Taxation Law Question Answer 2022

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Author Note

TAXATION LAW1
Q. 1
a) The topic covered by TR 2019/11 is the time when a company would be rendered to carry out
an activity, which depicts business.
b) The legal provisions that has been contained in div 30 of ITAA 972, deals with the
deductibility of the contributions as well as gifts.
c) The highest tax rate that will be applicable 21 individual who is a resident taxpayer for the year
2019-20 will be the amount of $54097 with an additional of 45% rate over any amount exceeding
$1800003.
d) Car as well as motorcycle is required to be treated as an exempt from being subjected to capital
gain taxation as per the provisions contained in s 118.5 of the ITAA 974.
e) Any asset of capital nature that has been owned by the taxpayer but has been destroyed or has
been lost from here would be required to be dealt with as a CGT event of C1 category as per the
provisions contained in s 104.20 of the ITAA 975.
f) The threshold that has been recently applicable for the resident individual for being tax free
with respect to his assessable income is an income amounting below $18200.
g) The main legal principle that has evolved with the decision of the High Court in the case of
Hayes v FCT (1956) 96 CLR 476 was the fact that any amount that has been received by the taxpayer
against any of the services he has rendered in the past would be required to be treated as a CGT gain for
the purpose of assessability. In this context, it can be stated that the amount received by a person being an
employee from his employer with respect to the services of employment he has rendered previously and
1 TR 2019/1
2 The Income Tax Assessment Act 1997 (Cth), div 30
3 www.ato.gov.au, "Individual Income Tax Rates", Ato.Gov.Au (Webpage, 2019)
<https://www.ato.gov.au/Rates/Individual-income-tax-rates/>.
4 The Income Tax Assessment Act 1997 (Cth), s 118.5
5 The Income Tax Assessment Act 1997 (Cth), s 104.20
6 Hayes v FCT (1956) 96 CLR 47

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received of the same has been accrued at the past would be included in the assessable income of that
employee as a capital gain. However, for the purpose of deciding upon a situation, where there is a
dilemma between the treatment of a receipt that has been received from past employer for the
employment services rendered previously, whether to include the receipt with the capital gain or with
respect to ordinary income. All the income has been received for the application of personal exertion is
required to be treated as an ordinary income, however, in case of receipt from former employer, where the
receipt has already been accrued but the same has not been provided to the taxpayer. This would render
the receive to have been acquired the nature of a capital asset as the same has been received by the
taxpayer as a lump sum amount on a subsequent period from that of the accrual of the same.
h) Two classes of income can be earned by an individual taxpayer, as per the categories of taxable
income that has been provided in the taxation law. The first income that needs to be recognised for this
purpose is the ordinary income. The other taxable income would include the statutory income. The
income that can be construed as a income from the general definitions as well as common contentions
apprehended by the public not having adequate legal knowledge would be treated as ordinary income. For
the purpose of assessing such incomes no stringent rules needs to be complied with as provided by the
statutes. In the absence of any express mention within the statutes related to taxation, an ordinary income
would be assessable income. Hence, it can be stated that any income that can be rendered as an income
through the ordinary concepts existing would be treated as an ordinary income. Again, any income that
has been expressly provided in the statute relating to taxation to be an income of a particular nature is
required to be treated as a statutory income. Statutory income would only be taxable if the same has been
supported by a legal provision contained in a statute. This form of income does not follow from the
ordinary concepts but needs statutory recognition for the purpose of being assessable as an income7.
i) The Medicare Levy and the Medicare Levy Surcharge implies two additional rates that are
imposed upon the taxpayers eligible for the same. There are certain taxpayers who are required to make
7 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).

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payment with respect to do additional taxes over the income tax payable by them. These include the
Medicare Levy and the Medicare Levy Surcharge. The Medicare Levy has been introduced for the
purpose of finding the Medicare that depicts the public health system of Australia. The same is to be
imposed upon the taxable income of an individual. The same is to be paid at a flat rate of two percent.
This tax is imposed by the Medicare Levy Act 19868 and the ITAA 369. Again, Medicare Levy Surcharge
has been introduced for the purpose of encouraging the individual taxpayers earning higher incomes to
make payment towards private health insurance for the purpose of reducing the burden upon the
Medicare. This form of taxation is only applied to the individual taxpayers who are not having any private
health Insurance. This levy is required to be imposed upon the total of the taxable income as well as
Fringe Benefits pertaining to an individual taxpayer. Depending upon the income of a taxpayer the rates
of this form of levy may vary between 1%, 1.25% and 1.5%10.
Q.2
As per the provisions contained in s 6.1 ITAA 3611, three tests are required to be involved in the
assessment of the residency of an individual within Australia. The domicile test, resides test, super
admission test as well as the 183 day test are required to be applied for the purpose of assessing the
taxability of an individual living in Australia or has any attachment with Australia. However, there are
two concepts that can be found in this section while discussing regarding the abovementioned tests.
Although, the two concepts namely usual place of abode and permanent place of abode sound similar but
the same has been assigned with distinct meaning as per the contentions of the taxation law prevailing in
Australia. Both the concepts has a similarity with respect to the concept of place of abode. For the
purpose of assessing these two concepts the meaning of the term place of abode is required to be clarified.
The concept of place of a boat is required to be analysed under the legal rule laid down in the decision of
8 The Medicare Levy Act 1986
9 The Income Tax Assessment Act 1936 (Cth)
10 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).
11 The Income Tax Assessment Act 1936 (Cth), s 6.1