Income Tax - ITAA 1997 | Case Study

Running head: TAX
Tax
Name of the Student
Name of the University
Author Note

TAX1
Table of Contents
Question 1......................................................................................................................2
Identification of Material Facts.......................................................................................2
Identification and analysis of Legal Issues.....................................................................2
Application of Tax Law...................................................................................................3
Conclusion......................................................................................................................4
Question 2......................................................................................................................4
Material Issues...............................................................................................................4
Relevant Laws................................................................................................................5
Application of Legal Facts..............................................................................................5
Conclusion......................................................................................................................6
References.....................................................................................................................8

TAX2
Question 1
Identification of Material Facts
The main issue in this case is to calculate the assessable income of Emmi, who
is studying at Holmes Institute and also working part-time in the Crowns Melbourne
Restaurant. The main issues in calculating the assessable income of Emmi are the
identification of the receipts which can be classified as a part of the income earned by
her and the extent to which tax can be applicable on them. The most significant receipt
by Emmi is the $25000 earned by her from working in the Crown Melbourne
restaurants. She also received tips worth $335 in cash from the customers visiting the
restaurant. As a part of the Christmas celebrations, she got a perfume from her
employer which was valued around $250. However, the issue with the perfume is that it
is not used by her and given to her mother. The owner of the restaurant that she works
in pays for a monthly entertainment event. The meals consumed by Emmi here are
worth $380 and are considered as a reward for her hard work by her. She also received
a Christmas present from her father worth $15000.
Identification and analysis of Legal Issues
The assessable income of an individual consists of both ordinary income under
s6-5 of ITAA 1997 and statutory income under s6-10 of ITAA 1997 (Ato.gov.au. 2020).
For an Australian resident, the assessable income of the individual consists of all the
income derived by them from all sources in Australia. Salaries, wages and interest are
all types of ordinary income covered under s6-5(1) of ITAA 1997. Hence, receipts of
these nature form a part of the assessable income. As held in Penn v Spiers and Pond
Ltd., payments of tips by customers are voluntary contributions and are provided based