Taxation Lawws Case Study 2022

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

TAXATION LAW1
Executive Summary:
The present study is based on determining the tax liability of the client that has derived
income from numerous sources during the relevant tax year. The sources of income includes
the income derived from employment, income earned from business and income made from
rental properties. Reference to the relevant laws, legislation and case laws will be made in
respect of the ITAA 1997 and ITAA 1936. The computation clearly states that client fell
under the lower middle income group.

TAXATION LAW2
Table of Contents
Introduction:...............................................................................................................................3
Income and Expense Information:.............................................................................................3
Part A: Income from Employment:............................................................................................3
Part B: Income from Business:..................................................................................................5
Part C: Rental Property:.............................................................................................................8
Dependent tax offset (valid and invalid carer tax offset):........................................................10
Conclusion:..............................................................................................................................11
References:...............................................................................................................................13

TAXATION LAW3
Introduction:
The ordinary income is viewed as the income that is made by taxpayers in accordance
with the ordinary conceptions. The ordinary income that is earned by the taxpayer is held
assessable within the legislative provision of “sec 6-5 ITAA 1997”. The law court have stated
that it is important to characterize the gain since it carries the characteristics of income. The
central issue regarding the use of Australian income tax law is to characterize the gains
ordinary income in the present case of Eric.
Income and Expense Information:
Interest received by taxpayer are held as ordinary income under “sec 6-5 ITAA 1997”.
Eric reports the receipt of bank interest from the joint term deposit with his wife at ANZ. The
interest received by Eric will be taxable as ordinary income under “sec 6-5 ITAA 1997”.
“Section 25-5 of the ITAA 1997” allows a taxpayer with the deduction for the certain costs
which also includes expenses occurred in managing tax affairs (Woellner et al., 2016). The
sum of $400 paid by Eric to a registered tax agent for preparing a tax return for 2018 will be
allowed for specific deduction under “sec 25-5 ITAA 1997”.
Part A: Income from Employment:
A taxpayer when receives any receipt from employment or from the provision of
providing any general service will be considered as the subject of income tax for the
employee or may be held as fringe benefit tax for the employee. A relation or any type of
nexus with the receipt arising as a result of taxpayer’s personal service will be held as
ordinary income (Barkoczy, 2016). Under the “sec 6 ITAA 1936” nexus is normally
established for the common items that relates to personal service such as salary and wages,
commissions, bonuses, fees charged for services given or any type of ancillary payments
which is regarded as the “incident of employment”. As noted in “Brent v FCT (1971)” nexus