Understanding Taxation Law: Income, Deductions, and Rules | A Comprehensive Guide

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
Headings:................................................................................................................................2
Issues:.....................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................5
Conclusion:............................................................................................................................9
References:...............................................................................................................................10

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Answer to question 1:
Headings:
The current study is associated to the problems relating to taxation for ascertaining the
net amount of assessable earnings and tax treatment for each transactions incurred during the
year.
Issues:
Are the income that is received by an individual will be considered as taxable income
based on the ordinary meaning of “section 6-5, ITAA 1997”? Is the individual taxpayer is
qualified for income tax deduction for outgoings incurred based on the “section 8-1, ITAA
1997”.
Rule:
As explained under “section 6, ITAA 1936” income from personal services or
personal exertion includes the wages, salaries, bonuses allowances, gratuities etc. that an
individual receives with respect to services provided in capacity of employee or obtaining
any proceeds from business undertakings1. Ordinary income is regarded as the income within
the purview of ordinary concepts and it is taxable under “section 6-5, ITAA 1997”. The gains
needs the characterization by the law court to determine if they carry the nature of income.
As held in “Scott v CT (1935)” income should be interpreted based on the ordinary concepts
and mankind usage.
According to TR 93/30 when it is noticed that a person makes the use of home as their
business place then an applicable part of the running and occupational outgoings are
permitted for tax deductions. The judgement denoted in “Swinford v FCT (1984) 15 ATR
1 Woellner, Robin, et al. "Australian Taxation Law 2016." OUP Catalogue (2016).

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1154” held that the taxpayer was self-employed script writer and was permitted deduction for
a part of house rent from where the taxpayer carried is business of script-writing and did not
had any separate premises for business2.
According to “section 40-25 (1), ITAA 1997” a person is permitted for claiming
permissible deduction for a decline in value of the depreciating assets that is held throughout
the year of income. However, depreciation can be reduced if the assets is used partly for
business purpose and partially for personal usage. While “section 25-55, ITAA 1997”
provides the taxpayer to claim an income tax deduction for the subscription made to any trade
membership, professional or business association.
As it has been stated under “section 25-100, ITAA 1997”, deduction is permitted to
the taxpayers relating to the outgoings occurred for travelling amid the place of work3. The
travel must have direct relation with the business place and work place and none being the
home for taxpayer. This also comprises of travelling during the course of a job namely,
salesman, self-employed builder that visits clients to offer quotations.
The court in “FCT v Wiener (1978) ATC 4006” held that the taxpayer was the teacher
and was required to teach in five schools. The commissioner of taxation allowed income tax
deduction for expenses on travelling amid the schools and travel between the home and the
2 Maley, Mr Nicholas. "Australian Taxation Office Guidance on the Diverted Profits Tax."
(2018).
3 Bankman, Joseph, et al. Federal Income Taxation. Aspen Casebook, 2018.