HI6028 Taxation theory, practice and law Question 2022

Running head: HI6028 TAXATION THEORY, PRACTICE AND LAW
HI6028 Taxation theory, practice and law
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HI6028 TAXATION THEORY, PRACTICE AND LAW
Table of Contents
Question 1:...................................................................................................................2
Identifying the material facts regarding The City Sky Co goods and services tax
(GST) consequences:...................................................................................................2
Identifying and analyzing the legal issues / legal question and relevant laxation law: 2
Question 2:...................................................................................................................3
Identifying the material facts regarding the capital gain tax (CGT) consequences of
Emma’s transactions:...................................................................................................3
Identifying and analyzing the legal issues / legal question and relevant laxation law: 5
References and Bibliography:......................................................................................7

HI6028 TAXATION THEORY, PRACTICE AND LAW
Question 1:
Identifying the material facts regarding The City Sky Co goods and services
tax (GST) consequences:
The Good and Services Tax (GST) is considered to be one of the major
components of tax revenue that is used by the Australian Tax Organization\ (ATO)
for accumulating the relevant tax on the goods and services that is provided by the
organizations. The GST tax calculations have both credit input and output, where the
companies need to maintain adequate level of track record for detecting the tax GST
that they are liable to pay or is owed by the ATO. Th GST credit input is one of the
measures, where the companies are able to claim the overall GST amount, as
refund for the services in goods used for supporting their operations. This method of
GST credit helps the organizations to maintain a fair value of tax that needs to be
paid to the ATO at the end of each financial year (Ato.gov.au 2019).
The analysis of City Sky Co case study has mainly indicated about their
operations, which has been conducted for detecting the overall GST input credit that
the organization intends to get from its overall transactions. The case study has
indicated that the main operations of City Sky Co is to buy plots of vacant land and
then conduct development activities to building new buildings or sale. This company
has recently purchased a block of land and intends to build 15 apartments.
Moreover, City Sky Co has also used services from a lawyer, which amount to
$33,000 for the construction purposes.
The analysis of the case study has mainly initiated that City Sky Co is not
viable to collect relevant GST credit input from their purchase of the vacant land. In
addition, the GST credit input credit is also not collected from the overall
development expenses that is incurred by the company. The development cost and
land cost are considered to be under the GST black credit, where the companies are
not able to collect the required level of GST credit input from their transactions. The
analysis has mainly indicated that there is not GST credit initiated for the purchase of
land, as it does not fall under goods or services (Ato.gov.au 2019). In addition, the
overall expenses on the development cost is also not considered in GST input credit,
as the GST law indicates that any expense incurred on development of land is not
considered as a GST expense and therefore no GST credit input is initiated.
However, the expense of the services of the lawyers is considered under the GST
credit input, where the City Sky Co is able for a refund on the total GST paid to the
lawyer (Ato.gov.au 2019).
Identifying and analyzing the legal issues / legal question and relevant laxation
law:
There are certain case laws and legal actions that were taken by the ATO
regarding the GST credit input claims that was made by companies to the develop
their property. The case and legal actions are depicted as follows.
Companies Claims from company Legal Actions
MBI Properties Pty Ltd GST-free supplies claimed
for the constructing the
hotel (Chrissievers.com
2013)
GST credit input on land
development is not
allowed under the Rule
39.32 of the Federal Court
Rules 2011
Bryxl Pty Ltd GST input tax credits
claimed for the land
development in respect of
certain acquisitions.
GST credit input on land
development is not
allowed under the Rule
39.32 of the Federal Court