Analysis of Taxation Laws and Payment Processes

The assignment analyzes taxation laws and payment processes, highlighting the need for fair judgement and modifications to improve the process. It covers various taxation laws, including income tax assessment acts, custom tariff acts, and Commonwealth Authorities Acts. The document also explores the impact of these laws on businesses and employees, emphasizing the importance of understanding tax knowledge, complexity, and compliance.

TAXATION LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAJOR PROJECT..........................................................................................................................1
Category 1 – Assessable Income............................................................................................1
Question 1...............................................................................................................................1
Susie.......................................................................................................................................1
Question 2...............................................................................................................................3
Baz Baxter..............................................................................................................................3
Category 2 – Allowable Deductions.......................................................................................5
Question 3...............................................................................................................................5
Carumba Ltd...........................................................................................................................5
Question 4...............................................................................................................................7
Waterside Pty Ltd...................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The taxation law can be levied by the governments of Australia as it includes various rules
and regulations on the several cases that are going to be solved in this report. Different laws
which are imposed on the purchase and sales of the product. The breach of any contract, the
import and export of various goods. These can be followed by the several sections that will be
fruitful in giving the proper judgement over the cases. The judgement must satisfy all the parties
who are included in the contract and agreement. The various case has several differences in their
issues and laws regarding it.
MAJOR PROJECT
Category 1 – Assessable Income
Question 1
Susie
Issues:
 Payments made to Susie around $100,000 which is not refundable royalty
amount.
 No sales made during that period the royalty amount is the only amount which is
ever gain by Susie.
 Malaysian company wanted to credit the royalty paid to Susie.
Law:
 Income tax Assessment Act, 1936 subsection 6(1). (s 6-10 (4))
 Common Law Royalty. 128B(9B)1
 Pape v Commissioner of Taxation [2009] HCA 23
Discussion:
Susie as an inventor of various machines which are most weird and amazing. She has
invented the gardening equipment named "Dynamow" a lawnmower which has features of auto
activation with the voice commands. Susie gains the patent right over it and signed the
agreement with a Malaysian company s6-1 ITAA36. Under the licensing agreement, she has
agreed to manufacture and produce the Lawnmower for Malaysian firm on which she has been
1
Income tax assessment act 1997
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paid $40 for each mower 128B(9B). The organisation has made payment to her around $100,000
on behalf of royalty which has the agreement of not refundable advance over royalty. Later the
entity wants to get the amount back and has entitled for crediting the royalty (2B)(b)(ii)2. During
that period, there was no production made by Susie and no transaction over sales occurred in the
company. There were no gains regarding the selling of any Mower. The amount of $100,000 was
the only payments ever consumed by Susie. Recently in the current year under the licensing
agreement if She made the sales of 200 mower which is in context with the same rates applied on
each mower of $40. The sum of the amount can be gain by licensee around $8000. As per the
case, the law can be implied of Australian Acts on royalty and property acquisition s6-1
ITAA36. The case can be same as Pape v Commissioner of Taxation [2009] HCA 23.
2
Income tax assessment act 1936
2

Susie has received the sum of royalty amount that is non-refundable and she has been
signed under consideration of Malaysian company. When both the parties were agreed in this
context there must be an implementation of various laws that will provide a fair judgement for
both the parties (s 6-10 (4))3. The licensing agreement includes the royalty methods to both of
them then the case can be gone under the income tax assessment act which is helpful in giving
the proper judgement regarding income generated by her s6-1 ITAA36. The common law royalty
can be libel on the payment made for things that can be manufactured and sold or on the
transaction of each performance. Thus, Susie has to pay an amount of royalty on the basis of
sales made by her. These royalties can be made in the consideration of something in return like
monetary of non-monetary returns.
Conclusion:
It is to be concluded that Susie has acquired the royalty amount of $100,000 which is
non-refundable and she will return the amount with the help of gains she made by selling the
mowers in under the licensing agreement with the Malaysian company(s 6-10 (4)). She will pay
the amount as she gains from the selling in instalments to the organisation. Thus, a firm is not
liable to credit the money back because it was mentioned in the agreement that it is non-
refundable. Susie will pay the amount taken from the company but as per the dealings were done
by her (2C)(b)(ii). The sales will generate the amount of revenue, there must be an increase in
the rates imposed on her each mower this should be done adequately and there must be proper
payments done by her in context to meet the liabilities levied.
3
Income Tax Assessment Act 1997.
? Section 6-5 Income Tax Assessment Act 1997
? Division 11A (sections 128AAA to 128X) Income Tax Assessment Act 1936
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Question 2
Baz Baxter
Issues:
 Baz Baxter signed the agreement on behalf of the current club that he will not go
to play Rugby for the duration of two years with any other club which in return he
will acquire $40,000.
 Conflicts occurred with his current club in the same year and he has agreed on
playing with the Gold Coast Rambos.
 Rambos will pay for releasing the Bax with the contract he has signed around
$20,000 and to cover the cost of shifting he will be paid $10,000.
Law:
 Income tax ACT 1997 (s 6-5 (2))
 Contract Act
 South Australia v commonwealth law
 New South Wales & Ors v Commonwealth of Australia [2006] HCA 52
Discussion:
Baz Baxter is the leading and successful Rugby player of Queensland's top teams. He had
agreements with his current club that he will not go to play for any other club for the duration of
two years. Gold Coast Rambo club has proposed the offer in front of Baz that they invited him to
play matches on behalf of their club. He has refused the agreement and continues to play with his
current group. During that same year, he has conflicts and arguments with the club members and
he has decided to leave them. He then accepts the offer from Rambo club and showed his interest
to play with them. This can be the breach of contract with his current club that he has signed for
not playing for two years with other groups. In this context, Rambo is going to pay the release
amount of $20,000 for Baz Baxter. They will also go to pay the cost of his moving from one
team to another which is approx. $10,000. The income tax law can be levied on Baz as he has
been gaining $10,000 as his moving charges (s 6-5 (2)4). The contract act will be beneficial for
4 Income tax Assessment act 1997
4

the club or Baz in the context of breaching the contract by their personal disputes. Rambo club
has their personal interest with this case as they can gain whatever amount they have paid for it.
Baz is the very talented player as he has acquired a good reputation in the Rugby game so it will
be beneficial for this club to gain a good amount of profit with the help of matches played by
Baz. Rambo club has owned all the expenses and making payments on behalf of the player
which shows their personal interest as they will recover the amount by organising various
matches of this player. They will be recover these amounts from Baz. It relates with the case of
South Australia v commonwealth law which relates with the cases faces by federal legislation
over income taxes and with New South Wales & Ors v Commonwealth of Australia [2006] HCA
52.
Conclusion:
The conclusion can be made with reference to that there is a breach of a contract. Baz had
a conflict and leave the club but the contract was signed before is still valid. After the completion
of this contract, the player will be able to play with other companies. Thus, in reference to this
context, the Gold Coast Rambo has paid the penalty and shifting charges on behalf of Baz. Later
on, Baz will be libel to credit the amount to Rambo club. Hence, Baz is libel for the breach of
contract and also his current club. Both the individuals are libel to pay the charges not any single
is responsible for it.
Category 2 – Allowable Deductions
Question 3
Carumba Ltd
Issues:
 Mexican company Carumba Ltd produces the parts for its subsidiary company at
Australia and take advantage of all the gains made on the sales.
 It can be an economic loss for the local employment, so the government of
Australia imposed a fixed annual quota on the number of imports.
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 To give the challenge on this new rule of government Gonzales expended
$750,000 on the advertisements for the racing bikes
Law:
 Custom tariff act 1995 (Part 2 duties of customs (s 15 & 17))5
 Medley pharmaceuticals Ltd. v. CCE& C., Daman 2011 (263) E.L.T. 641 (S.C.)
 Goods and service tax (2C)(b)(ii)6
 CGT ACT Under section 104.5 And (s104-110)
Discussion:
Mexican company Carumba Ltd the parent company of Gonzales Ltd which is a
subsidiary company at Australia. For the new racing bike Speedy Gonzales, the company
imports some part which is manufactured by the parent company. Thus, all the gains occurred on
this racing bikes was enjoyed by the Mexican company that brings the threat to the local
employment of Australia. It directly attacks the employment opportunities and the economic
condition of the local country. In proportion to control this risk, the government made new
variations in rules of importing goods Under section 104.5. They have fixed the quota on
importing component parts of racing bikes in perception with control the monetary transactions
that will be helpful in domestic employment development. As to give challenge on this new
reform Gonzales has spent the amount of $750,000 on the promotion of its racing bikes in
Australia they have started advertising the bikes over social media which produces the bull in the
demands for these bikes. Thus, this promotional technique attacks the policies made by the
government. The company has made five times more expenses than it usually spends over the
advertisements of its products. For the improvement of the domestic organisation, they need the
deduction in the expenses and extension in the quota imposed by government (2C) (b)(ii). Hence
the Gonzales is libel to pay the import duties on the fixed volume of imports. The taxation
includes the rate imposed on the imports of any product from any country (s104-1107). These
5 Custom tariff act 1995
6 Income tax assessment act 1997
7 Income tax assessments act 1997
6

will be fruitful for the government in raising the funds and controlling the monetary system in a
country. Goods and service law will be a libel on the transportation of the goods it contains all
the details about the volume and prices of the organisational products same as the case of
(Medley pharmaceuticals Ltd.v. CCE& C., Daman 2011 (263) E.L.T. 641 (S.C.)) . The parts
which are going to be imported by the Mexican company which includes all the information
regarding the bills to be paid, the volume of the products, manufacturing unit, the material used
in the production of such article. According to part 2 of the custom tariff act 1995 section 15
denotes duties imposed by federal legislation of Australia which will indicate mexican company
to pay the duties over importing the goods in Australia and as per section 17 of the same act
represents rate over goods and services to be imported which are legally fixed by federal
legislations. As per CGT act sections 104-110 denotes the capital gains or deduction can be made
by an taxpayer on the contrary transactions. Here in this case the capital gains made by Mexican
company which is taking the maximum monetary advantages from Australia that will be taxable
under CGT act.
Conclusion:
It is to be concluded that Gonzales Ltd has to focus on manufacturing the products within
the national boundaries and should promote the domestic employment and make the economy
better as to sell the racing bikes (s104-110). The taxes must be levied on the import of products
and it must be discounted for the domestic company. The maximum percentage of taxes should
be paid by the exporting country. The government of Australia should increase the import quota
as the company can be able to bring more parts, this will be fruitful in gaining the good amount
or profit (s.108-20(2)). Here the government should increase the charges or rates over the duties.
The duties can be paid by both the companies but the proportion of paying the taxes should be
lower at the domestic side it will help in improving the monetary balance of the country. It can
be concluded that Mexican company has to make payments of taxes as per the legislative acts
related with capital gains act sec 104-110, custom duty tariff act 1995 and the case of (Medley
pharmaceuticals Ltd.v. CCE& C., Daman 2011 (263) E.L.T. 641 (S.C.))
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Question 4
Waterside Pty Ltd
Issues:
 Waterside Pty Ltd manufactured the shipbuilding in Brisbane and is going to be
wound up due to decline in the sales.
 All assets were disposed to its subsidiary company Waterside Investments Pty
Ltd.
 Water Investments Pty Ltd has made payment of worker compensation claims
Law:
 Employee rights (under section 9 or 10)8
 Commonwealth Authorities act 19799 (northern territory pay-roll act)
 McDonald 2016 v Fair work commission 1976)10
 South Australia v Totani [2010] HCA 39
Discussion:
Water Pty Ltd is known for its services provided in Brisbane it is a manufacturing unit
which builds the ships. On the occurrence of the financial crisis, the organisation has the
downturn in it business and had a great loss. The assumptions can be made that this will cease
before the festive season of Christmas. After the wound up of this company, it has invested in
launching one subsidiary company named at Waterside Investment Pty Ltd which will be helpful
in proceeding the selling of products (under section 9 or 10). Thus, there is deep contraction
between both the firms as the subsidiary company pays the employees compensation claims
which can make the settlement after the wound of this parent entity. The laws can be implied on
the worker's compensation claim. The organisation is bound to pay it employees before the
ending up the operations. There must be proper laws regarding the satisfaction to the employees.
If the parent company is wounding up than it is the responsibility of them to make payment
before they end up their business operations. Hence, the various acts and laws must be followed
8 Income tax assessments act 1997
9 Commonwealth Authorities act 1979 (northern territory pay-roll act)
10 Fair work commission 1976
8

by the organisations in claiming the employee's remuneration. Workers worked in the company
and served the society with their efforts there must be fair judgement in regarding the
responsibility of the organisation in making the payments (Taxation & your employees. 2017).
No company can end its operation before making payments to it stakeholder or the employees.
These are the main liabilities of the entity which has to be done properly. The commonwealth
authority act 1979, facilitates equality in providing pay-offs to the employees and this will help
the workers in having the proper remuneration. These relates to the case of McDonald in 2016
and South Australia v Totani [2010] HCA 39.
Conclusion:
Waterside Pty Ltd is the parent company of Waterside Investments Pty Ltd hence the
decision was taken by the subsidiary company in regards to payments to be made to the workers
of this organisation. The business is done by the parent company in context with manufacturing
and building ship and related products. Was not performing well as the company has to meet to
the declining phase where the business is totally winding up. Hence the managers of the
organisations made payments to the employees who were serving in the operations of the
company. The subsidiary company is going to be launch after the wound up this parent company
they have claimed against the payment is not the responsibility of the newly launched company
as it even does not perform in the market and has not acquired any profit or revenue. There will
be no payments made by the subsidiary company as it must be paid by the parent company
before ending up the business. The various laws to be followed by the government in this context
to provide the fair judgement to all the parties.
CONCLUSION
As per the above cases, it is to be concluded that the government of Australia must make
changes in their rule and regulations imposed in the various laws. There must be fair judgement
regarding all the different issues. Knowledge of the laws is to be provided to individuals who are
entitled in this context. There can be a use of various laws in consideration with the import and
export of the goods and services. The duties levied on each article must contain the details about
the manufacturer and the buyers of such parts. Other taxation laws are regarding the income gain
9

by various people through various sources. It is to be suggested that the laws must be modified
and there must be a fair judgement of all the issues. The payments made to release the player Baz
from the breach of the contract and his moving charges by the other club. The payments to the
worker's remuneration can be claimed by the subsidiary company Water Investments Pty Ltd.
Thus, in this context, there must be changes in the law as they can improve the process of
payments made by them.
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