then only the above discussed expenses needs to be deducted from calculating income
taxation. The amount that will not be included for purpose of deductions in taxable income is
the expenses that are incurred but they do not relate uniformly to purpose of taxation
(Davison et al., 2013).
Answer of Question viii)
According to Australian taxation law, the expenses that is incurred in work dresses
and make up by employer is not included for taxation purpose.as provided by artist, execution
of art by artists according to Australia Taxation office are considered for the purpose of
deduction. Individual performing arts as granted by Australian taxation office under the
taxation rule are:

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 Performing artists that are actor
 Performing artist who are musicians
 Performing artists who are singer
 Performing artists who performs in circus and dance
 Variety artists performing artists
The expenses incurred in this particular scenario would be allowed for deduction
purpose that will assist in shaping performing artist income tax if it is assumed that expenses
are in context of work make up and dressing.
Answer of Question ix)
It is generally considered that individual for his or her own private reason travel
between home and office. Nonetheless, for the purpose of deduction in this case, there are
specific provisions that can be emphasized as expenses that are incurred for travelling.
Allowable deductions are emphasized when a part of expenditure component are taken when
individual travel from home to office. This is applicable when travelling is partly official and
partly for official purpose. When the expenses are incurred only for official purpose, then
such expenses are mot for deductible allowances. In the given case, it can be assumed that
travelling by individual between home and office are mainly for official purpose and the
expenditure incurred are emphasized for determining or computing income tax (Miller &
Oats, 2016).
Answer of Question x)
Expense incurred by individual to travel between one employer and another employer
is taken for deduction purpose while computing income tax.

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While travelling between one employer and another employer, expenditures are
incurred. In current scenario, the travelling costs that is incurred between one employer and
another are not deductible for the purpose of taxation. The reason is attributable to the fact
that taxable office of Australia do not claim deductions for the expenses incurred for
travelling from one employer and another to be included in income tax computation (Raghu,
2014).
Answer to Question 2
For determining the income tax liability of income, the first and foremost thing that
needs to be determined is the residential status of individual. Therefore, for computing
income tax, it becomes essential to determine residential status whether individual is foreign
resident or he is an Australian resident. According to the Australian taxation law, if the
overseas student has enrolled in Australian universities for more than time period of six
months, then they should be considered for purpose of computing taxes. In the given case, it
can be seen that Manpreet is an international student who have enrolled in CQU in Australia.
Course, which Manpreet has enrolled into in Australian University, is for duration of more
than six months and hence, he should be considered as resident of Australia and should be
considered for computation of income tax (de Cogan, 2015).
International students enrolled in Australia course lasting for more than six months
are subjected for calculating tax as they are regarded as resident of Australia for calculating
tax. It would indicate following facts and they are as follows:
 Tax would be payable by such individual at the same prevailing rate as other residents
in Australia.
 Such person would also be entitled of receiving benefits of Australian taxation system
and this involves two or three benefits. They are paying lower rate of taxation as

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compared to other foreign residents and other is tax-free threshold. This would
involve only part of such individual is only for particular time in a financial year. Last
benefit that would be received are tax offsets.
On general term, Australians are required to make declaration of their eared income at
international level as well as in their own country on their Australian tax return. However,
international students are considered as temporary resident of Australia as they have
temporary visa. Temporary Australian resident are not required to declare their Australian
income tax return, as most of their foreign income are not considered for purpose of taxation
in Australia (Yin, 2017). Considering above facts, it can be said that Manpreet would be
taxed at Australian resident tax rate and credit can be claimed by them against Australian tax
for the part that is paid on foreign income.
Tuition fees are considered expenses that would be incurred by international students
pursuing course in Australia. Therefore, it is expected on part of students to be financially
prepared for bearing living costs and fees incurred on enrolment in any particular course. It is
strongly recommended to such international students to obtain a tax file number when
arriving in country. Students not having this tax file number would end up paying higher rate
of tax on income earned by them. It has been worthwhile for many students studying in
Australia to work part time and earning extra money. Tax-free threshold would be reduced
proportionally if such students were resident for less than full financial year (Harrow, 2013).
It can be explained with the help of an instance that students residing in Australia for six
months as their tax-free threshold would be entitled to $ 9100. Enrolment in course that is for
more than six months by overseas students as Australian resident for taxation purpose. If the
taxable income is above tax-free threshold, it is required by them to lodge a tax return. In the
event of tax paid by individual that is below tax-free threshold, then for receiving fund, they
are required to lodge a return. Trained volunteers of Australian taxation office are involved in

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running program that would assist low-income people in filling their tax return. Furthermore,
if course pursued by students are eligible for work related self-education expenses, then
laptops or computers would be required for carrying out study. In such case, students can
claim tax deductions on expenses incurred on purchasing computer or laptop and other items
such as printer. Some of eligible expenses on computer and printer that can be claimed for tax
deduction include repairing cost of computer, interest on loan amount that is borrowed for
financing the cost of such computer, printers and laptops. It also includes decline the
computer costs or depreciation associated with such equipment (Saad, 2014).
International students would be able to qualify for tax deduction of computers and
printers used for study purpose if the course enrolled into has sufficient connection with
current employment. Students will not be able to claim tax deductions for laptops and
computers concerning self-education if current income earning activities are not related with
the courses enrolled (Cao et al., 2015).
Student are eligible for computer tax deductions if along with studying and working
they are satisfying following criteria. Such criteria are listed below:
 There is improvement in knowledge and specific skills that are incorporated in current
employment
 Students are upgrading their qualifications concerning current employment.
 It is required to be shown by students that current course would led or they are likely
to lead an increase in income from employment.
 Course undertaken by students form part of traineeship when they are employed as
trainee.
Students under the following conditions cannot claim self-education expenses and they are
listed below.

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 When there exist no relevance between course enrolled by students and current
employment.
 When the courses in started for opening new employment field.
 Enhanced skills obtained by students would not be used or it will be partly used in
employment duties. However, current employment of student is related to his studies.
Furthermore, in relation to claim of self-deduction expenses, it is certainly possible to
split the claim. Splitting of claim is dependant upon the purpose for which computers are
used. Expenses would be claimed at higher proportion if they are used for self-education
purpose.
As depicted in case study, Manpreet for gaining experience in her chosen career
worked part time as an office assistant at an accountant’s office. While working, the
remuneration of Manpreet stood at $ 45000. Expenses incurred by him on carrying out
education a not considered for deductible purpose (Law, 2014). As stated by Australian
taxation law, that expenses relating to self-education can be claimed by individual if
individual has received taxable bond scholarship and the study is carrying for being engaged
in work. With current employment, there should be some beneficial interest in the course that
is undertaken for purpose of self-education. Following should be involved in the course for
including it in taxable income and they are listed below.
 The ongoing course taken by student or enrolled by student would help in increasing
the current employment income
 Course will help in enhancing and improving the skills possessed by individual that
would help in sharpening the skills required at current job or employment.

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 Therefore, expenses related to self-education or attributing to self education having no
bearing with current employment or if they are not related with present employment
should not be appealed by individual.
Expenses is considered for deduction purpose or deduction allowance according to
section 8-1 of the Income Tax Assessment Act if there exists considerable relationship
between activities that generates income and their associated expenses. Expenses that arise
from some private reasons and if they are incurred domestically, they are not considered for
the deduction purpose. Under section 8-1, it is ascertained that expenses would placate test if
it possess the features of generating income from undertaking activities as in the case of
Lunney v. FC of T; Hayley v. FC of T (1958) 100 CLR 478; (1958).
This particular view point is supported by the judgement that has been provided in
case Ronpibon Tin NL v. FC of T (1949). If the taxable income are able to be produced by
outgoing then they can be allowed for purpose of deducting taxable income. In the given
case, expenses that are incurred for self-education should not be considered for tax deduction.
It can be observed from the provided case that some expenses have been incurred by
Manpreet on purchasing printer and computer for educational purposes and additional
amount for purchasing mobile phone. Mobile phone has been purchased for dealing with
work related issues or matters. From the given case, if there exists sufficient relationship
between earning capacity and expenses, in that case, expenses are considered for the purpose
of deduction. For the deduction allowance, one of the essential character considering
expenses is that they should be of domestic nature. Domestic nature expenses should lead to
deduction allowance (Carlin, 2015).
Expenses incurred should be relevant or incidental for and leading to generate
income. Considering this, one of case can be discussed that allowed mangers to deduct

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expenses. As per case of FC of T v. M I Roberts 92 ATC 4787, mine managers were allowed
by court according to laid down principles in Maddalena to carry out deductions relating to
MBA. Therefore, considering this, for mobile phone, Manpreet can claim allowable
deduction. Following table depicts calculation concerning above question.
Computation of Assessable Income of Manpreet
For the year ended 2016/17
Particulars
Amount
($)
Amount
($)
Assessable income
Gross Salary 45000
Foreign Sourced Income
Income From Trust 10000
Total Assessable Income 55000
Allowable Deductions
Computer and Printer 2000
New mobile for work
purpose 500
Total Allowable
Deductions 2500
Total Taxable Income 52500
Tax on taxable Income 8609
Medicare Levy 1050
Low income tax offset 212.5
Total Tax Payable 9446.5

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