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TAXATION LAW 10 10 Taxation Law Name of the University Author

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Added on  2021-05-31

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Laws: “Section 6-5 of the ITAA 1997” “section 6-1 of the ITAA 1997” “Scott v Commissioner of Taxation (1935)” “Brent v Federal Commissioner of Taxation (1971) ATC 4195” “Hobbs v Hussey (1942) 24 TC 153” Applications: An individual deriving income from the private exertion ought to be held as taxable earnings based on concept of statutory income or ordinary income.

TAXATION LAW 10 10 Taxation Law Name of the University Author

   Added on 2021-05-31

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Running head: TAXATION LAWTaxation LawName of the StudentName of the UniversityAuthors NoteCourse ID
TAXATION LAW 10 10 Taxation Law Name of the University Author_1
TAXATION LAW1Table of ContentsAnswer to question 1:.................................................................................................................2Issue:......................................................................................................................................2Laws:......................................................................................................................................2Applications:..........................................................................................................................2Conclusion:............................................................................................................................4Answer to question 2:.................................................................................................................4Issue:......................................................................................................................................4Laws:......................................................................................................................................4Applications:..........................................................................................................................4Conclusion:............................................................................................................................6Answer to question 3:.................................................................................................................6Issue:......................................................................................................................................6Laws:......................................................................................................................................6Applications:..........................................................................................................................6Conclusion:............................................................................................................................8Reference list:.............................................................................................................................9
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TAXATION LAW2Answer to question 1:Issue: Would Jenny be held accountable for appearing in the media conversation for thepurpose of narrating the story of her husband and receiving amount relating to the reward forservice shall be held assessable under “section 6-5 of the ITAA 1997” as income fromordinary concepts?Laws: I.“Section 6-5 of the ITAA 1997” II.“section 6-1 of the ITAA 1997”III.“Scott v Commissioner of Taxation (1935)”IV.“Brent v Federal Commissioner of Taxation (1971) ATC 4195”V.“Hobbs v Hussey (1942) 24 TC 153”Applications: An individual deriving income from the private exertion might be held as taxableearnings based on concept of statutory income or ordinary income. As stated in thereconciliation rule of the “section 6-25 of the ITAA 1997” states that if the amount constituteboth the ordinary and the statutory income then the rules of statutory income prevails excepta conflicting intention is specified (Pinto, 2013). The nexus test defines that the three shouldbe a nexus among the receipts and the provision relating to the services which includesproduct or reward or any ordinary incident relating to the provision of services. In accordance with the “section 6 of the ITAA 1936” income which is created fromthe private effort or income obtained from the individual comprises of the earnings, salaries,wages, gratuities that is received as an employee or the proceeds that is obtained from thesum that is received based on the bounty of services (Brokelind, 2014). It also includes theproceeds that a person obtains from the business that is carried on by the person alone or inpartnership or any form of amount that is included in the taxable earnings of the taxpayer byvirtue of the “section 393-10 of the ITAA 1997” (Coleman & Sadiq, 2013). Nevertheless“section 6-1 of the ITAA 1997” does not takes into the account any form of amount that isobtained from the principle business comprising of money lending or unless the interest isreceived relation to the debt that is due for the goods or services supplied. The case study opens up with the situation stating that Jenny who is the wife of thelate husband Henry once a renewed Jazz singer. Jenny was approached by Jack, a publisher
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TAXATION LAW3who was keen on knowing about the life of Henry. Jack initially offered Jenny with anamount of $1 million for narrating the life story of Henry and in advance rewarded Jennywith a sum of $500,000 for appearing in the interview. In view of that, “section 6-5 of the ITAA 1997” describes ordinary income asmaximum of the returns that is originates into the taxpayer. The jurisdictional concept ofordinary proceeds includes income according to the ordinary concepts (Grange et al., 2014).The expression “income” should not be viewed as the term of art as it requires the applicationof necessary principles in order to determine as to what extent those receipts essentiallyrequired to be held as earnings and should be held in agreement with the commonconceptions and usage of mankind. The law court in “Scott v Commissioner of Taxation(1935)” explained that a constituent that has the character of income is derived when thesame has the home coming nature for the taxpayer (James, 2014). The existence ofunlawfulness, dissolution or the ultra vires does not prevents the source. The element of income possesses the component of proceeds that is obtained wouldbe believed as proceeds till the sum of its derivation value (Kenny, 2013). The court of lawstated that the character of profits ought to be established in terms of the situations of itssource by the person who derives it. To possess the character of income the item should beheld as the gain by the by the person that derives it. There is no gain except the article ofearnings is obtained beneficially by a person. The judgement that was passed in “FederalCommissioner of Taxation v Brent (1971) ATC 4195” stated that the other half of the trainthief was allowed by the media company with the special right of publishing the story of herlife and return received a payment that was held as reward for service (Krever, 2013). Thepayment that was received by the robber of the wife was regarded as the income on the basisof ordinary concept of the “section 6-5 of the ITAA 1997” and the same was considered fortaxation. Taking account of the situation of Jenny the sum that was paid to her by the publisheris held as the reward for the service for appearing in the interview and narrating the story ofHenry’s life. The amount that was received by her holds sufficient nexus among the receiptsand the provision of service which is the reward under the provision of services (Morgan etal., 2013). The advance payment of $500,000 and remaining amount constituted taxableunder “section 6-5 of the ITAA 1997” as earnings on the basis of ordinary concepts.
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