Laws of Taxation Assignment

Running head: LAWS OF TAXATION
LAWS OF TAXATION
Name of Student
Name of University
Author note
Course ID

1
LAWS OF TAXATION
Table of Contents
Answer to question 1..................................................................................................................2
Issues:.........................................................................................................................................2
Rule:...........................................................................................................................................2
Application.................................................................................................................................3
Conclusion:................................................................................................................................5
Answer to question 2..................................................................................................................5
Answer a:...................................................................................................................................5
Answer b:...................................................................................................................................6
Answer c:...................................................................................................................................6
Answer d:...................................................................................................................................8
Answer e:...................................................................................................................................8
References................................................................................................................................10

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LAWS OF TAXATION
Answer to question 1
Issues:
Tax liabilities of different receipts that are received by the taxpayer resulting from the
employment will be discussed in the case study.
Rule:
Some deductions are followed by the assessable income that are involved in the
income of the taxpayer will be discussed under “sec 6-5 (1)” which states that the
characteristics of income described that it must be income and it should be convertible into
money (Ford and Dibden, 2019). The section also describes that the assessable income are
included in the income in agreement and it is mentioned in the “ordinary concept”. An
ordinary income is a voluntary or unanticipated payment that is obvious and it is received by
the taxpayer in the employment. Under “sec 6-5 (1) ITA Act 1997” describes that a tip
received by the taxi driver is taxable and it should be treated as ordinary income. “Calvert
and Wainwright (1947)” noted about this in the section (Burton, 2017).
Fringe benefit can be provided by the employer to the employee for any personal
service and it should be taxable from the employer. It can act as a motivated factor for the
employee (Pasztor and Valent, 2016). The receipts that are originated from the personal
service of taxpayer’s and is relating to the receipt is amounted and treated as ordinary
income. Relation with the receipts are established through personal services like salary and
wages. “Moorhouse and Dooland (1995)” stated through their tax commissioner that the
amount received by the taxpayer direct or indirectly from the personal service of taxpayer is
defined as ordinary earning.

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LAWS OF TAXATION
Any taxable income should include any income excluding gifts that a person gets for
their personal services and this type of gifts should not be treated as taxable income of the
receiver. “Scott v FCT (1996)” noted that if any gift are given for certain services and matter
of appreciation, then it should not be treated as ordinary income and other factors regarding
this should be considered. Fringe benefit can be observed as a benefit given by the employer
to the employee during the tax year or relating to the tax payer. This definition is stated under
“sec 136 (1) FBTAA” and assumption regarding this are discussed in the section. This type
of benefit can be any interest in the real or personal property, facilities and privilege services
and also involves the benefit excluding salary which is given to the employee by the
employer in the relation of employment. The assessable value of benefit are the basis of FBT
and is should be paid by the employer with relation to the employment. Those benefit can be
direct or indirect and is related with the employment. As noted by the law court in “FCT v
J&G Knowles (2000)” that there should be a reason among the benefit and services and it
should be discernable and reasonable. Also is court described that there should be a rational
connection among the remunerations and services.
Any cash gift that is received by a person is not treated as ordinary income rather it is
amounted as capital receipts. “Hayes v FCT (1956)” described that, amongst the donor and
recipient, if there is any personal relationship then the pre-existing relationship will result in
the voluntary payment and should not be treated as voluntary earning. Any money which is
received from the family member due to any personal reason should not be treated as income
and these amounts are not assessable and treatable in the tax return hence it should not be
reported in the tax return.