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Sample Assignment on Taxation Law (docs)

   

Added on  2021-06-17

12 Pages2770 Words20 Views
Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID

TAXATION LAW1Table of ContentsPart A:........................................................................................................................................2Answer to requirement A:..........................................................................................................2Answer to requirement B:..........................................................................................................7Part B:.........................................................................................................................................7Reference List:.........................................................................................................................10

TAXATION LAW2Part A: Answer to requirement A:MemoTo Chief Financial Officer Manic Pty LtdAs defined under the “Section 6 of the ITAA 1997” an individual that derives incomethrough the private exertion is regarded as the income consisting of the earnings, salaries,wages, bonus, fees, pension, superannuation’s or any form of business profits that isperformed by the taxpayer either individually or through the partnership (Woellner et al.2016). Referring the definition of “Section 6-5 of the ITAA 1997” income that is generatedfrom the ordinary sources is held liable for taxation. Citing the reference of the court in thecase of “Scott v Commissioner of Taxation (1935)” receipts will be held as the taxableincome in compliance with the ordinary concepts (Barkoczy 2016). Denoting from thecurrent circumstances of Manic Pty Ltd the sum of $80,000 that are received from the servicefees forms the part of the taxable income as income derived from private exertion withreference to “section 6 of the ITAA 1936”. As stated under the “section 6-5 of the ITAA 1997” a person when beneficiallyderives the income has the character of home coming for the taxpayer (Cao et al. 2015).Additionally, income that are derived from the ordinary concept of mankind is consideredassessable. Evidently in the situation of Manic Pty Ltd the interest income will be included atthe time of filing for tax return. According to the “section 8-1 of the ITAA 1997” an individual taxpayer is allowed toclaim deductions for the expenses that are incurred in generating the assessable income for

TAXATION LAW3any loss or expenses incurred (Braithwaite 2017). The Australian taxation office provides thatexpenditure related to trading stock is allowed for deduction. An increase in the value of thetrading stock constitute assessable income whereas a fall in the value of trading stock isregarded as the permissible deduction. Taking into the consideration the value of tradingstock helps in assuring that in the ordinary business course the taxpayer relating to tradingstock purchased during the year reflects the cost of sales that is involved during the year.Therefore, purchasing the trading stock from the Hong Kong forms the part of the deductionas the accounting expenditure. According to the “taxation ruling of 92/18” provides that there are situations where ataxpayer can claim an allowable deductions relating to the bad debts (Davis et al. 2015).According to the “section 51 (1)” any types of business losses that are in the nature ofoutgoing or holding the characteristics of revenue is allowed for deductions when thoselosses and outgoings are primarily incurred. The federal court in the case of “Crane SalesLtd v Federal Commissioner of Taxation (1971)” explained that the debt constitutes thepurpose in section “63 of the ITAA 1997” where a taxpayer is allowed to claim equaldeductions for the debt which is bad. An individual taxpayer is only allowed to claim deductions for the bad debt which isentirely written off as the bad debt during the year of income (Saad 2014). Ideally in the caseof Manic Pty Ltd the bad provision shall not be allowed as allowable deductions. The reasonfor this is that the company did not recorded or suffered any form loss from bad debt.Furthermore, there was no evidence of recording of transaction by the Manic Pty Ltd in theincome year where an appropriate bad debt deduction can be claimed. The guidelines provided by the Australian taxation office provides that a person canclaim deductions relating to expenses that are in the nature of capital (Miller and Oats 2016).

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