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Principles Of Taxation Law | Assignment

   

Added on  2020-12-10

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PRINCIPLES OF TAXATION LAWMAJOR ASSIGNMENT

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1Advice to Tony and Hub in relation to property tax..............................................................1QUESTION 2...................................................................................................................................3Taxation advice given to Monica for various scenario..........................................................3CONCLUSION................................................................................................................................4REFERENCES................................................................................................................................5

INTRODUCTIONTaxation law is very important for an individual as well as for a company. The taxationincludes tax on individual incomes and taxes on sales of good and services. In the present casestudy, the capital gain taxation will be discussed. Along with this, client Monica providesdifferent scenarios related with tax law where she has acquired a rental property and borrowed aloan for the same. The following report is prepared to reflect the legal taxation advices given toTony, Hub and Monica.QUESTION 1Advice to Tony and Hub in relation to property tax1. Whether to continue renting out of the house or not?Rent income: Tony and Hub have a co-ownership of the house they have rented, incomeearned as rental income shall be included in their particular income. The income earned as rent isliable for taxation according to ATO. Both of them need to keep the records right from startingand they can plan for deduction which they can claim. The rental income shall be declared in thetax return for both Tony and Hub. Rental income taxation: according to taxation administration Act 1953, tax on thisrental income will be added in the individual incomes of Tony and Hub and will charge normaltax rate according to the tax slab (Austen, Sharp & Hodgson, 2015). The income earned by Tonyand hub by renting out of the house inherent from their father is $12000 for 8 months. Rent received for a year would be 12000*12/8= $18000Individual rental income of Tony and Hub: 18000/20 = $9000 per person.Deduction: They can claim for a deduction for rental property expenses such as-depreciation of rental property, advertisement, cleaning and maintenance of the house, legal feespaid etc. 2. selling the house and invest money in another development/ shares or investmentproperty.With the sale of real estate in this case, the house inherited by Tony and Hub at the timeof event (of Capital gain) is when they enter in to a contract for sale not when sale is settled(Cobiac, TamVeerman & Blakely, 2017). The movement they enter in to a contract of sale theevent of capital gain is established. 1

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