LAWS20060 || Taxation Law
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LAWS20060 - Taxation Law of Australia (LAWS20060)
Added on 2020-02-24
LAWS20060 || Taxation Law
LAWS20060 - Taxation Law of Australia (LAWS20060)
Added on 2020-02-24
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Answer 1Case 1In the given case, business analyst employed by the consultancy firms receives Web jet frequentflyer points from travels which they make relation to their business related work. The paymentfor this travels are being made by the consultancy firm. The employees are channelizing thesebusiness expenses through their personal cards and enjoying the benefits of card point’swallpapers news without any tax liability. Australian tax authorities have shown their concerntowards the misuse of these points. As per the case laws, if any points has been received myemployee by making a business method expense, the employee will be eligible to pay fringebenefit tax in relation to these points. However, if there is a salary arrangement between theemployee and the employee, that any reward points that has been earned by an employee inrelation to business travel will form part of a salary, the same will be taxable in the hands of theemployee. (Tax ruling 1999/6 flight rewards)In the given case, the employees and the business analyst getting frequent flyer points for thebusiness related travels, thus in this scenario the amount of flyer points that my dear reply or thebusiness analyst will be treated as fringe benefits provided by employer to the employee and thusthe employer is eligible to pay fringe benefit tax on this amount.Case 2In the given case, the customer has damaged a crane which has been provided to him by a cranehire company. The customer paid claim to the company for the damaged caused by him. Theamount so received by the company for the claim amount will be treated as income in the handsof the company. The Crane is an asset for the company thus the same will not be reflected in the
income tax return. But being the same has been damaged and the company has received theclaim in its respect, the same will be treated as income and thus will be taxable in the hands ofthe company. Considering the provision discussed above, the amount of claim received by the company will betreated as taxable income and will be taxed in his hands. (ATO)Case 3In the given case, a manager of a nightclub has received the free holiday package from asupplier. As per the provision of Australian tax laws, if any gift or benefit that has been receivedby an employee which is of a small amount in relation to his birthday or at a family event willnot be taxable in the hands of the employee. On the other hand, if a large amount has been paidto an employee or to a contractor from the employer or from through an indirect source inrelation to his employment will be treated as taxable income in the hands of the employee. The holiday package received to the manager of the nightclub is in relation to his employmentand thus will be taxable in the hands of the manager. (ATO)Case 4In the given case, a caneo club has raised funds from its members for the purpose of purchasingcaneo. However the fund that has been raised for the excess, thus the club decided to refund theexcess amount that has been raised from its members. As per the provision Australian tax lawsthe Asset and liabilities amount will not be reflected in income tax return of a company or of anindividual. The amount raised by the club from its members, is liability for the club and thus thesame will not be reflected in income tax return for the club. Being the club has decided to return
the excess amount, the club is reducing is liabilities and the same has nothing to do with theincome generation activity of the club. There has been no inclusion or exclusion of income inrelation to the above transaction that has been made by the club for refund of excess amount thathas been raised from its members. Considering the above provision, the return of excess amount has been raised by the club fromits members will not direct any income tax liability neither in the hands of the club nor in thehands of its members, (ATO)Case 5In the given case, a television station has paid a certain amount to Australian footballer afterbeing named as the best footballer in the Australian Federation League. The amount that hasbeen paid by the television station to the footballer is a reward for his success. As per theprovision of Australian tax laws, the reward that has been received by the footballer is a cashprize award for its good performance in the Australian Federation League. The amount so paidby the television station is not a relation to its business. As per the provision of Australian taxlaws, for an expense to be allowed as deduction in the books of a company it is important that thesame should be spent in relation to the business activities. The amount that has been paid by thecompany to the Australian footballer is not a relation to any business activity thus the same willnot be allowed as deduction for the television station. On the other hand, the cash price soreceive by the footballer will be treated as income in the hands of the sportsman and will betaxed in his hands. (Tax ruling TR 1999/17)Case 6
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