Income Tax Assessment Act 1997 (ITAA) | Taxation Law Assignment
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Added on 2020-04-07
Income Tax Assessment Act 1997 (ITAA) | Taxation Law Assignment
Added on 2020-04-07
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Running head: TAXATION LAWTaxation lawName of the studentName of universityAuthors note
1TAXATION LAWTable of ContentsAnswer to Question 1.................................................................................................................2Laws:..........................................................................................................................................2Applications:..............................................................................................................................3Answer to Question 2.................................................................................................................4GST Act, 1999...........................................................................................................................4Big bank operations:..................................................................................................................5Computation of Input tax credit:................................................................................................6Answer to Question 3:................................................................................................................6Criteria for claiming offset:........................................................................................................6Assessable income of Angelo:...................................................................................................7Answer to Question 4:................................................................................................................9Calculation of net income for partnership for the income year:................................................9References:...............................................................................................................................12Answer to Question 1.
2TAXATION LAWLaws:Income tax assessment Act 1997 is one of the main statues for calculating income taxand an act of Australian parliament. Under the provision of section 8-1 of the income tax assessment act, 1997, some ofthe general deductions are provided that are listed below:Any loss or outgoing can be deducted from assessable income to the extent that Loss is incurred in conducting business for the purpose of producing and gainingassessable income. Loss is incurred in producing and gaining assessable incomeHowever, under this section loss or outgoing cannot be deducted to the extent that:Loss or expenses incurred is of domestic or private natureOutgoing or loss is of capital natureTax payers are prevented from deducting as per the provision actExpenses are incurred in relation to producing or gaining exempted income tax on netassessable non-exempt income (Miller and Oats 2016). Under section 8-1, for loss or outgoing, a taxpayer is accordingly entitled to generaldeductions. This is applicable if the amount of expenses or losses satisfies none of the fournegative limbs in subsection 8-1(2) and one of the two positive limbs in subsection 8-1(1). The working of taxable income is provided under section 5.15 of income taxassessment act, 1997. Taxable income can be worked out by given formula as below:Taxable income= Assessable income- DeductionsThis involved adding up of all assessable income of year and then adding updeductions for income year. In last step, deductions are subtracted from assessable income.
3TAXATION LAWTherefore, it is stated under section 4-15 of income tax assessment act, 1997 that calculationof taxable income from assessable income is done by deducting allowable expenses. Undersection 8-1(1) of the ITAA 1997, taxpayer can claim deductions for the items that are listedabove or criteria given above. Deductions under section 8-1(1) of the ITAA 1997for thegiven situations are discussed below.Applications:In the first situation, an individual for moving machineries to a new site incurs cost.Deductions relating to expenses incurred for machinery will be considered undersection 8-1 when usage of machinery helps in generating income that can be taxed(Bankman et al. 2017). This can be explained with the help of a given case whererelocation of plant involved expense that are not allowed for deductions as capitalexpenditure expenses. Granite Supply Association Ltd v Kitton(1905) and Smith vWestinghouse Brake Company(1888) is a case that lead to relocating of plants thatinvolve expenditures wold not be used for deduction as the capital nature expenses. Second case is incurring of cost that is involved in revaluing assets for effectinginsurance cover. Under section, 8-1A of ITSS 1997, cost that is involved in assetrevaluation is not regarded as considered for deductions and thereby it is not treated asdeductible expenses (Lang et al. 2015). Third situation is about legal expenses that is incurred by an organization foropposing petition in winding up. It is provided in section 8-1 of the act, 1997 thatexpenditure incurred by organization in lawful proceedings regarding filing ofpetitions for opposing the winding up. Last situation deals with number on matters on which legal expenses are incurred byorganization. These involve discharging of mortgage, conveyance and general legaladvice relating to the business of clients. An organization has to incur expenses for
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