Taxation Law: Corporate Culture

Running head: TAXATION LAW
Corporate Culture
Name of the Student
Name of the University
Author Note

1TAXATION LAW
Table of Contents
PART A...........................................................................................................................................2
Answer to question 1:..................................................................................................................2
Facts:........................................................................................................................................2
Issue:........................................................................................................................................3
Conclusion:..............................................................................................................................3
Part A (i)..........................................................................................................................................4
Part A (ii).........................................................................................................................................5
Part B...............................................................................................................................................6
Part C...............................................................................................................................................6
Answer to question 2:......................................................................................................................7
Part B...............................................................................................................................................8
Answer to question (i).................................................................................................................8
Answer to question (ii)................................................................................................................9
Answer to question (iii).............................................................................................................10
Reference:......................................................................................................................................11

2TAXATION LAW
PART A
Answer to question 1:
Arthur Murray (NSW) Pty Ltd V FCT (1965) 114 CLR 314
Facts:
This present case is based on the Arthur Pty ltd. where it has been observed that that
group has professed certain business related to the dancing class. Further, it has been observed
that all the students have to enter into a contract with the company regarding the period of dance
class. Further, the group was providing discounts to the students and the reason behind the same
was to motivate all the students so that they feel affordable to come and join the dance class. The
agreement that has been signed in between the students and the group stated one term where it
has been mentioned that no refund regarding the prepaid fees could be done. Further, it has been
stated that the nature of the contract is full and not divisible. It is a non-cancellable document.
However, it has been mentioned by the authority that in case of a justified situation, the claim for
refund can be taken into place and exceptional steps could be taken there. There were two
accounts named suspense account and revenue account. All the money after receiving from the
students was transferred to the suspense account and after the lessons had been over, certain
amount transferred to the revenue account from the suspense account. Therefore, under this
process, it has been observed that there was no need to refund the amount to the students. The
group was the taxpayer and they are treating the tuition fees as their income. The fees become
income when the dancing course was completed. The taxpayer adopted a method where not all
the monies were received in advance in the form of payment credited to the general revenue.
Rather all the amount was credited to the untaught lessons account. During the year end,

3TAXATION LAW
considerable amount was regarded as untaught lessons account and Commission of Tax has
actually received assessable income and the prepaid tuition fees as general income under section
25(1) and Income Tax Assessment Act 1997.
Issue:
Considering the facts of the case, certain issues have been come into the light:
 The assessable income of the taxpayer has been assessed differently and the
commissioner of tax and the taxpayer with different views have done calculation
regarding the treatment of prepaid tuition fees.
 Certain complexities take place regarding the assessable income made by the taxpayer
on the fact that whether the prepaid tuition fees should be included under the assessable
income or not.
Conclusion:
According to the rules regarding the assessable income, it has been observed that if any
fees have been received in advance, the same could not be held as an assessable income and
therefore, the fees received by the dance group on advance should not be regarded as assessable
income. Further, it has been held by the High Court Australia that the taxpayer should make
certain declarations to the students regarding the fact of refunding the money. According to this,
it has been held by the High court that the taxpayers should make a clear statement that no refund
will be made by the authority. However, an adverse situation has been observed where the
authority had declared that in certain circumstances, money could be refunded and this has made
a violation to the rules of assessable income. This provision of refund has created certain
complexities regarding the yearend balance sheet of the group. It has been observed that the