Taxation law Sample Assignment (pdf)

Taxation law

Table of Contents
INTRODUCTION...........................................................................................................................1
Question 1: The goods and service tax (GST)............................................................................1
Question 2: Capital gain tax (CGT)............................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................6

INTRODUCTION
Taxation law is the rules book to provide several rules and provisions which are several
things which render guide towards several business individuals and organisations. This law was
to maintain and create a betterment of environment of working conditions of business. These
laws and provisions help in creating several it points towards total wealth and revenue generated
in assessment year. These guidelines in Australia are created by federal government with help
from Australian taxation office. The following report refers toward two cases with different
circumstances in which what rules and codes are to be followed are mentioned under this report
(Bant, 2015).
Question 1: The goods and service tax (GST).
Facts of case: city sky co is a firm which deals in property development and investment,
after a recent purchase they contacted a lawyer Maurice Blackburn for legal help regarding
development for $ 33,000. This person being single owner of his firm has a revenue generation
of $ 300,000 per annum. Here they availed service of an local lawyer to accumulate services
regarding purchase of an vacant land.
The legal issue or suggestion here is very clear that GST stands for goods and services
tax, property bought by city sky co is an land which comes into immovable property. Its not a
good nor its a service. First of all company is a registered firm in GST so they can avail input tax
credits. Their is no GST on land so company shall not pay anything. No GST shall be implied
over this concept to understand things with more perspective one should understand following
concepts:
GST credit claims: this means that any person who pays tax is using some property for
his personal or business purpose then no input tax credit will be implied over it.
Reverse charge techniques: this term means to attain legal help from some lawyer or
any one, this theses services come under business purposes so they can be claimed under the
input tax credit (Bartleet And et. al., 2014).
GST over immovable property: the basic definition of GST is goods and service tax
which states that any good or service taken by any person or given by any person is made
available only for these things. The immovable properties which neither is a good nor a service.
The GST application of input tax credit will not be applicable in such cases.
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Hence, in provided case scenario city sky co has acquired a vacant land and in present he
help of an lawyer is been taken for prominent purposes of making legal bindings and
requirements for a future project of developing 15 apartments. The goods and services tax will
not be applicable (Buchan, 2014).
The plans on constructing apartment on a vacant land under credit but black which
basically mean when a person who is taxable resident if buying such property shall not be liable
for any direct tax input. It is mentioned that city sky co is attaining help from a local lawyer
Maurice Blackburn for property development costing $33,000. Such services are made available
for purpose of attaining legal necessaries for particular project. The only regulations the business
firm will have should be this services attained by them, input direct tax will only be liable for
accumulating such services. In case of such property which is not even ready in present shall
require to provided to the receiver of property not person developing it.
The revenue generation for revenues given for the local lawyer Maurice Blackburn does not
make any sense and is not connected to case.
Recommendation: summarising the whole case the advice to firm city sky firm is that they are
never considered to be paying any taxes rather than input tax credit. Any other things mentioned
are not required to be paid by this firm, other things are liabilities of the person who will
eventually own such vacant lands after development (Dowling, 2014).
Having proper invoices of revenues is very important aspect according to Australian
system for taxation. It provides both GST collections and the credits which several business-men
are available to acquire and claim.
Any such business person should have all the invoices related to business demands and
requires all these to claim input tax credit from government. In several cases one can claim bona
fide tax invoice which should include names and identity of both buyer and seller.
Guidelines of GST are mentioned particularly in ATO on tax invoices and regulations. These
things qualify the fact that only goods or service which are provided are marked under GST not
any immovable property.
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Question 2: Capital gain tax (CGT).
Case facts: Emma has given several listings of assessments years records which will
perform several tasks and calculations of goods and assets and shares she has sold and purchased
in this case. The income tax return is to be filled in current year 2015 and revenues generation is
to be made (Eccleston and Woolley 2014).
Capital gain tax is slip of statement which creates a effective difference between the sales
and purchases of an individuals. Here, original price of asset and selling price both is mentioned
in this statement. Their are two types of gains which are made by an person one is capital gain
and second is short term gain. The main difference in both is that one is gained after more than 3
years of time and short term gains are acquired within a year. The CGT conducts work by
incurring these capital gains in taxable amount for every year. This includes all things which are
sold and purchased in the current assessment year (Saad, 2014).
Capital gain provisions will be calculated accordingly and then after accumulating her
total gain for the current assessment year one can calculate the provisions regarding such things.
Their is also tax on capital gains of a person, its done over the net capital gain acquired by a
person (Gumley, 2014). In case of capital loss no tax over gains is paid but it does not provide
any rebate in paying taxes for current year. The basic accumulations of capital gain tax. this is
calculated on the basis of below given transactions and calculations:
1. accumulating gross balance sheet for taxation value.
Sale of block of land $1000000
purchase costing deductions:
purchased in 1991 250000
stamp fees 5000
legal fees 10000
bank interest paid 32000
water, fees paid 22000
legal fees paid 5000
cost cutting of pine trees 27500
agent fees 25000
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gross total value: 623500
The above mentioned calculations are for providing several deduction from the total amount of
sale Emma made in the assessment year of 2015. Sale of piece of land was sum amount Emma
had collected after selling that land, she collected $1,000,000. their were several purchases she
made in the year which were deducted from the sum amount (Isa, 2014). Here the legal issue is
that she is in profitable gain for the assessment year as her gross profit was accumulated to be
$6,23,500. according to Australian taxation law, all expenses are deducted from main sale or
assessment years beginning budget. A capital gain is always calculated by asset one pays for and
for what amount it was sold off. If the sale amount is more than purchased amount it is said to be
capital gain and vis-versa is called capital loss(Richardson and Lefroy, 2016). Every person pays
a different ratio of tax at end of the year, there is no rebate over capital gain tax discount one has
to pay 30% on every net capital profit. In case of having a capital gain one can apply for 50%
discount over it if indexation is not applied.
Things which are needed to accumulate this amount are mentioned below:
 all sale receipts and initial costings made
 the interest which is paid related to loan or borrowing from a person.
 All other costs which are day to day recorded.
 Valuation of assets which keep getting either more expensive or decrease their value.
2. evalulation of selling shares and gaining capital gain of $ 49,833.
sale of total shares of 1000
actual price per share 50.85 1000x50.85 50850
Deducting 2% brokerage 50,850x2/100 1017
purchased price 1000x3.5 3500
total amount (profit) 49833
In this case when any part of share is sold and was bought in a very long period of time,
either becomes capital gain or loss. In this scenario it is capital gain earned by emma which will
be added in later accumulated total amount of either profit or loss earned in the current year.
Investing in shares is the most beneficial investment one can do as to buy on a very low rate and
keep it for long tenure, later sales of such shares provide a lot of gains(Macintosh, Foerster, and
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McDonald, 2015). Like in this case as well shares bought in 1982 and sold them in 2015. this
bought her from the price difference of $3.5 per share to $50.85 per share.
3.sale of stamp and had a short term loss of $15,000 in it.
Selling stamps was considered to be a wrong decision for Emma as she incurred a capital
loss in the and of financial year and it will considered short term loss.
4.Sale of antique piano a long term loss was incurred of $50,000.
selling the antique piano was major loss for Emma as it was sold in 50,000 capital loss for the
year(McGregor-Lowndes, 2014).If she would consider depreciating the asset value each year she
might have gained some benefit or it might have been on par with selling price.
sale of stamp collection 60000
plus fees 5000
sold in 50000
short term loss 15000
sale of antique piano 80000
selling cost 30000
long term loss: 50000
As per rules and guideline mentioned in taxation laws and principles Emma gained a full term
capital gain in financial year of 2015.
Total accumulated gross profit 623500
Deductions of capital losses
stamps 15000
Antique piano 50000
Additions of capital gains
Sale of shares 49833
The total accumulated capital gain 608333
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In the following case scenario, one can accumulate the legal issue to be that Emma
should have had applied for the policy of gaining 50% benefit over profit in assessment year.
The guidelines which were followed in the course year were from rule book of taxation in
Australian laws (Moretto and et. al., 2014).
According to superannuation funds should register and fill form of capital gain tax(NAT
3423).
One shall consider several tax and regulation rule books which will provide several benefits and
rules to solve all issues and accumulate the net gain and loss of the year(Picciotto, 2015). Such
guide books are:
 company tax return act
 trust tax return
 fund income tax return
 Self-managed superannuation fund annual return.
Recommendation: In this case scenario Emma will gain capital gain tax and can file for claiming
all her expenses incurred in whole assessment year. According to policies in taxation laws one
can claim back their all expenses in end of year though gaining capital gain in the end (Murray,
2015).
CONCLUSION
In report mentioned above two scenarios provided guide through several guidelines
provided for the correct analysis of tax savings and accumulating gains and losses (Welsh, 2014).
Taxation law of Australia is strict policy act but it does provide several remedies. In certain case
laws one can gain many benefits out of filling in provisions form to gain extra benefit & claim
several expenses back at time of tax paying.
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REFERENCES
Books and journals
Bant, E., 2015. Statute and common law: Interaction and influence in light of the principle of
coherence. UNSWLJ. 38. p.367.
Bartleet, B.L. And et. al., 2014. Reconciliation and transformation through mutual learning:
Outlining a framework for arts-based service learning with Indigenous communities in
Australia. International Journal of Education & the Arts. 15(8).
Buchan, J., 2014. Deconstructing the franchise as a legal entity: practice and research in
international franchise law. Journal of Marketing Channels. 21(3). pp.143-158.
Dowling, G. R., 2014. The curious case of corporate tax avoidance: Is it socially
irresponsible?. Journal of Business Ethics. 124(1). pp.173-184.
Eccleston, R. and Woolley, T., 2014. From Calgary to Canberra: resource taxation and fiscal
federalism in Canada and Australia. Publius: The Journal of Federalism. 45(2). pp.216-
243.
Gumley, W., 2014. An analysis of regulatory strategies for recycling and re-use of metals in
Australia. Resources. 3(2). pp.395-415.
Isa, K., 2014. Tax complexities in the Malaysian corporate tax system: minimise to
maximise. International Journal of Law and Management. 56(1). pp.50-65.
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