Taxation Law: Analysis of Payments, Car Fringe Benefit, Capital Gains Computation

TAXATION LAW
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Question 1
The analysis of the three payments is indicated below.
Payment from Autobiography
It is evident that Hilary does not possess writing skills and hence the payment offered by
newspaper to Hilary is not for writing the book but to instead communicate personal
information about her life which the newspaper can copyright. This information will have
commercial value owing to famed status of Hilary (CCH, 2013). The act of writing does not
produce income or cashflows but only is a transfer means for the information which already
exists. This position is supported by Brent vs Federal Commissioner of Taxation (1971) 125
CLR case (Barkoczy, 2015). Thus, the proceeds are not classified as income from personal
exertion.
Payment from Manuscript
Since the writing as an activity does not lead to commercial income, hence it can be
understood the value of manuscript is on account of the information contained therein and
association with Hilary. Thus, the proceeds are not classified as income from personal
exertion (Gilders et. a., 2016).
Payment from Photograph
The photographs of the expeditions do not derive value on any superior photography skills
possessed by Hilary but rather on account of these pictures capturing the famous expeditions
of Hilary. Considering that the act of photography lacks any intrinsic worth, hence the
proceeds are not classified as income from personal exertion (Sadiq et. al., 2016).
Change of intent for book
Considering that act of writing is not related with production of commercial value, thus the
underlying intention while writing would lack any significance in relation to the underlying
tax treatment. Hence, there would be any change in the tax treatment owing to intention being
self-satisfaction and not earning money (Deustch et. al., 2016).
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Question 2
As per section 9 of FBTAA 1986, the car fringe benefit can be computed using the statutory
formula listed as follows (Woellner, 2014).
The discussion in relation to the above input values is indicated below (Sadiq et. al., 2016).
 A - $ 50,000 (s.9 FBTAA 1986)
 B – 20% (Independent of the distance travelled)
 C – 183 (Given)
 D – 365 days in the FBT year concerned
 E - $ 1,000 (s. 10A FBTAA 1986 allows deduction with documentation which is
permissible here since employee has proof of expenses borne)
Thus, putting the input values indicated above in the statutory formula, the following result is
obtained
Question 3
The son through the medium of cheque has returned $ 44,000 to the parent. This money has
two components.
1) Principal Repayment – This would be receipt which is of capital nature and hence no
tax implication would arise from the same. This is because this money was lent and is
not being returned by the son (Barkoczy, 2015).
2) Interest payment – Further analysis is required on this amount which is $ 4,000 and
has been extended to the parent as interest. This cannot be recognised as income
under s 6(5) since the parent is not involved in any business related to money lending.
Her conduct while extension of financial assistance to the son is a testimony of this
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