Personal Service Income & PayG

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:...............................................................................................................12
References:...............................................................................................................................14

TAXATION LAW2
Answer to question 1:
Issues Law and Reasons Amount ($)
Personal service income
(wages) & PayG
Within “sec 6, ITAA 1936”
the personal exertion income
includes wages, allowances,
salaries that is received in
relation to employment or
services rendered (Woellner
et al. 2016). The receipt of
$80,000 wages is a personal
service earnings and will be
taxable as ordinary income
under “sec 6-5, ITAA
1997”. While the PayG of
$24,000 will be allowed for
tax offset.
$80,000
Assessable
$24,000 Not Assessable
Entertainment Allowances Jean will be permitted to
obtain tax deduction for the
entertainment allowance
because it was spent on
entertaining the clients for
work purpose.
$10,000
Not Assessable
Unused annual leave and
unused service leave
A taxpayer may receive
lump sum payment for the
unused annual leave or long
Unused Annual Leave
$5000

TAXATION LAW3
service leave (Barkoczy
2016). The sum of unused
annual leave and long
service leave amounting to
$5000 each will be included
in the salary and wages of
Jean Johnson.
(Taxable Income)
Unused long service leave
$5000
(Taxable Income)
Gift of I-phone and travel
accommodation
Gains that are simple gift is
not held income. In “Scott v
FCT (1966)” gift of 1000
shares received by taxpayer
was not an income (Sadiq
2019). The gift of I-phone
worth $1000 and travel
accommodation is not an
income for Jean Johnson.
$1000 (I-phone)
Not examinable
$1,000 (travel and
accommodation)
Not examinable
Lump sum of $100,000 The numerous lump sum
payment which is received
by employee upon the
termination of service is
taxed as the statutory
income. The one-off receipts
of $10,000 received by Jean
will be included in the
$10,000
(Assessable)