Taxation Law: Deductions and Fringe Benefits Tax Implications

Taxation Law

INTRODUCTION...........................................................................................................................2
QUESTION 1..................................................................................................................................2
QUESTION 2..................................................................................................................................4
Calculation of Anushka's taxable income and net tax payable....................................................4
QUESTION 3..................................................................................................................................5
Discussion of Fringe Benefits Tax implication of different cases...............................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
Taxation could be defined as the liability of every business and individual to pay accurate
tax to the legal authorities of the country in which income is generated by them. These are levied
in every country around the world and it is one of the main source of income of governmental
bodies. In other words, it could be described as the system which is imposed by government on
all the citizens and entities to finance all their expenses such as infrastructure development,
education and health care (Maurer and Walker, 2017). Present report is based upon assessment of
tax in different situations and analysis of deductions for individuals and businesses. This report
covers various topics such as allowable deduction for a new chimney, calculation of taxable
income for an individual’s etc. Apart from this, assessment of fringe benefit for employers in
different situations under Australian taxation law is also covered in this assignment.
QUESTION 1
In case of building new chimney, there is no amount allowable as a deduction under
Australian Income Tax but, if Furnaces Pty going to repair the chimney then it would be
deductible. Repair of any machinery or equipment will always be the replacement of a part of the
capital equipment or of the system, the component being repaired being no more than a
subservient part of all of it (Deduction under Australian taxation. 2017). For example, buildings
are considered to be a whole rather than a subservient portion, but the elements that make up the
construction are subordinate parts.
In case of Furnaces Pty, repair amount of the chimney would be allowed for deduction. A
deduction shall be made for the cost of repairing business property, part of premises or a drop in
the value asset (as defined in s40-30) retained for the purpose of generating an appraisal income.
If the assets is held or only used in part for that reason, a deduction may be made in so far as is
appropriate in the circumstances (s25-10). The taxation authority cannot force the owner to own
the asset or the depreciating asset (Arnold, Ault and Cooper, 2019). It may also be held by another
organisation; however, if the expense is for maintenance and the owner retains or uses the
property or the depreciating asset from the year of income for the purpose of creating
an appreciable income, the deduction is permissible given that the payment is produced. There
are three cases such as incurred by the taxpayer who sought the deduction, incurred in the same
year that the deduction is assumed and imposed in regard of property or a devaluing asset.
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