Taxation Law | Assignment | Answers

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Table of Contents
Answer to question 1:.................................................................................................................2
Issues:.....................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................3
Conclusion:............................................................................................................................4
Answer to question 2:.................................................................................................................5
Answer A:..............................................................................................................................5
Answer B:...............................................................................................................................5
Answer C:...............................................................................................................................6
Answer D:..............................................................................................................................7
Answer E:...............................................................................................................................7
References:.................................................................................................................................9

TAXATION LAW2
Answer to question 1:
Issues:
The “sec 6-5 ITA Act 1997” discusses whether the salary and other receipts the tax
payer should receive from her employer Crown Melbourne restaurant which attracts the tax
liability or not.
Rule:
The common concept of income on the basis of ordinary notion for an individual
taxpayer are described in the “sec 6-5 ITA Act 1997”. The receipts which a taxpayer earns
from their services and employment might be statutory and ordinarily assessable (Skapinker
2018). The payment which are recovered from voluntary payments are mainly rewarded for
their services and treated as ordinary earnings as ordinary employment incident takes place in
the situation. Any tips should be considered as third party gift and should be help as
voluntary payments as these are considered as paid for their services as described in “Peen v
Speiers & Pond Ltd (1908)”. It helps to establish a link between the services making it an
ordinary earnings.
Commision and services also considered as service and held as ordinary earnings.
This also includes wages, salaries bonuses fees for services. According to “Moorhouse v
Dooland (1995)” any earning of the taxpayer whether direct or indirect which is based on
their personal works can be considered as ordinary earnings (Tucker 2018). The “sec 6-5
ITAA 1997” describes the certainty of the receipts and works should be treated as ordinary
earnings or not.
Any gift or related thing should be treated as ordinary earnings which is not taxable.
“Scott v FCT (1996)” noticed that any unsolicited service which is prompted by the

TAXATION LAW3
gratitude of certain services should be treated as non-taxable ordinary earnings (Walrut
2018). Other considerable factors are needed to be understood for this situation.
Under “sec 66(1), FBTAA” the employees are not needed to pay tax as it is levied on
the employer named as Fringe benefit tax. This type of tax should be levied on the
endowment of benefits and should not be on the receiver of benefits. The legislation of FBT
applicable on non-cash benefits. So, it is important to understand whether the workers are
remunerated with non-cash benefits rather than salary or not (Pinto, Kendall and Sadiq 2018).
The “sec 23L ITAA 1936” defines that the fringe benefit will always treated as non-taxable
earning where the employer provides the employee with the same. The employer bears the
liability of paying tax of any benefits given to the employee. “Indooroopily Children’s
Service v FCT (2007)” noted that any applicable benefit should be provided to the employee
during the employment stage.
Any gifts received on the special occasions which includes cash gift from the relatives
will not be treated as taxable income as it is given out of love. The personal gifts are not
treated as taxable income for the recipient as described in “FCT v Hayes (1947)”.
Application:
In this situation, Emmi is the taxpayer who is working in Crown Melbourne restaurant
on a part time basis. A customer gives her a tip of $335 in the restaurant. As per “Peen v
Speiers & Pond Ltd (1908), tips received from customer should be treated as voluntary
payment as it was paid to Emmi for her level of service to the customer (Sadiq 2018). “sec 6-
5 ITAA 1997” states that any tips received by taxpayer links with the service and it will be
treated as ordinary earnings and is taxable under this section.
In another case, Emmi received $25,000 from her part time job in the restaurant.
“Moorhouse v Dooland (1955) describes this as ordinary earnings as this income is earned