Sample Assignment on Taxation Law (pdf)

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

TAXATION LAW1
Table of Contents
Arthur Murray (NSW) Pty Ltd v FCT (1965)............................................................................2
Case Facts:.............................................................................................................................2
Issue:......................................................................................................................................3
Conclusion:............................................................................................................................3
Answer to A (i):.....................................................................................................................4
Answer to A (ii):....................................................................................................................4
Answer to question A (iii):.....................................................................................................6
Answer to Part B:.......................................................................................................................6
Answer to question A:............................................................................................................6
Answer to question B:............................................................................................................7
Answer to question C:............................................................................................................7
Answer to question D:............................................................................................................8
Question E:.................................................................................................................................8
Reference List:.........................................................................................................................10

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Arthur Murray (NSW) Pty Ltd v FCT (1965)
Case Facts:
The taxpayer under this case held the licensed from United States as the company that
performed the business of the giving lessons in dancing to the pupils in Sydney and
Melbourne. The taxpayer provided the students with the contact that enrolled under the
taxpayer for taking dancing lessons. The period of lessons generally consisted of the fifteen
hours which was spread over one year period (Sadiq et al. 2014). The pupils were enrolled
under the taxpayer who were required to sign the contract. The provision that was stated in
the contract was completely non-refundable and the pupils that enrolled under the taxpayer
were completely held responsible for the full sum that was paid for lessons as enumerated in
the contract. The contract clause contained that the amount paid cannot be refunded and
cannot be cancelled as well.
The clause of the contract stated that any form of request relating to refund can be
only considered if the request made by the students is on justified grounds (Woellner 2013).
Even though the terms that were provided in the contract the taxpayer in the income year
made certain kind of refunds based on the situations when the pupils were failure in taking
the fixed amount of dancing classes and gave the students the suitable explanations for
termination of contract.
The accrual” method of accounting was adopted by the taxpayer where the full
amount of money that is obtained in advance as prepaid dancing tuition given, were
immediately not recorded or credited in the company revenue account books (Woellner et al.
2014). The taxpayer instead credited the prepaid amount in “Unearned deposits”-“Untaught
Lessons Account”. As and when the lessons were provided by the taxpayer to the students the

TAXATION LAW3
instructor was required to record the amount in the sheet that was kept together with the
names of the pupils.
At the end of the each month an equivalent sum which was earned upon imparting the
dancing lesson was transmitted in to an account called “Earned Tuition Account”.
Consequently, the sum that was received by the taxpayer were not treated in the form of
income that has been earned until and unless the tuition is provided (Pinto 2013). After the
income year the sum that was standing in the “Unearned Deposits-Untaught Lesson Account”
was carried forward to the following year.
As a result the taxation commissioner issued an assessment of the sum that was in
respect of the years of income together with the assessable income where the sum was
ultimately received by Arthur Murray in every year of income rather than the sum that was
presented into the books of accounts of taxpayer as received. The taxpayer objected against
the assessment that was turned by the commissioner and requested to refer the subject to the
Board of Review (Basu 2016). The review conducted by the board stated that the cash that
was received from the dancing lesson were regarded as the gross receipts of the business
process for the taxpayer and was regarded as the portion the taxpayer assessable earnings
during the year in which the amount was obtained and eventually upholding the assessment.
This led the taxpayer to eventually raise an appeal in the High Court of Australia.
Issue:
The issue revolves around whether the taxpayer has originally obtained the advance
payment of the tuition fees that was received during the year where dancing lessons were
provided?