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Taxation Law Assignment | Taxable Income & Tax Consequences

   

Added on  2020-05-16

11 Pages2042 Words114 Views
Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID

TAXATION LAW1Table of ContentsIssue:..........................................................................................................................................2Rule:...........................................................................................................................................2Application:................................................................................................................................4Conclusion:................................................................................................................................7Reference List:...........................................................................................................................8

TAXATION LAW2Heading: The income tax problems are related to taxable income and tax consequences relatingto the transactions occurred in the income year of 2016/17. Issue:The current issue is based on the determination of the income tax implications forBridget relating to the incomes and expenses reported by her during the income year of2016/17. Additional issues such as rental income, winning from prizes, cash award surroundsthe issue. Furthermore, deductibility of expenses relating to self-education, legal expense andtravel expense surrounds the study. Rule: As held in the “section 6 of the ITAA 1936” income from personal exertion includesthe income that is generated from the personal exertion1. This represents the income thatoriginates from the earnings, salaries and wages, fees, bonus etc. that is received in capacityto the employee in respect of the services rendered. An amount that is generated from thepersonal exertion might be included in the assessable income in the form of statutory incomeor ordinary income. An instance of remuneration has been provided in the case of “Dean vFCT (1997)” where retention payment made in considerations of the employees will beconsidered as assessable income2. Rent refers to the price that is paid to make use of the another person’s property suchas the land, building, equipment would be held assessable. As held in “Adelaide Fruit andProduce Exchange Co Ltd (1932) 2 ATD 1” rent money that is received would be1Robinson, L., Savor, P. and Sikes, S., Value Relevance of Income Tax Expense Post FIN 48 2017.2Brasington, D.M., Passing school building tax levies may increase teacher salary.Economics Letters 2017..

TAXATION LAW3considered as the assessable income. Spending that is occurred in letting out the propertywould be considered as allowable expenditure. According to the interpretative decision of “ATO ID 2002/644” the prize is notregarded as the ordinary or statutory revenue and hence it would not be considered as thereckonable earnings under either of the “section 6-5 or section 6-10 of the ITAA 1997”3.Instead, it is measured as the non-taxable bonus gain. The court has considered that the prizeor gift will be considered as the ordinary income in capacity of the decision held in“Squatting Investment Co Ltd v FCT (1953)”. Usually, a gift or reward is considered as theindividual bonus and it is not regarded as the ordinary revenue given the taxpayer hasreceived the reward or gift in respect of the revenue generating making activity of thetaxpayer. Mere prizes are not an income however it may be a income if there is an adequateconnection with the taxpayer’s income generating activities. As held in “Kelly v FCT” theamount received by professional footballer for best player is an income since it is incidentalto his work. The character of an article will be regarded as the revenue and must be arbitratedunder the conditions of its origin by the taxpayer and devoid of such character it may beenderived by alternative individual4. As held in the case of “Federal Coke Co Pty Ltd v FCT3May, M., Briefing Paper SMART (Save Money and Reduce Tax) Pensions in the UK: Salary Sacrifice andAuto-Enrolment Margaret May January 2015..4Palazuelos, D. and Dhillon, R., Addressing the “global health tax” and “wild cards”: practical challenges tobuilding academic careers in global health.Academic Medicine,91(1), p.30 2016.

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