Income and Expense Information

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

TAXATION LAW1
Table of Contents
Introduction:...............................................................................................................................2
Income and Expense Information:.............................................................................................2
Part A: Income from Employment:............................................................................................2
Part B: Income from Business:..................................................................................................4
Part C: Rental Property:.............................................................................................................8
Dependent tax offset (valid and invalid carer tax offset):..........................................................9
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11

TAXATION LAW2
Introduction:
As noted “sec 6-5 (1)” assesses ordinary income for the taxation purpose. A person’s
assessable income comprises of income based on ordinary conceptions that is known as
ordinary income (Burman et al., 2016). The characteristics of ordinary income includes
income should be money or converted into money. When a receipts that is received from
income generating activities will be treated as “ordinary earnings”.
Income and Expense Information:
The general rule of “sec 6-5 (1) ITAA 1997” says that interest is viewed as ordinary
earnings. Eric in the year has received a bank interest from a jointly held account with his
wife that amounted to $300. The interest received is a taxable ordinary earnings within “sec
6-5 (1) ITAA 1997” (Hanley et al., 2016). A specific deduction is permitted to taxpayer under
“section 25-5 of the ITAA 1997” for outgoings that have been incurred for administering the
matters of tax affairs. Eric paid $400 for preparing a tax return to a registered tax agent in
2018. Hence, Eric can obtain specific deduction under “sec 25-5 ITAA 1997” for the
expenses on tax affairs.
Part A: Income from Employment:
As per “sec 6 (1) ITAA 1936”, income that is earned from personal exertion implies
that income earned from salary, wages, commissions, fees, bonus etc. received by working as
employee. “Sec 6 (1) ITAA 1936” there should be an adequate nexus amid the amount or
benefit received and personal exertion (Jones & Rhoades-Catanach, 2015). As noted in case
of “Dean v FCT (1997)” retention payment which is received by taxpayer for agreeing to be
employed for another 12 months was considered as income. The personal exertion includes
the amount of benefit received constitute a reward or product of personal exertion.

TAXATION LAW3
Accordingly, the case facts obtained from Eric suggest that he has received a
remuneration from his work with Blue Merlin Pty Ltd. The remuneration amounted to
$7,800. The sum of $7,800 is an income from personal exertion under “sec 6 (1) ITAA 1997”
(Miller & Oats, 2016). Citing “Dean v FCT (1997)” the remuneration received is a product
of employment for Eric and will be considered taxable as ordinary income under “sec 6-5 (1)
ITAA 1997”.
Eric also received a shift allowance of $2,000 from his employment. Under “sec 15-2
of the ITAA 1997” where an employee receives any allowances it is not viewed as fringe
benefit rather the receipt of allowance is regarded as statutory income of an employee
(Lukashova, 2016). Similarly for Eric the receipt of shift allowance is a taxable statutory
income under “sec 15-2 of the ITAA 1997”.
As per the “sec 7, FBTAA 1986” a car fringe benefit occurs when a car is given by
employer to an employee for their private usage. Eric reports that he has been given a car by
his employer (Rossikhina et al., 2018). With respect to the car will be considered as fringe
benefit for Eric under “sec 7, FBTAA 1986”. Mentioning to the judgement made in “FCT v
J&G Knowles”, the car has adequate relation with the employment of Eric and the car
provided to Eric is a direct benefit given to the taxpayer. Alternatively the employer of Eric
will be considered taxable for fringe benefit given to him and under “sec 23L ITAA 1936”
the benefit constitute a non-assessable income for Eric.