Taxation Law Analysis for RIP Pty Ltd: A Comprehensive Guide

HI6028 Taxation Law
1

Table of Contents
Introduction......................................................................................................................................3
PART A...........................................................................................................................................4
PART B...........................................................................................................................................7
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
2

Introduction
Tax is the amount which is required to be paid by the business on the income that is made by it
and for that, all the laws and regulations which are there in a relevant manner are to be complied
with. There is the need to file the return and for that correct calculation of the tax, an amount is
required to be made. In this report, various aspects in relation to it will be discussed for the RIP
Pty Ltd. In that, the income tax assessment act 1977 will be taken into consideration. All the
areas of the deductions and allowability will be explained below in the report.
3

PART A
a) Description of Arthur Murray (NSW) Pty Ltd v FCT (1965) case.
In the Arthur Murray (NSW) Pty Ltd v FCT (1965) 114 CLR 314 the aspects in relation to the
prepayments which are made by the entity will be taken into consideration. It will be identified
that whether it shall be included in the assessable income of the organization so that correct
taxable amount is determined.
Facts of the case:
In this case, the company is involved in the provision of the dancing facilities to the client and
they are provided on the hourly basis. In this, the students will be required to make the payment
to the company on the per hour basis. Then a new lump-sum facility was provided in which they
were to make the payment for the total 1200 hours and that will have to be paid in advance. They
can use those hours for the lifetime and for this they were also offered the discount by the
company they make the immediate payment (Hemmings and Tuske, 2015). There is no provision
in relation to the refund and in any case, there will be no repayment and the amount which is
collected is deposited in the unearned deposits-Untaught lessons account. This will be transferred
to another account of earned tuitions when the company will be providing the lessons for the
same.
Issue related to the case:
The issue which is faced here is in relation to the identification of the fact that whether the
advance payment made by the customers will form part of the assessable income or not. The
company is of the view that the amount will be included in the income only when the income is
actually earned that means when the lessons will be provided and due to this, it as not included
the same in the tax return which is prepared by the company. But in the contention of the
commissioner the amounts which are received whether they are in advance or after the provision
of the service both will be included in the calculation of the taxable income and will be recorded
in the company as and when it is received.
4