Taxation Law

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Author Note

1TAXATION LAW
Q. 1.
a)
The Taxation Ruling TR 2018/41 covers the procedure that the Commissioner implements
to compute the effective life with respect to the assets, which suffers depreciation.
b)
The Income Tax Assessment Act 1997(Cth) under Div 132 details available tax details the
claim in relation to tax offset.
c)
The top tax rate that is to be applied to a resident taxpayer for the 2018/19 tax year is
54,097 plus 45% for every $ 1 over 180,001 or above.
d)
An example of an asset that is exempt from capital gains tax is gains from shares, which
has been provided under section 118.13 to section of the Income Tax Assessment Act
1997(Cth)3.
e)
The CGT event B1 that has been provide under section 104.15 of the Income Tax
Assessment Act 1997(Cth)4. Provides for the right conferred upon a person in relation to the
use and enjoyment relating to a CGT asset prior to the actual passing of the ownership of the
same.
1 Taxation Ruling TR 2018/4
2 The Income Tax Assessment Act 1997 (Cth), Div. 13
3 The Income Tax Assessment Act 1997 (Cth), s. 118.10
4 The Income Tax Assessment Act 1997 (Cth), s. 104.15

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f)
The formula for the computation of the amount of income tax has been provided under the
Income Tax Assessment Act 1997(Cth) in section 4.10(3)5. It needs to be calculated by
making deduction of the taxable income of a person, which has been multiplied by the tax
offsets available.
g)
The High Court, in the case of FC of T v Day 2008 ATC 20-0646 has allowed all the
expenditures that has been incurred in the furtherance of generation of the taxable income of
a taxpayer as a general deduction under the income tax assessment Act 1997 in section 8.17.
Previously, expenditures that a person incurred for personal purposes were not allowed as a
deduction under this section. However, with this case, if it can be establish that the
expenditure that has been incurred to the taxpayer, has in anyway made a contribution in the
process of generation of income, which taxable would be permitted as a deduction
irrespective of its nature.
h)
Average rate of tax and marginal rate of tax are required to be differentiated with respect to
the target they impact. Firstly, it can be stated that in case of average rate of tax, the
calculation needs to be carried out upon the taxable income of a person, in its entirety.
Whereas the marginal rate of tax of a person needs to be computed over the increments
relating to the income that has been taxable pertaining to the taxpayer. Secondly, it can be
said that in case of average rate of tax all the incomes that are assessed and taxable for the
taxpayer needs to be considered. Whereas in case of marginal rate of tax only those part of
the income of a taxpayer is to be considered, which relates to the increment. The calculation
5 The Income Tax Assessment Act 1997 (Cth), s. 4.10(3)
6 FC of T v Day 2008 ATC 20-064
7 The Income Tax Assessment Act 1997 (Cth), s. 8.1

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of the average tax rate is to be done by treating the income tax payable by the taxpayer with
the total taxable income of the taxpayer. On the other hand, the marginal tax is required to be
calculated by treating the increment incurred with respect to the tax rate.
i)
Any tax that has been imposed or levied upon the usage or consumption relating to services
and goods to a person either directly or indirectly can be construed as a consumption tax.
These taxes includes sales tax, GST, duties and other forms of taxes that a person consuming
services or goods needs to make payment for. The spending upon the consumer goods and
services needs to be considered for the purpose of assessment. The amount of the goods and
services is irrelevant in this aspect. In Australia, the main consumption tax is the Goods and
Services Tax (GST) and the same imposes a tax rate of 10% upon most of the consumer
goods and services.
Q. 2.
a)
Expenses or costs that a taxpayer may incur in the course of income generation process,
which can be subjected to taxation, would be construed as a deduction under the Income Tax
Assessment Act 1997 (Cth), section 8.18. It can be stated that the amounts incurred by the
taxpayer as an expense while earning the taxable income would only be allowed as deduction
under this section. In this case, although the loan availed by Brett was against his personal
home, but the same has been availed for the purpose of paying the wages of the employees he
has for the purpose of running his business. This can be construed as an expense incurred
while earning taxable income and will be permitted as a deduction.
8 The Income Tax Assessment Act 1997 (Cth), s. 8.1