Taxation Law

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

TAXATION LAW1
Table of Contents
Answer to question 1:............................................................................................................................2
Headings:...........................................................................................................................................2
Issues:................................................................................................................................................2
Rule:..................................................................................................................................................2
Application:.......................................................................................................................................3
Conclusion:........................................................................................................................................5
References:............................................................................................................................................6

TAXATION LAW2
Answer to question 1:
Headings:
The case is based on the taxation issues relating to the tax liability of the transactions that is
occurred by the taxpayer in the release of service duties.
Issues:
The case involves the issues
a. Whether the taxpayer will be accountable for paying tax for the proceeds that is earned in
capacity of the employee under the ordinary sense of “section 6-5, ITAA 1997”?
b. Whether the taxpayer will be permitted to obtain deduction for outgoings that is occurred
while gaining the taxable earnings under positive limb of “section 8-1, ITAA 1997”?
Rule:
Proceeds which is associated to the performance of contract or the provision of service are
treated as income from individual effort under “section 6 ITAA 1936”. As held in “Hayes v FCT
(1956)” personal exertion amount is characterised is product or incidence of work or payment for
rendering services1. If the employer provides the employee any sort of fringe benefit, then the benefits
will be treated as non-chargeable earnings for the worker under “section 23L ITAA 1936” and the
boss would be accountable for FBT for the total value of benefits given to employee.
Payments which is related to employment constitute assessable ordinary income. In “Kelly v
FCT (1985)” reward for best player was related to the taxpayer’s effort and service. The amount was
taxable under “section 6-5, ITAA 1997” as ordinary proceeds in the hands of recipient. The general
rule explains that travel between work and home is not permitted as general deduction under “section
8-1, ITAA 1997”2. However, travel expenses may be deductible if occurred in course of employment.
In “FCT v Weiner (1978)” deduction for travel was allowed to taxpayer because it was incurred in
event of creating chargeable proceeds.
In view of court in “Moore v Griffiths (1972)” simple prize is not the earnings but might be
an income provided that there is adequate relation with income creating acts. Similarly, in “FCT v
Stone (2005)” the taxpayer was charged tax for endorsement and prize money received since the
taxpayer was conducting the business of professional athlete and receipts were income under ordinary
sense of “section 6-5, ITAA 1997”3. As per “section 21A, ITAA 1936”, a non-cash benefit might
1 Barkoczy, Stephen, Foundations Of Taxation Law 2014
2 Robin & Barkoczy Woellner (Stephen & Murphy, Shirley Et Al.). Australian Taxation Law Select 2019: Legislation and
Commentary. OXFORD University Press, 2019.
3 Grange, Janet, Geralyn A Jover-Ledesma and Gary L Maydew, Principles Of Business Taxation 2014.