Taxation Law Study Material and Solved Assignments

0TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

1TAXATION LAW
Table of Contents
Answer to question 1:.................................................................................................................2
Answer I:................................................................................................................................2
Answer II:...............................................................................................................................3
Answer to question 2:.................................................................................................................4
Answer I:................................................................................................................................4
Answer II:...............................................................................................................................4
Answer to question 3:.................................................................................................................5
Answer I:................................................................................................................................5
Answer II:...............................................................................................................................5
Answer to question 4:.................................................................................................................5
Answer to question 5:.................................................................................................................6
Answer to question 6:.................................................................................................................8
References:...............................................................................................................................10

2TAXATION LAW
Answer to question 1:
Answer I:
The payments that are received by the taxpayers for relinquishing or restricting the
rights are treated as the capital in nature and cannot be classified as income. This generally
involves the payment that is received by the taxpayer for agreeing not to do something
(Miller and Oats 2016). Restrictive covenants can be defined as the lump sum payment that is
received by the taxpayer in relation to the promise of the taxpayer to abide by the restrictions
based on the right of earning income is usually treated as capital in nature.
Citing the case laws example of “Beak v Robson (1943)” the taxpayer here received a
lump sum amount of payment from the employer following the agreement that when the
contract for employment comes to an end, the taxpayer will not be competing with the
employer within the 50-mile radius of his employer’s premises for the period of next five
years. The court of law treated the amount as capital in nature (Jones and Rhoades-Catanach
2015).
In another example of “FC of T v Woite (1982)” a football player entered in the agreement
with the North Melbourne club that bound him to only play for that club if the taxpayer were
to play in the VFL (Barkoczy 2016). The amount was treated as capital in nature because it
represented a payment that were having the nature of compensation for the taxpayer’s
restricting the part of his revenue producing activity.
In light of the above judgement the circumstances of George states that he received an
amount of $40,000 when he entered in a contract with the employer to not reveal or use any
of their private data and additionally restricting his ability of work by not competing with the
employer for rest of the employment period should be treated as capital amount. The amount

3TAXATION LAW
that is received by George express the nature of compensation that is paid for restricting his
income generating activities.
Answer II:
a. According to the “division 30 of the ITAA 1997” a taxpayer is permitted to claim for
the tax deduction where any form of gifts or donation has been made in the form of
money whose value exceeds greater than $2 to the eligible deductible gift recipient
(Brabazon 2019). As evident in the current situation of Cheryl it is noted that she
donated a sum of $300 to a local public primary school’s building fund. With respect
to the “division 30, ITAA 1997” the donation of $300 that given by Cheryl should be
considered as eligible deduction since the local primary school is assumed to be a
deductible gift recipient.
b. In another instances it is noticed that Cheryl also made a donation of $50 to the local
public library. By referring to the “division 30, ITAA 1997” it can be stated that
Cheryl will be permitted to obtain an income tax deduction for the donation that is
made to the public library because it is an Australiana fund and satisfies the
requirements stated under the “section 30-17” (Burman et al. 2016). The library is
considered as the eligible gift deductible recipient.
c. An individual tax payer is allowed to claim an income tax deduction for the complete
amount paid to the membership of trade, professional associations or business which
is associated directly to the income producing activities of the taxpayer. A taxpayer
must also denote that they are allowed to claim deduction of up to $42 per year in
relation to each subscription that is made for the membership of the trade, business or
professional association which is not directly associated to the income producing
activities of the taxpayer (Bankman et al. 2018). A payment of $700 has been made
by Cheryl for the membership of real estate agents association. She is presently not