Taxation: Deductions and Expenses

Running tax: TAXATION
TAXATION
Name of the Student
Name of the University
Author Note

TAXATION1
Answer one
a)
Tax Ruling 2019/1 – concerned with the exact timing when the company can be said to have
continuing the procedure of business.
b)
div 30, ITA Act 1997: concerns the deductibility of the gifts & contributions in the form of
expenses.
c)
maximum tax bracket for 2019-20: $54097 & 45% on excess of 180,0001.
d)
s 118.5, ITA Act 1997: car & motorcycle are to be exempted from CGT computation.
e)
s 104.20, ITA Act 1997: objects ruined or lost, which were owned as used by the TP comes in C1
group of the events of CGT.
f)
threshold under which income would be tax free and the TP would not have any liability: $18200.
g)
Hayes v FCT (1956) 96 CLR 472 - importance: this case has been a foundation in the taxation law
where the fixed incoming earning that has been received by the employer by the TP who has been
1 www.ato.gov.au, "Individual Income Tax Rates", Ato.Gov.Au (Webpage, 2019)
<https://www.ato.gov.au/Rates/Individual-income-tax-rates/>.
2 Hayes v FCT (1956) 96 CLR 47

TAXATION2
employed with him in the past and has earned the amount in question previously but has never been paid
the same. The amount that the TP receives by virtue of that long accrued earning is required to have the
implication of taxation under the CGT. Therefore, it can be contended that any incoming amount in
relation to the previously performed services towards the employment that the TP has been pursuing on a
previous date and has received payment of the same subsequently would result in the imposition of the
same under the capital gain taxation. Again, this has not been in conformity with the general rule that
requires the earnings of personal labour to be put for assessment as an income or ordinary kind. It has
been posing a contrary position to such a treatment of the earnings from labour. As employment has been
centered upon being remunerated for the application of efforts, the same requires taxability under the
head of ordinary income and the same requires treatment in accordance with that. But the same in this
case has been declared to be CGT gain. The explanation that court has provided regarding the same is the
fact that the income accrued from personal efforts on a previous time has been considered as ordinary
income if received at that time. However, with time it has taken the essence of a capital asset as it has
been received by the TP later on and hence the same is to be construed as CGT gain as the same has been
received as a lump sum amount and has should not be included in the category of ordinary income as it
does not depicts to have arisen from the ordinary concept.
h)
Distinction among Ordinary Income (OI) & Statutory Income (SI)
Ordinary Income (OI) Statutory Income (SI)
OI is an earning construed through ordinary
meaning existing in relation to earnings.
SI is an earning construed through statutory
sections declaring the same as an earning.
OI does not need an acknowledgement by a
statute to be recognized as an earning.
SI does not need to be authorized by the
legislation to be identified as an earning.
The lack of any statute extending
acknowledgement to the receipt as an earnings
would not make it fail to recognize it as an
earning.
The lack of any statute extending
acknowledgement to the receipt as an earnings
would make it fail to recognize it as an earning.

TAXATION3
The assessability of OI as taxable is a general
concept.
The assessability of SI as taxable is a legislative
concept.
OI is taxable in the lack of mandate from
legislation.
SI needs mandate from legislation to be
recognized for taxation.
For example - business income, salary income. Example: CGT.
i)
Distinction among Medicare Levy (ML) & Medicare Levy Surcharge (MLS)
ML MLS
ML is an extra levy imposed on income tax. MLS is an extra levy on the aggregate pertaining
income tax & the FBT.
ML has been announced for a backing to be
provided to the whole system Medicare, which
governs the administration of the health of public
in the territory of Australia.
MLS has been announced for diminishing the
weight which the Medicare system was facing in
the deficiency of the system.
The rate of tax pertinent to ML is 2 percent. The rate of tax pertinent to MLS is 1 percent, 1.25
percent and 1.5 percent.
ML is governed by MLA19863 & the ITAA 364. MLS is governed by MLA 19865.
ML needs application on personalities having
exceeded the optimum threshold.
MLS needs application on the personalities have
its place in the higher tax brackets.
Application to be made upon the personalities to
be reflected for Medicare.
The personalities does not having any personal
health insurance needs application MLS.
Answer two
The concept of ‘permanent place of abode' & ‘usual place of abode' has been the two ideologies
that has been conceived from the tests of residency determination as has been provided under s 6.1, ITA
3 The Medicare Levy Act 1986
4 The Income Tax Assessment Act 1936 (Cth)
5 The Medicare Levy Act 1986