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
Part 1..........................................................................................................................................2
Answer to question 1 A-............................................................................................................2
Requirement A:......................................................................................................................2
Answer to B:..........................................................................................................................3
Answer to question 1 B:.............................................................................................................3
References:.................................................................................................................................7

TAXATION LAW2
Part 1
Answer to question 1 A-
Requirement A:
“Section 15-2, ITAA 1997” states that receipts derived by the taxpayer in the form of
compensation, benefits and bonus that is received directly by the tax payer either directly or
through indirectly in regard to the employment (Morgan, Mortimer and Pinto 2018). Where a
taxpayer receives lump sum amount in return for the taxpayer promise of accepting the
restrictions on the right of earning income then it is treated as capital in nature and not liable
for tax. A similar outcome was achieved in the case of “Beak v Robson (1943)” where the
compensation received by the taxpayer was considered as capital in nature and not liable for
tax (Morgan and Castelyn 2018). The taxpayer in this case received a lump sum from his
employer after agreeing that when the employment of taxpayer comes to an end, he would
not be competing inside the range of 50 miles of the premises of employer for the period of
next five years. The amount was capital in nature and not liable for tax as ordinary earnings.
In the present situation, Deb is currently working as the tax specialist for the
supermarket chain. Deb entered in an agreement with his employer to surrender his right of
taking a paid day off every month in return for $20,000. Citing the decision made in “Beak v
Robson (1943)” the lump sum payment of $20,000 received in return for giving his right of
taking the paid day off will be regarded as the capital receipt and not taxable as ordinary
earnings (Robin and Barkoczy 2019). The payment received by Deb is in return for the
promise of the taxpayer to accept the restrictions relating to the right of earning income and
hence will be treated as capital in nature.