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Income Tax Assessment Act 1997- Taxation Law

   

Added on  2020-04-07

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Running head: TAXATION LAWTaxation LawName of Student:Name of University:Author’s Note:
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1TAXATION LAWAnswer 1:Answer to requirement 1:Issue:In compliance with the section 8-1 of the ITAA 1997, the present issue considers whetherthe cost suffered in the movement of the machinery to a new site is to be considered as allowabledeductions or not.Legislations:a.Section 8-1 of the Income Tax Assessment Act 1997b.British Insulated & Helsby CablesApplications:The major reason for thinking about the expenditure for the allowable deductions is dueto the fact that the cost is considered as a part of the business expenses. No sort of deductions areallowed in case of the cost that is incurred in transportation of machinery to the new site. Thisfollows from the 1 of the Income Tax Assessment Act 1997. According to the section 8-1 of theIncome Tax Assessment Act 1997, the obtained cost in the movement of machinery isrepresentative of a price which is incurred from minor changes and can be thought of asallowable deductions (Barkoczy et al., 2016).Based on the of British Insulated & Helsby Cables case verdict, the involvedtransportation cost shows a continuous benefit on the business related matters after the shift of
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2TAXATION LAWthe assets which are deprecating. The cost of occurrence in bringing the machine to a state ofthrough operation will be considered as revenue according to the Taxation Ruling of TD 93/126on the installation of the machinery. Based on the present scenario, it is learnt that the cost ofoccurrence in the location of the machine to the new site is representative of the cost of capital.This will be considered as non-permissible deductions.Conclusion:The incurred cost in the movement of the machine to a new site represents themovement of an asset from one place to another. This falls under the category of capitalexpenditure. In concern with this, no allowable deductions will be allowed under section 8-1 ofthe Income Tax Assessment Act 1997. Answer to requirement 2:Issue:The present situation introduces whether the revaluation of assets can be thought of asallowable deductions under section 8-1 of the Income Tax Assessment Act 1997.Legislation:a.Section 8-1 of the Income Tax Assessment Act 1997Application:Proper study on the present situation indicates that expenses and the fixed assets arerelated. Thus the determination of the deductions is crucial for the determination of whether such
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3TAXATION LAWexpenses have occurred in revaluation (Nechaev, 2014). Either it is merely obtained in theprotection of the asset or obtained for increasing the revenue producing capability. In case theformer results in a sort of benefit to the temporary character, in case the expenses are repetitive,then under the section 8-1 of the Income Tax Assessment Act 1997, it will be treated aspermissible deductions. Proper understanding of the present situation clearly indicates that thecost incurred in asset revaluation will be considered as allowable deductions as there arerepetitive in nature. This is in compliance with the section 8-1.Conclusion:It can be concluded that, according to the section 8-1 of the ITAA 1997, the price leadingto the insurance cover is treated as allowable deductions. This is because the nature of the cost isrecurrent (Woellner et al., 2016).Answer to requirement 3:Issue:The situation brings to the fore, the issue regarding the fact that if the legal expendituresthe company incurred would be treated for deductions based on the section 8-1 of the ITAA1997. Legislation:a.Section 8-1 of the Income Tax Assessment Act 1997b.FC of T v Snowden and Wilson Pty Ltd(1958) 99 CLR 431)
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