Income Tax Assessment Act (ITAA) 1997 Taxation Law Assignment
Added on 2020-04-07
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Running head: TAXATION LAWTaxation LawName of Student:Name of University:Author’s Note:
1TAXATION LAWAnswer 1:Answer to requirement 1:Issue:The situation at present considers the fact that the cost incurred in moving machinery to anew site can be thought of as permissible deductions or not in compliance with the section 8(1)of the ITAA 1997. Laws:a.“Section 8-1 of the Income Tax Assessment Act 1997”b.“British Insulated & Helsby Cables”Application:In compliance with the of -1 of the Income Tax Assessment Act 1997, the cost which isincurred in the location of the machinery to a new site represents the nature of the capital natureand no sort of permissible deductions is allowed in case of this particular scenario. Due todepreciation reasons, the movement of the machinery represents a small change cost and it isstated that it will be allowed as permissible deductions under the section 8(1) of the Income TaxAssessment Act 1997.The major reason for putting importance in the expe4nses for the purpose of permissibledeductions results from the daily business operations.
2TAXATION LAWBased on the British Insulated & Helsby Cables verdict the involved cost in thetransportation is characteristic of the increasing benefit on the business related premises due toshift of the depreciable assets.According to the Taxation Ruling of TD 93/126, the machinery installation and thebeginning of the business functions the occurrence cost in bringing the machine for the completeoperation is to be considered as revenue. It is clearly inferred from the above situation that thelocating of the machine to the new site is to be treated as non-allowable deductions (Reaves andBauer 2012).Conclusion:The obtained cost in movement of the machine to a new site is representative of themovement of an asset from a particular place to another. It is also noted that it is to be consideredas capital expenditure (Posner 2014). In connection to this the permissible deductions will beallowed in compliance with section 8(1) of the Income Tax Assessment Act 1997. Answer to requirement 2:Issue:The situation helps in understanding if the revaluation of the assets to affect the cover ofinsurance would be viewed as allowable deductions in compliance with the “section 8(1) of theIncome Tax Assessment Act 1997”.Laws:a.“Section 8-1 of the Income Tax Assessment Act 1997”
3TAXATION LAWApplication:It is evident from the discussed scenario at present that the expense possessingassociation with the fixed assets makes it necessary to determine whether such expenditures haveoccurred in the revelation acquired in increasing the revenue producing capacity whiledetermining the deductions. It is also to be seen whether it is used in just the asset protection(Scholes 2015).In case the latter helps in the benefit of the temporary nature it is possible that theexpenditure is probably repetitive and needs to be treated as allowable deductions. This shouldbe considered in compliance with the section 8-1 of the Income Tax Assessment Act 1997. Thisis done usually as the occurred expenses are basically repetitive in nature (Zelenak 2012).Conclusion:It can be concluded that the cost that leads to the cover of the insurance is to beconsidered ads permissible deductions and it is to be considered so under the “section 8-1 of theITAA 1997”. Answer to requirement 3:Issue:The situation helps in bringing to the fore the issue of whether the legal expendituresincurred by the company in opposing the petition for the winding up would be considered withdeductions with reference to the “section 8(1) of the ITAA 1997”.
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