Taxation Law: Calculation of Net Income from Partnership and Fringe Benefit Taxation

Running head: TAXATION 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
Issues:.....................................................................................................................................2
Rule:.......................................................................................................................................2
Applications:..........................................................................................................................4
Conclusion:............................................................................................................................5
Answer to question 2:.................................................................................................................5
Issues:.....................................................................................................................................5
Rule:.......................................................................................................................................5
Application:............................................................................................................................6
Conclusion:............................................................................................................................7
References:.................................................................................................................................8

2TAXATION LAW
Answer to question 1:
Issues:
The case introduces the issues that is related to the calculation of the net income from
the partnership made by the partners during the year.
Rule:
As per the “division 5 of the ITAA 1936”, a partnership is not treated as the separate
business under the general law and partnerships is not required to the tax. Instead the partners
pay the tax on the profits that is distributed to the partners (Arnold, 2016). Under the “section
90, ITAA 1936” the calculation of the net income or loss of the partnership is done after
deducting the allowable expenses.
Assessable income of the taxpayers is regarded as the taxable income that is included
for taxation purpose. Ordinary income is viewed as the income that an individual derives
under the ordinary concepts and the same is considered for taxable purpose under the
“section 6-5, ITAA 1997” (Carlisle & Harrington, 2017). Income as per the ordinary
concepts is explained under the “Scott v CT (1935)” income should be interpreted based on
the ordinary notions and use of mankind.
The provision of general deduction under the “section 8-1, ITAA 1997” explains that
the taxpayer can obtain the deduction for the expenditure if the expenses are sustained at the
time of earning income. The general provision of “section 8-1, ITAA 1997” has the potential
of being implemented to any taxpayer (Deutsch, 2018). Expenses or outgoings that is
necessarily occurred at the time of gaining or producing the assessable income is allowed for
deduction under the general provision of “section 8-1, ITAA 1997”.

3TAXATION LAW
In “Amalgamated Zinc Ltd v FCT (1935)” gaining or producing the assessable
income must hold the adequate nexus with the losses or outgoings (James, 2016). This
implies that the expenses should be incurred in the course of producing assessable income.
It is noteworthy to denote that as per the negative limbs of “section 8-1(2))”,
expenses or losses or not allowed for deduction under the general deduction rule given that it
meets the criteria for negative limbs. Expenses that are capital, domestic or private is not
treated for deduction under the negative limbs of “S-8-1 (2))”.
As it has been described under the “sec 25-10” deductions are permitted to the
taxpayer for expenses which is occurred for repairs to the premises or assets that are
depreciative in nature and used for generating the income under “section 25-10” (Kenny et
al., 2018). Similarly, under the “TR 97/23” work that is performed to satisfy the requirement
of the regulatory bodies is not held as repair unless the work is involve remedies to defects.
Item should be used for producing income in order to be permitted for deduction
under the “section 25-10”. This includes the repairs that is occurred in carrying on the
business or repairs that is made to the investment property (McCouat, 2018). Maintenance
work is regarded as repair such as painting on the plant or business premises for rectifying the
damage is held as deductible repair.
The costs that is occurred in replacing the items that are permanent fixtures installed
in the premises used for producing the income is regarded as the deductible repairs under the
“section 25-10” given that the replacement is for damaged out unit by the new one of
identical design to normally restore the function of the asset.
As per the ATO if a taxpayer buys an asset and it is costing $20,000, the taxpayer can
write-off the business part of the asset in their tax return. The taxpayers are eligible for using