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HI3042 - Taxation Law Assignment

   

Added on  2019-10-31

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Running head: TAXATION ASSIGNMENT Taxation AssignmentName of the StudentName of the UniversityStudent IDAuthor Note
HI3042 - Taxation Law Assignment_1
1TAXATION ASSIGNMENT Answer (1): Requirement-1: Issue: In the given scenario, it is seen whether the expenditures incurred by any taxpayer in moving anycapital asset should be taken as permissible for deduction. Rule: i) “Section 8 (1) of the ITAA 1997”ii) “British Insulated & Helsby Cables v Atherton 1926”Application: The concerned expenditures of the taxpayers, as stated in the “Section 8 (1) of the ITAA 1997”,are applicable for deductions when the amount is in the form of loss or incurred as outgoing capitaland also when the expenditure is private expenditure. The expenditure is allowable for deductions,which are a part of daily functions of enterprises. The given scenario, dealing with shifting of themachineries from an old site to new one, shows the outgoing type of capital and is a smallvariation and therefore, the same is not considered allowable deductions (Jacob and Jacob 2013). Taking reference of the case of “British Insulated and Helsby Cables Ltd v Atherton 1926”, thedepreciable properties shifted, caused a hike in the benefits of the commercial enterprise andtherefore should not be taken as permissible deduction because of their capital expenditure nature.As per the “Taxation ruling of IT 2197”, the expenditures of outgoing machines and installing thesame shall not be permissible for tax deduction (Law.ato.gov.au, 2017).
HI3042 - Taxation Law Assignment_2
2TAXATION ASSIGNMENT Conclusion: It can be concluded that the concerned cost in this issue, being a capital expense, will not be apermissible deduction. Requirement-2: Issue: In the concerned issue, the eligibility of assets revaluation expenditure as allowable deduction isbeing taken into account with regards to “Section 8 (1) of the Income Tax Assessment Act 1997”. Rule: i) “Section 8 (1) of the ITAA 1997” Application: With reference to the “Section 8 (1) of the ITAA 1997”, the asset revaluation expenses, which areof recurring type, is in general taken to be eligible for deductions in income tax perspectives. In theconcerned issue, as the expenses for covering insurances are of recurring nature. However, itshould also be seen whether the expenses are only done to protect the asset and not made tofacilitate benefits in terms of commercial activities. Conclusion: Therefore, as can be seen from the statements of “Section 8 (1) of the ITAA 1997”, in this case asthe cost to revaluate asset for affecting the cover of insurance is of the nature of recurring expense,it will be taken as allowable for deductions in terms of income tax.
HI3042 - Taxation Law Assignment_3
3TAXATION ASSIGNMENT Requirement-3: Issue: Here, the concern is of business winding up and the eligibility of the legal expenditures occurringin this aspect, as admissible deductions. Rule: i) “Section 8 (1) of the ITAA 1997” ii) “Sun Newspapers Ltd v F C of T 1938” Application: The “Section 8 (1) of the ITAA 1997”, states that there are several judging characteristics of thelegal expenditures, based on which, it is decided whether these will be treated as allowabledeductions or not. This is asserted by the “Taxation ruling of ID 2004/367” also. In this contextthe case of the “Sun Newspapers Ltd v F C of T 1938”, can be taken into account. According tothe verdict, the expenses legally taken not for functional but for structural changes will not beallowable as they are capital expenditure in nature (James, Sawyer and Wallschutzky 2015). Conclusion: The concerned cost of winding up of a commercial enterprise is not taken to be allowable fordeductions as the expenses are being done for the purpose of structural and not functional change. Requirement-4: Issue:
HI3042 - Taxation Law Assignment_4

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