(solved) Assignment on Taxation
Added on 2020-07-23
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Taxation
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 1..................................................................................................................................1(A)................................................................................................................................................1(B)................................................................................................................................................2(C)................................................................................................................................................2(D)................................................................................................................................................2QUESTION 2..................................................................................................................................3Assessing Big Bank’s ability to claim in relation to advertising expenses.................................3QUESTION 3..................................................................................................................................4Determining foreign tax offset.....................................................................................................4QUESTION 4..................................................................................................................................6Calculating net income for the partnership..................................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................9
INTRODUCTIONSection 8-1 of ITAA 1997 consists various deductions from the assessable income ofassesses. Furthermore, expenses which are incurred by person can be deduct from their incometax amount and they are not able to pay them at the time of payment of tax. Income tax has beenimposed on every person or firm as well and they are responsible to pay amount equal to thementioned under law (Mete, Dick and Moerman, 2010). Present report based on payment ofcompulsory amount which is mentioned under law. In case company established in order toprovide services to people then it have to pay GST up to the rate imposed on them. Foreign taxoffset has been calculated of any person according to his income, expenses and rate of tax aswell. Also two partners name called Johnny and Leon who run partnership firm. So that, their netincome needs to be calculated on the basis of their income and expenses also they are bound topay the same. QUESTION 1(A)According to rules of section 8-1 of ITAA 1997 it has been stated that machineryconsidered as fixed assets for the company. If it moved from one site to another than expensesshould be considered as capital expenses. Various types of rules and procedures mentioned underthis section which is imposed on assesses and bound them to follow the same also try to complywith them as well (Tran-Nam and Evans, 2011). The expenses of moving of fixed assets fromone site to another no deduction will be provided because it is considered as expenses of capitalnature. These are able to increase cost of the goods and services for the purpose of depreciation.This expenses has not been paid in case but it can reduce cost of fixed assets every year. But thisis not the reason for provide deduction amount. Tax liabilities must be imposed on person whoseincome higher then limited amount of income which is mentioned under. Profit which is earn by
companies in through fixed assets are considered as capital profit on which no firm can receivededuction (Butler and Skandakumar, 2014). (B)Cost of asset revaluation is the process which incurred expenses related to fixed assets.So that, as per the rules of law, such expenses can be deduct from assessable income of assesses.As they are bound to pay remaining amount which is imposed on them. It is deductable item asper the rule of law (Joseph, 2014). If expenses are related to fixed it should be considered that itmust be deductabe in nature which is beneficial for people because it is able to enhance incomeearning capacity of them which can be protect as well as preserve it. If the expenses should berecurring in nature than should be deductible according to rules of law. Expenses which areincurred upon asset revaluation than it should be deemed to be recurring in nature. Certain rulesmentioned under this rules which is imposed on people and they are bound to fulfil the same inorder to comply with law. (C)If the legal expenses incurred by a organization in order to opposing a petition for thepurpose of winding up then amount should be deductible in nature (Harrison and Keating, 2010).As per this scenario, deductibility of expenses is totally depends on the structure which is givenas related to structure or it can depend on the income generation capacity of above mentionedcompany. Or expenses can be related to with operational activities of the organization. In caseuncertain outcomes on the petition is able to reduce ability of firm and through which it is notable to enhance their level on income then expenses are considered as capital expense. If thecases related to the operation functions of the company then it should be related with the revenuewhich is covered under section 8-1 of ITAA 1997. Expenses related to process of operation ofbusiness has been considered as revenue in nature. Furthermore, such amount is able todeductible in nature. On the basis of that capital expenses can be deduct from amount of paymentof tax. (D)Legal expenses which are incurred for the purpose of providing services of solicitorwhich is related to several numbers of matters involving legal advice to various client related totheir business operation, conveyancing and much more. In this scenario, the account of solicitor
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