Taxation of Capital Gain and Fringe Benefits: A Case Study

Running head: TAX
Tax
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Answer to Question no. 1:..........................................................................................................2
Answer to question 2:.................................................................................................................7
References................................................................................................................................14

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Answer to Question no. 1:
Issues:
The present issue is linked with the significances of the taxation of capital gain under
“section 104 of the ITAA 1997”.
Laws:
A taxpayer under “section 102-5 of the ITAA 1997” is essential to comprise the
capital gains amount in their incomes earned on that year. To realize the condition of the
taxpayer about the capital gains as well as the capital loss it is essential to visualize the CGT
of the taxpayer. Moreover, it is essential to realize the CGT asset for the qualification of the
asset. The taxpayer only obtains the capital gains as well as the losses sourcing from the
event of CGT under “section 102-20”. According to “section 104-10 (1)” the A1 event of
CGT occurs during the arrangement of the CGT asset (Becker et al., 2015).
According to “section 104-25 (1) of the ITAA 1997 a CGT” the C2 event takes place
at the completion of the insubstantial asset. Laterally, intangible assets ownerships finish at
the time of the expiration of the asset. In accordance to the goodwill, it is visualised by the
ATO that the event C1 of the CGT occurs at the time when the business is permanently
ceased. The TR 1999/16 of taxation ruling is relevant to the taxpayer that arranges the
goodwill of the business or the goodwill interest in accordance with “ITAA 1936”. A
business is permanently ceased because of the consequences of voluntary act. This is to
symbolize that the business should be ceased permanently as the temporary closing is not
going to outcome in C1 event of CGT (Burkhauser et al., 2015).
The law court in “FC of T v Murry (1998)” has visualises the constitutes of the
goodwill. Goodwill is observed as the eminence that is gained from the business from other
assets. The presence of goodwill is needful on the resistant on the asset revenues that is

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produced from the business, and the locations and methods of the business. Under
“Subsection 108-5 (2)” apprehended that the asset of CGT must yield into the goodwill
account. The law court in “IRC v Muller & Co Margarine Ltd (1901)” apprehended that the
goodwill is reliant on the appeal and the business nature. A taxpayer is essential to embrace
in the taxable income the net capital gains value of which is obtained from the goodwill
business sale (Saad, 2014).
According to the “taxation ruling of TR 1999/16” defines about the obstructive
agreements that includes the agreement with the vendor as well as the purchaser connecting
with the business sale or somewhat distinct agreement that necessitates the sellers to not
contend in the same business (Rose & Karran, 2018). In accordance to the “taxation ruling
of TR 1999/16”, it is described about the agreements between the vendor worker and the
purchaser connecting to the agreement for vending the business grounded on which the
company agrees not to contend in the business as well as to appeal the clients of business.
Expenditures that are acknowledged for surrendering or limiting the privileges are not
considered as income. This comprises of the expenditures that is established for not
approving on doing some work is not regarded as income. Quoting “Jarrold v Boustead
(1964)” case the law court held that the payment of the protuberance sum that is
acknowledged by the rugby player for open handing the position of unprofessional were not
considered as income (Richardson et al., 2015). In the same scenario, the decision quoted in
“Dickenson V FC of T (1958)” held that the sum which is paid to the petrol station taxpayer
for the selling of only the shell goods for coming ten years from the similar petrol station. In
addition to the vending only shell goods inside the 5 miles radius for the coming five years is
not to be considered as income.