Sample Assignment on Taxation Law (docs)

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

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Table of Contents
Answer to question 1:.................................................................................................................2
Issue:..........................................................................................................................................2
Laws:..........................................................................................................................................2
Application:................................................................................................................................2
Conclusion:................................................................................................................................5
Answer to question 2:.................................................................................................................5
Answer to question 3:.................................................................................................................6
Issue:..........................................................................................................................................6
Laws:..........................................................................................................................................6
Applications:..............................................................................................................................6
Conclusion:................................................................................................................................7
Answer to question 4:.................................................................................................................7
Answer to A:..............................................................................................................................7
Answer to B:..............................................................................................................................8
Answer to C:..............................................................................................................................9
Reference List:.........................................................................................................................10

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Answer to question 1:
Issue:
Is the amount received by the taxpayer for the selling the interest of book written by
her to the newspaper would be taxable under “section 6-5 of the ITAA 1997”?
Laws:
a. “Brent v Federal Commissioner of Taxation ATC 4195 (1971)”
b. “Housden (Inspector of Taxes) v Marshall (1958)”
c. “Hobbs v Hussey (1942) 24 TC 153”
d. “Scott v Commissioner of Taxation (1935)”
e. “Section 6-5 of the ITAA 1997”
f. “Section 6-1 of the ITAA 1997”
g. “section 15-2 of the ITAA 1997”
Application:
According to the “section 6-1 of the ITAA 1997” income that is derived from the
personal exertion includes the income derived from wages, salaries, fees, gratuities or
proceeds from the business that are carried on by the taxpayer either alone or in partnership1.
As defined under the “section 6-5 of the ITAA 1997” commonly maximum of the income that
is derived by the taxpayer is held as ordinary income. The court of in “Scott v Commissioner
of Taxation (1935)” stated that the receipts are ought to be considered as income in
agreement with the ordinary concept2.
1 Woellner, Robin, et al. "Australian Taxation Law 2016." OUP Catalogue (2016).
2 Barkoczy, Stephen. "Foundations of taxation law 2016." OUP Catalogue (2016).

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As stated under “section 6-1 of the ITAA 1936” an individual deriving amount from
the personal exertion would be required include those income in the taxable return either as
the ordinary income or in the form of ordinary income3. According to the “section 15-2 of the
ITAA 1997” an individual taxpayers taxable income comprises of the worth to the individual
relating to gratuities, bonus, fees or benefits that is provided to the person in relation to any
services or employment performed.
In the present situation of Hilary, it was known that she is well known mountain
climber however on being approached by a local newspaper she agreed to write the book and
sell all the title and interest to the newspaper for publication. The deal fetch Hilary with a
sum of $10,000. An individual taxpayer obtaining money for media appearance to tell the
story of life or selling publication rights to the media shall be held taxable under “section 6-5
of the ITAA 1997”4. Payments that is received from the media rights depends on the
circumstances of being held for assessment given that the taxpayers is required to perform the
service so that they can get the payment. As held in “Brent v Federal Commissioner of
Taxation ATC 4195 (1971)” the court of law held that the amount that was received by the
wife of train robber for narrating the story of her life in a publication was regarded as taxable
income according to ordinary concepts under “section 6-5 of the ITAA 1997”.
As evident in the circumstances of Hilary the receipt of $10,000 by the Daily Terror
Newspaper is regarded as the benefit for the services performed and constitute income from
personal exertion. The sum of $10,000 would be considered for assessment under “section 6-
3 Basu, Subhajit. Global perspectives on e-commerce taxation law. Routledge, 2016.
4 Long, Brendan, Jon Campbell, and Carolyn Kelshaw. "The justice lens on taxation policy in
Australia." St Mark's Review235 (2016): 94.

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5 of the ITAA 1997 as income from ordinary concepts. Citing the reference of “Brent v
Federal Commissioner of Taxation ATC 4195 (1971)” Hilary was motivated by the payment
of $10,000 to provide the service which required her assigning the interest of the book to the
media company5. Therefore, the sum of $10,000 constituted income from personal exertion
which will be held taxable under “section 6-5 of the ITAA 1997” as income from ordinary
concepts.
Later it was observed that the manuscript and the photographs taken by Hilary while
climbing mountain was sold to Mitchel Library. The court of law in “Housden (Inspector of
Taxes) v Marshall (1958)” found that the amount received for making available the
experience as Jockey along with the photographs and newsprint cuttings was regarded
assessable based on the ordinary concepts of “section 6-5 of the ITAA 1997”6. Therefore, the
selling of photographs and manuscripts to the library amounts to income derive from personal
exertion which would be held assessable under section 6-5 of the ITAA 1997.
On the other hand, if the alternative decision of writing the book on her own was
undertaken by Hilary then the sale of such books would have amounted to royalties.
Referring to the judgement of the law court in “Hobbs v Hussey (1942) 24 TC 153” where
the taxpayer was infamous criminal and sold the rights of the autobiographies for publication
in the newspaper7. Therefore court of law held that the amount received was held as taxable
5 Cao, Liangyue, et al. "Understanding the economy-wide efficiency and incidence of major
Australian taxes." Canberra: Treasury working paper 2001 (2015).
6 Robin, H. Australian taxation law 2017. Oxford University Press, 2017.
7 Robin and Barkoczy woellner (stephen & murphy, shirley et al.). Australian taxation law
2018. Oxford University Press, 2018.

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income. Evidently in the situation of Hilary the selling of book written by her would have
accounted as royalties income and such amount would attract tax liability.
Conclusion:
The sum of $10,000, $5,000 and $2,000 derived by Hilary would be considered as
income from personal exertion which will be considered assessable under the ordinary
concepts of “section 6-5 of the ITAA 1997”. While the decision of writing the book herself
would have amounted to royalties.
Answer to question 2:
Answer to question 3:
Issue:
Is the receipt of interest from the loan made to son by the parents would be considered
as assessable under “section 6-5 of the ITAA 1997”?
Laws:
a. “Section 6-5 of the ITAA 1997”
b. “Hochstrasser v Mayes (1960)”

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Applications:
An element having the character of income must be determined in respect of its
realisable value. An element that has the character of income should be determined in respect
of the situations of derivation by an individual. To possess the nature of income the item must
be hold the element of gain for the taxpayer8. The court of law in “Hochstrasser v Mayes
(1960)” stated that to possess the nature of income the element must be a gain for the person
that obtains it.
In the present case it is noticed that the parents lend their son with a sum of $50,000
for short term housing finance. The son agreed to repay to full amount after a five years’
time. even though no interest was charged by the parents however the son return the
principle amount with interest within two years of loan taken.
According to the “Section 6-5 of the ITAA 1997” most of the income that comes in to
the taxpayer is held as income according to the ordinary concepts9. The receipt of interest by
the parents for the loan made to son will be considered taxable under section “Section 6-5 of
the ITAA 1997”. Nevertheless, the receipt of loan principle cannot be regarded because it was
regarded as the capital amount. Referring to the case of “Hochstrasser v Mayes (1960)”
receipt of interest by the parents possess the character of income and it would be considered
taxable under “section 6-5 of the ITAA 1997”.
Conclusion:
Based on the ordinary concepts of the “section 6-5 of the ITAA 1997” the interest
income constituted gain for the parents since was returned three years earlier from agreed
8 Bankman, Joseph, et al. Federal Income Taxation. Wolters Kluwer Law & Business, 2017.
9 McDaniel, Paul. Federal Income Taxation. Foundation Press, 2017.

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time. The amount possess the nature of income and would be considered assessable according
to the ordinary concepts.
Answer to question 4:
Answer to A:
Land and building is regarded as the distinct CGT Assets. This is because the
taxpayer purchased the land on 1st October 1980 and during that the time the land was held as
pre-CGT asset while constructing the building on the land in 1986 led to post CGT assets
based on “section 105-55 (2) of the ITAA 1997”10. The sale of land under “section 104-10(1)
of the ITAA 1997” is held as the CGT event A1. The below listed table provides the summary
of net capital gains made by Scott for 30th June is stated below;
10 Burke, Karen. Federal income taxation of partners and partnerships in a nutshell. West
Academic, 2016.

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Answer to B:
If an alternative decision of selling the property to daughter was undertaken then it
would have resulted in capital gains of $50,000. The below stated calculations supports the
statement;
Answer to C:
On the other given that the property owner was company instead of individual then
the amortization and tax payment should be subtracted.

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Reference List:
Bankman, Joseph, et al. Federal Income Taxation. Wolters Kluwer Law & Business, 2017.
Barkoczy, Stephen. "Foundations of taxation law 2016." OUP Catalogue (2016).
Basu, Subhajit. Global perspectives on e-commerce taxation law. Routledge, 2016.
Burke, Karen. Federal income taxation of partners and partnerships in a nutshell. West
Academic, 2016.
Cao, Liangyue, et al. "Understanding the economy-wide efficiency and incidence of major
Australian taxes." Canberra: Treasury working paper 2001 (2015).
Long, Brendan, Jon Campbell, and Carolyn Kelshaw. "The justice lens on taxation policy in
Australia." St Mark's Review235 (2016): 94.
McDaniel, Paul. Federal Income Taxation. Foundation Press, 2017.
Robin and Barkoczy woellner (stephen & murphy, shirley et al.). Australian taxation law
2018. Oxford University Press, 2018.
Robin, H. Australian taxation law 2017. Oxford University Press, 2017.
Woellner, Robin, et al. "Australian Taxation Law 2016." OUP Catalogue (2016).