Taxation Law Assignment: Net Income of Partnership and Fringe Benefit Tax

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
Answer to question 2:.................................................................................................................7
References:...............................................................................................................................10

2TAXATION LAW
Answer to Question 1:
According to the “division 5 of the ITAA 1936” this case study is determining the net
income from a partnership.
Rule:
According to “section 91, ITAA 1936” a partnership should incur and record the
amount of profit gained by the objectives of partners and this determines the actual taxable
incomes for the partners. Similarly, “section 91, ITAA 1936” this section highlights as per
the rules of general law the partnership need not pay the tax separately (Dong 2018). In terms
of profit the partners needs to calculate their taxable income and they have pay the tax as the
profit earned. Hence the allowable deductions are omitted while calculating the taxable
income.
Under “section 6-5, ITAA 1997” the income gained from the profit of a business is
called as the ordinary income. According to the court under “Scott v CT (1935)” income is
not recognized as the word of art but this is known as proportion of entities used for meeting
the benefits of public along with highest profit throughout the business life cycle (Mares and
Queralt 2015). Hence, according to “section 6-5, ITAA 1997” the incomes and profit gained
from the business objectives are called as the ordinary income. Now the categorization of the
ordinary income must include the receipts forms that are used while gaining the business
objectives or profits.
According to the “section 8-1” the importance of paying tax over gaining profit from
the partnership is that the objective should not only satisfy the basic needs of public but also
this should be following the rules of “section 8-1”. The positive part of the “section 8-1 (1),
ITAA 1997” states that the taxpayer is allowed to get all the deduction if they have made the
expenses for the profit making with respect to their business objective and also this must be

3TAXATION LAW
for gaining the taxable income throughout the business (Berliant and Gouveia 2018).
Consequently if the taxable income is following the negative limbs of the “section 8-1 (1),
ITAA 1997” if the expenses are considered as capital, domestic or private then the taxpayers
are not allowed for the deductions in their taxable incomes.
According to “section 25-10, ITAA 1997” a taxpayer is allowed to claim the
expenditure that happened for the repair in depreciating assets and also for the properties
which may lead to the increment of profit in partnership (Calabrese, Epple and Romano
2018). Under “section 25-10” any kind of maintenance work is known as repairs as painting
of business premises, repair of current business entities that may lead profit increment.
Consequently, the expense involved into this repairs and replacements includes deductions to
the taxable income for the taxpayers as they are incurring these changes for gaining more
taxable income. However, this is very important to be noted that the good or entities those
which are replaced should be same as the worn out entity but this should give more effective
results in terms of production or gaining profit. This aspect is included in order to highlight
the improvement of the business functionalities.
The taxpayer can be allowed instant $20,000 write- off if they have invested this
amount or less than it in their entity repairs and relevant expenses. Hence they will get a
deduction in their taxable income for these kinds of repairs.
Application:
Rendering to the “division 5, ITAA 1936” Daniel and Olivia ha incurred several
business activities those incurred taxable income along with different expenses into their
business (Auerbach and Hassett 2015). According to “section 91, ITAA 1936”, these
expenses along with the taxable income gained by their partnership is elaborated in this
section.