Taxation Law Assignment Help
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Added on 2020-03-28
Taxation Law Assignment Help
Added on 2020-03-28
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Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID
TAXATION LAW1Table of ContentsAnswer to question 1:.................................................................................................................2Issue:..........................................................................................................................................2Rule............................................................................................................................................2Application:................................................................................................................................2Conclusion:................................................................................................................................6Answer to question 2:.................................................................................................................7Issue:..........................................................................................................................................7Laws:..........................................................................................................................................7Applications:..............................................................................................................................7Conclusion:..............................................................................................................................11Reference List:.........................................................................................................................12
TAXATION LAW2Answer to question 1:Issue:Are the legal expenses on advertisement and the redundancy expense incurred by thetaxpayer for challenging the government statement will be an allowable deduction undersection 8-1 of theIncome Tax Assessment Act 1997(ITAA 1997). Lawsa.“8-1 of the ITAA 1997”b.“subsection 51 (1) of the ITAA 1936”c.“Income tax ruling of ID 2001/83”d.“FC of T v Snowden and Wilson Pty Ltd(1958)” e.“Magna Alloys and Research Pty Ltd v. FC of T(1980)”f.“Herald and Weekly Times Ltd v. FC of T(1932)” Application:The problem statement that has been defined under this case is relating to theadvertisement expenses that has been occurred by the taxpayer relating to the expense of theadvertisement for launching an attack against the government in media. The following casestudy of Aussie Ltd provides information that the company functions as the subsidiary to theMeranti Ltd that produces high quality furniture at a very low cost. The furniture produced byMeranti Ltd is exported to the Aussie Ltd that enjoys high success from economies of scale.However, the decision of the federal government to impose high amount of duty on annualsales of importing furniture that is imported by Aussie Ltd. consequently, the decision of the
TAXATION LAW3government created an adverse impact on the Aussie Ltd and this ultimately hampered therevenue of the company. Later, Aussie Ltd undertook the decision of launching the attack forrepealing the decision of the government against the imposition of the heavy duty. The ledthe company to incur a spending of $2 million for revoking the decision of the government. According to section 8-1 of the ITAA 1997, an individual candeductfrom yourassessable income any loss or outgoing to the extent that, it is incurred in gaining orproducing your assessable income (Anderson et al., 2016). On other hand the expense isnecessarily incurred in carrying on a*business for the purpose of gaining or producing yourassessable income. However, there is an exception to this rule where an individual cannotdeduct a loss or outgoing under this section to the extent that it is a loss or outgoing ofcapital, or of a capital nature; or it is incurred in relation to gaining or producingyour*exempt income or your*non-assessable non-exempt income. The provision of this Actprevents an individual taxpayer from deducting it. As held in Hallstroms Pty Ltd v. Federal Commissioner of Taxation(1946)Also, indetermining whether a deduction for legal expenses is allowable under section 8-1 of theITAA 1997, the nature of the expenditure must be considered (Barkoczy 2016). The nature orcharacter of the legal expenses follows the advantage that is sought to be gained by incurringthe expenses.On the other hand, it has been decided in the case of Herald and Weekly TimesLtd v. Federal Commissioner of Taxation(1932)that Legal expenses are generally deductibleif they arise out of the day to day activities of the taxpayer's business (Cao et al.,2015).Additionally, in the case of Magna Alloysand Research Pty Ltd v. FC of T(1980) thelegal action has more than a peripheral connection to the taxpayer's income producingactivities.
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