Australian Taxation Law Case Study

This assignment presents a case study of Big Bank Ltd, examining their advertising expenditure and the potential for claiming a Goods and Services Tax (GST) input tax credit. Students must apply Australian taxation law principles, including GSTR 2006/13, to determine if the expense qualifies for credit based on its purpose. The analysis should reference relevant legislation and case studies to support the conclusion.

Running head: PRINCIPLES OF TAXATION LAW
Principles of Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

1PRINCIPLES OF TAXATION LAW
Table of Contents
Answer to question 1:.................................................................................................................3
Answer to scenario 1:.................................................................................................................3
Issue:..........................................................................................................................................3
Legislations:...............................................................................................................................3
Applications:..............................................................................................................................3
Conclusion:................................................................................................................................4
Answer to Issue 2:......................................................................................................................4
Issue:..........................................................................................................................................4
Legislation:.................................................................................................................................4
Application:................................................................................................................................4
Conclusion:................................................................................................................................5
Answer to scenario 3:.................................................................................................................5
Issue:..........................................................................................................................................5
Legislation:.................................................................................................................................5
Application:................................................................................................................................5
Conclusion:................................................................................................................................6
Answer to scenario 4:.................................................................................................................6
Issue:..........................................................................................................................................6
Legislation:.................................................................................................................................6
Application:................................................................................................................................6

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Conclusion:................................................................................................................................7
Answer to question 2:.................................................................................................................7
Issue:..........................................................................................................................................7
Legislation:.................................................................................................................................7
Application:................................................................................................................................8
Conclusion:................................................................................................................................9
Answer to question 3:...............................................................................................................10
Answer to question 4:...............................................................................................................11
Reference List:.........................................................................................................................13

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Answer to question 1:
Answer to scenario 1:
Issue:
The question brings forward the question that is evidently linked with whether the
cost that is sustained at the time of locating the machine to a new site shall be beheld as the
admissible deductions under section 8-1 of the ITAA 1997.
Legislations:
a. Section 8-1 of the ITAA 1997
b. Taxation Ruling of TD 93/126
c. British Insulated & Helsby Cables
Applications:
Taking into the considerations that is defined under the 8-1 of the ITAA 1997 the
amount of cost involved in moving the assets from one spot to alternative spot would be
considered, as capital in nature and no kind of permissible deductions shall be measured as
acceptable under the above stated section (Coleman and Sadiq 2013). The expenditure might
however result in an increase in the cost of the asset for the purpose of depreciation
(Barkoczy et al. 2016). Any kind of cost that is sustained from the minor changes at the site
would establish the cost as the deductible disbursement “under section 8-1 of the ITAA
1997”. This is because they form the part of the business expenditure resulting from the day
to day activities of carrying on of a business (Harris et al. 2016).
In respect of the decision that is passed under the case of British Insulated & Helsby
Cables the cost that is incurred at the time of transportation will be accounted in the form of
lasting benefit on the commercial properties of the taxpayer’s by locating the depreciable

4PRINCIPLES OF TAXATION LAW
asset (Kenny 2013). Once the plant is installed and it is in an operational state, the cost
involved in brining the machinery in the full operation, however not the cost of additions or
modifications would constitute revenue in nature under Taxation Ruling of TD 93/126.
From the above defined analysis in the present circumstances it is discerned that the
cost involved in shifting the machine to new site characterises a cost that holds the anture
capital and it will measured as non- permissible deductions.
Conclusion:
As it has been defined from the above conduced analysis it can be concluded that
moving of fixed asset from one location to another location would be held possessing the
characteristics of capital expenditure and no deductions shall be allowed in section 8-1 of the
ITAA 1997. The expenditure might however result in a rise in the cost of the item for the
purpose of depreciation.
Answer to Issue 2:
Issue:
The existent question introduces the issues that is related with the revaluation of
assets to the effect of insurance cover, which would be measured as acceptable deductions
under section 8-1 of the ITAA 1997.
Legislation:
a. Section 8-1 of the ITAA 1997
Application:
As evident from the scenario, though the expenditure is associated with the fixed
assets, in determining the deductibility it is important whether the expenditure incurred on
revaluing the assets represents the expense that is incurred in enlarging the income producing

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capacity or they are incurred simply to safeguard or preserve the asset. If the latter results in
the form of benefit that is very much expected to possess the characteristics of provisional,
exclusively if the spending are in most of the scenario is periodic then it is going to be
measured as the deductible spending under section 8-1 of the ITAA 1997 (Keyzer, Goff and
Fisher 2015). From the analysis it is discerned that the cost sustained on revaluing the asset to
the effect of insurance cover in most likely scenario will be treated as the acceptable
deductions from the time when the expenditure is perhaps is possessing the characteristics of
frequent and periodic under section 8-1.
Conclusion:
On arriving at the conclusion, it can be ascertained that the cost incurred represents as
an allowable deductions since the expenditure are recurring in nature and satisfies the criteria
of deductibility under section 8-1 of the ITAA 1997.
Answer to scenario 3:
Issue:
The existent question is evidently related to the ascertainment of whether or not the
lawful spending incurred by the firm for the purpose of differing an appeal for winding up
would be measured as the acceptable deductions under section 8-1 of the ITAA 1997 (Krever
2013).
Legislation:
a. FC of T v Snowden and Wilson Pty Ltd (1958)
b. Taxation ruling of ID 2004/367
c. Section 8-1 of the ITAA 1997

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Application:
As defined under the taxation ruling of ID 2004/367 legal cost are generally
considered as deductible given the fact that they are incurred or the claim is made because of
very act of executing the work through which the taxpayers derives the taxable income. In
agreement with the section 8-1 of the ITAA 1997 cost that a taxpayer sustains in the process
of winding up of a commercial business are commonly not arisen for the determination of
carrying of an occupation and therefore they are not viewed as allowable deduction (Morgan,
Mortimer and Pinto 2013). Considering the decision that has been passed in the instance of
FC of T v Snowden and Wilson Pty Ltd (1958) the element that the outflow are sustained are
infrequent and the taxpayer has in kind of earlier instances was required to commence such
legalised activities that in no circumstances avert the disbursement from being regarded as
the admissible deductions.
From the above stated discussion, it can be discerned that the legal charge sustained in
the process of differing a winding up plea would in no circumstances will be acceptable as
deductible outflow for the reason that they possess the character of are capital and such
outlays falls inside the process of the trade.
Conclusion:
On arriving at the conclusion, in compliance with section 8-1 of the ITAA 1997 it can
be concluded that the cost of opposing a petition for winding up would be considered as non-
allowable deductions.
Answer to scenario 4:
Issue:
The existent question is related with the ascertainment of whether or not the legal
disbursement sustained for the amenities of a solicitor for the administration business

7PRINCIPLES OF TAXATION LAW
procedures shall be measured as the acceptable deductions under section 8-1 of the ITAA
1997 (Lang 2014).
Legislation:
a. section 8-1 of the ITAA 1997
Application:
In respect of the principles that is defined under the section 8-1 of the ITAA 1997,
whenever an individual taxpayer concerning the operation of the business to generate the
assessable income incurs a legal spending, it will mostly be measured as the acceptable
deductions. Nonetheless, there is definite exception whenever the legal spending is sustained
signifies the characterises of capital, domestic or private or if it is explicitly sustained in
acquiring the exempted and non-taxable non-exempt returns (Nethercott et al. 2016). In this
regard, for individual occurring legal fees, the expenditure would not be considered as
allowable deductions unless it is clearly incurred in deriving the assessable income.
Consequently as it has been noticed from the present scenario it can is discerned that the legal
outflow of expenditure sustained by the tax payer signifies a relationship with the trade in
acquiring the chargeable proceeds and it would be beheld as admissible deductions in
conformity with the section 8-1 of the ITAA 1997.
Conclusion:
In conformity with above stated analysis and section 8-1 of the ITAA 1997 it can be
evidently discerned that legal fee that is sustained in the process of the trade to yield the
taxable proceeds will measured as the admissible deductions.

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Answer to question 2:
Issue:
With regard to the GSTR Act 1999 the existing matter deals with the issue of input
tax credit that can be claimed for the expense that is incurred in advertisement.
Legislation:
a. GSTR Act 1999
b. GSTR 2006/3
c. Ronpibon Tin NL v. FC of T
Application:
As it has be clearly made evident in the GST ruling of GSTR 2006/3, the ruling
introduces introduces the way on the methods that implemented to figure out the input tax
credits. It also defines the method of adjustment to be used by the suppliers of the saleable
provisions that is made under the new system of assessment defined under the GST Act 1999.
The ruling considers the extent to which the creditable purpose and definite use of the ruling
under the division 11, 15 and 129 of the GST Act 1999 (Woellner 2013).
The current case study of Big Bank Ltd evidently lay down that fact the company
acquired a spending of $1,650,000, which additionally included the amount of GST that is
incurred by the company on the advertising campaign in the past year. Taking into the
account the evidence of Big Bank Ltd the “GST ruling of GSTR 2006/3” is relevant to the
units that are registered or compulsory required to attain for registration. It is discerned from
the present issue of Big Bank Ltd that it makes the business supplies, which outdoes the fiscal
attainment verge; it will be measured at the unit that is authorised for claiming the input tax
credits or lowered input tax credits. If an organization is registered or it is required to be

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registered under the GST Act 1999, GST shall be payable by the individual or the company
on the taxable supplies that it makes (Woellner et al. 2016).
As stated under the scheme of the GST legislation an individual shall be permitted to
input tax credits for the sum of GST that is included in the value of the things an individual
acquires or importation for their enterprise (Nethercott et al. 2016). However, if an individual
making supplies exceed the threshold limits of the financial acquisition, they will be not be
allowed to recover the entire amount of GST charged to them, hence a fragment of the GST
shall be able to be recuperated.
In respect of the reference to the case of Ronpibon Tin NL v. FC of T the principles
of “extent” and “to the extent” applies in the understanding of the GST regulation. This
comprises of the obligation where the allotment method is accepted in order to be rational
and judicious under the situations of the respective enterprise (Morgan, Mortimer and Pinto
2013). Bearing in mind the provisions that has been specified under paragraphs 11-5 and 15-
5 for an acquisition to be treated as the creditable realisation or creditable import it ought to
be in such a manner that the acquirement is exclusively or somewhat partially for the
creditable purpose.
Considering the guidelines defined under the subsection 15-25 an import will be
somewhat partly be treated as the creditable acquisition if the same is solitarily for a partially
creditable purpose. Taking account of the guidelines defined under the section 11-15 or 15-
10 an import is partly measured as creditable if an entity makes financial supplies for the
purpose of the input tax credit or partly for the domestic purpose (Coleman and Sadiq 2013).
As evident in the present Scenario of Big Bank Ltd, the advertising expenditure was incurred
for the creditable acquisition purpose. Big Bank Ltd in agreement with the GSTR ruling of
2006/3 it has discerned that the company made the procurement of the fiscal purchases that

10PRINCIPLES OF TAXATION LAW
surpasses the monetary procurement verge and the bill that is issued to the company by their
tax consultant will considered eligible for input tax credit or reduced tax credit (Schenk
2016). In compliance with the GST legislation, Big Bank is entitled to input tax credit for the
purpose of GST in the price of advertising expenses acquired or imported by the company.
Conclusion:
From the analysis that is conducted above, it can be detected that Big Bank Ltd will
be qualifies for claiming input tax credit in conformity with GSTR 2006/13 for the
expenditure that is incurred on the advertising for the creditable acquisition.
Answer to question 3:

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Answer to question 4:

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Reference List:
Barkoczy, S., Nethercott, L., Devos, K. and Richardson, G. (2016). Foundations Student Tax
Pack 3 2016. South Melbourne: Oxford University Press Australia & New Zealand.
Coleman, C. and Sadiq, K. (n.d.). Principles of taxation law 2013.
Harris, J., Graw, S., Gilders, F., Kenny, P. and Van der Waarden, N. (n.d.). Theory and law in
the regulation of business.
Kenny, P. (2013). Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths.
Keyzer, P., Goff, C. and Fisher, A. (n.d.). Principles of Australian constitutional law.
Chatswood: LexisNexis Butterworths.
Krever, R. (2013). Australian taxation law cases 2013. Pyrmont, N.S.W.: Thomson Reuters.
Krever, R. (n.d.). Australian taxation law cases 2015.
Mangioni, V. (n.d.). Land tax in Australia.
Morgan, A., Mortimer, C. and Pinto, D. (2013). A practical introduction to Australian
taxation law. North Ryde [N.S.W.]: CCH Australia.
Nethercott, L., Devos, K., Gonzaga, L. and Richardson, G. (2016). Australian taxation study
manual. Melbourne: Oxford University Press.
Woellner, R. (2013). Australian taxation law 2012. North Ryde [N.S.W.]: CCH Australia.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D. (n.d.). Australian taxation
law 2014.