Taxation Law

This document provides information on various aspects of Taxation Law, including deductibility of gifts, maximum tax rate, exemptions, types of income, additional charges, residency tests, and deductible expenditures. It also discusses the criteria for deducting expenses related to travel, books, repairs, and clothing. Course code: N/A, Course name: N/A, College/University: N/A

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

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Answer 1
a) When it is apparent that a business action has been said to be carried out by a company
that is the topic which is considered to be dealt with Taxation Ruling 2019/11.
b) In div 30 of ITAA, 972 the deductibility of the gifts or the contributions whether they
can be made are laid down.
c) The maximum tax rate that an individual has to pay for the year 2019-2020 is the
amount of 54097 AUD $ with the addition of 45% on any amount which can exceed 180,000
AUD $3.
d) There can be an exemption of car as well as motorcycle as the provisions which have
been laid down in Sec 118.5 of ITAA ,974 from being subjected to capital gain taxation.
e) Any kind of item or an asset which has been misplaced or has been destroyed that was
in possession of the taxpayer before would be considered to have fallen under CGT as an event
of C1 according to the provisions laid down in 104-20 of ITAA, 975.
f) Any kind of income or revenue earned by the taxpayer which is considered to be under
the amount of 18,200 AUD $ cannot be included in taxation.
g) The legal code which has been considered to develop with the High Court’s decision
can be seen in the case of Hayes v FCT (1956) 96 CLR 476 was that any kind of amount which
1 TR 2019/1.
2 The Income Tax Assessment Act 1997 (Cth), div 30
3www.ato.gov.au,"IndividualIncomeTaxRates",Ato.Gov.Au(Webpage,2019)
<https://www.ato.gov.au/Rates/Individual-income-tax-rates/>.
4 The Income Tax Assessment Act 1997 (Cth), s 118.5
5 The Income Tax Assessment Act 1997 (Cth), s 104.20
6 Hayes v FCT (1956) 96 CLR 47.

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has been received by the taxpayer which has been against any kind of services rendered by him
in the past instances needs to be used as or seen as a kind of CGT gain which is for the purpose
of assessability. It can be understood, in this situation that the amount or the price received from
the employer by the employee after providing the services which needed to be performed before
receiving the same amount for doing it again would be considered to be assessable income as a
capital gain of that employee. In case of deciding upon an instance where there is a difficulty in
the treatment of any kind of receipt which has been accepted from the previous employer for the
services rendered by the employee before where the difficulty is to whether to use the amount as
a capital gain or use it as an ordinary income. The income has been received because of personal
effort is considered to be treated as just another ordinary income. Nevertheless, if a receipt has
been accepted from the employer for whom the employee worked before and it has already been
accumulated but it has not been received by the taxpayer this would only be considered to be
received by the taxpayer and has been obtained as nature of an asset because the same thing has
not been obtained by the taxpayer as a lot of amount which has been accumulated by the
taxpayer for a succeeding period.
h) There are two kinds of income that can be earned by an individual who is a taxpayer
under the taxation law which has delivered categories of the taxable income. The ordinary
income is considered to be the first category under the taxation law. The statutory income would
be considered to be the second category under taxation law. The income which falls under the
category of general definitions of an income which is known to public who do not have any legal
understanding would be considered as the ordinary income. In order to evaluate such kind of
incomes there are no strict rules that needs to be conformed with which are also provided in the
statutes. If there is an absence of an y express which has not been mentioned in the statutory

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provisions which is in connection to taxation the ordinary income would be considered to be
evaluated as an income. Therefore, from the above discussion, it can be understood, that income
that can be used as an income in the ordinary course would be considered to be an ordinary
income. Any income that has been specifically mentioned in the statutory provisions that is in
connection with taxation which is considered to be an income of a specific nature is necessary to
be considered as a statutory income. These income would be taxable only if these kind of income
has been mentioned as a legal provision which are confined in a statute. These are the type of
income which are not monitored as ordinary income but they need statutory acknowledgement in
order to be considered as an income7.
i) There are two different additional charges that are levied upon the taxpayers which are
the Medicare Levy and the Medicare levy surcharge. Some of the taxpayers are considered to
pay additional charges and also additional taxes which are to be paid by those taxpayers. The
Medicare Levy is considered to be presented for the health system of the public which is
prevailing in Australia. It is also imposed on the individual as a taxable income. It is to be paid at
a rate of 2%. The Medicare Levy Act, 19868 along with the ITAA9 imposed it. The Medicare
Levy Surcharge has been established for the individuals who have high income rate to spend
their money on their private health by investing in private health insurance for trying to decrease
the weight of Medicare. In this form of taxation it is only applied on the taxpayers who do not
have any kind of health insurance. This kind of levy is essentially executed on the total of the
income which is taxable and also on the Fringe Benefits which are relating to an single taxpayer.
It varies on the income of the different taxpayers which may be between 1%, 1.25% and 1.5%10.
7 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).
8 The Medicare Levy Act 1986
9 The Income Tax Assessment Act 1936 (Cth)
10Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).

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Answer 2
In the Sec 6.1 of the ITAA 3611 , there are a requirement of three kind of tests which
involves the valuation of the residency in Australia of an individual. First is the domicile test, the
second is considered to be the resides test and the third is considered to be the super admission
test which is also the one eighty three day test which are required in order to evaluate an
individual’s taxability rate who is living in Australia or any individual who has any kind of
connection with the country. There are two kinds of notions which are to be discovered in this
segment while there is a discussion about the above-mentioned tests. There is a difference
between the usual place of abode and the permanent place of abode even though it may sound
quite similar regarding the taxation law in the country. These two have a certain similarity as
both are considered to be a place of abode. In order to evaluate these two concepts the meaning
needs to be clear. The idea of a place of abode needs to be evaluated under the rule which has
been provided in the case of I.R.C. v. Lysaght (1928) A.C.23412. In this particular case the place
of abode would be considered to be any kind of residential property, where the taxpayers have
been using the land or property by possessing it or by lending it where the main intention was to
dwell or lodge with the surroundings of the place along with the family. The intention behind
residing in a property would be evaluated and it would be for the reason for residence and thus, it
is considered to be a place of abode.
The idea of permanent place of abode which can be described as it can be seen in the case
of FC of T v Applegate 79 ATC 430713. In this case which has been established as per the
provisions a permanent place of abode is considered to be a place where the person who is the
11 The Income Tax Assessment Act 1936 (Cth), s 6.1
12 I.R.C. v. Lysaght (1928) A.C.234
13 FC of T v Applegate 79 ATC 4307

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taxpayer has been residing with the intention to reside in that place for a continuous period of
time with no intention of leaving that place. There is a specific time period in which the person
has to reside in a place can be indefinite but it cannot be infinite or for whole eternity. The time
period of more than three years without the intention of moving would be considered to be the
permanent place of abode. It can also be supported by in the case of F.C. of T. v. Jenkins 82
ATC 409814.
The idea of the usual place of abode needs to be evaluated in connection to domicile.
This also necessitates the person or an individual to live in a place as a habit or a part of the
custom. There can be a rented accommodation existing in the usual place of abode of an
individual. This kind of stay should not be confused with the permanent place of abode. It can be
seen in the case of Levene v. I.R.C.(1928) A.C.21715.
Answer 3
a) With respect to a person’s income earning process the expenditure which is
considered to be arising can be easily available and is considered to be a deduction of the income
of that individual as per the provision confined in Sec 8.1 of the ITAA, 9716. For the persistence
of claiming such kind of deduction the individual who is considered to be a taxpayer would be
obligated to signify that the expenditure was not relating to any kind of domestic purpose and it
was based only on the income earning process. In this situation the expenditure which is
amounting to a total of eight hundred and fifty dollars for HECS-HELP has been acquired with
respect to a student loan which was personal. This does not have anything to do with quantifiable
income of a person. Therefore, it cannot be considered to be a deduction.
14 F.C. of T. v. Jenkins 82 ATC 4098
15 Levene v. I.R.C.(1928) A.C.217
16 The Income Tax Assessment Act 1997 (Cth), s 8.1

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b) An individual taxpayer has the right to have an expenditure while travelling in the
workplace has to be permitted an expense which can be deducted in the rule which is mentioned
under Sec 25.100 of ITAA 9717. In the current scenario the expenditure that has been acquired
for travelling from the workplace to the university is amounting up to 110 AUD$ which would
be considered to be deductible.
c) With respect to the expenditure of an individual which is for the income earning
process is measureable and needs to be deducted which is towards the income of the individual
stated in the provisions of Sec 8-1 of ITAA, 9718. To claim any kind of deduction the taxpayer
needs to be able to denote that it was not having any kind of relation with the domestic purpose
and is only based on the income earning process. In the current scenario the 200 dollars book
which has been obtained by the taxpayer for the betterment of his skills relating to his accounting
profession and hence, is considered to be deducted as the expenditure had been incurred.
d) With respect to the expenditure of an individual which is due to the increase in the
income earning process of an individual is considered to be a deduction under Sec 8.1 of ITAA,
9719. For the purpose of such deduction which was being claimed the expenditure was not having
any kind of domestic purpose but was based on the income earning process. It can be seen in the
case of Lodge v Federal Commissioner of Taxation [1972] HCA 4920. The cost of 250 AUD$
which was taken to repair the piece of refrigerator at home cannot be considered to be a
professional expense. It is a private expense therefore it would not be deductible.
f) The expenditure which has been sustained for a piece of clothing which would be worn
in the workplace of the taxpayer would not be considered to be deductible as in the provisions of
17 The Income Tax Assessment Act 1997 (Cth), s 25.100
18 The Income Tax Assessment Act 1997 (Cth), s 8.1
19The Income Tax Assessment Act 1997 (Cth), s 8.1
20 Lodge v Federal Commissioner of Taxation [1972] HCA 49

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Sec 8.1 Of the ITAA, 9721. Thus, the amount of One hundred and forty five dollars which was
used to buy black trousers and shirts would not be considered as a deductible amount.
g) The expenditure that has been ascending due to the income earning process of an
individual that is measureable is considered to be a deduction as per the provisions in Sec 8.1 of
ITAA, 9722. In the current scenario the three hundred dollars have been expended with the
employment contract which is existing with the new proprietor. It is not considered to be
deductible as it was not for the purpose of earning income and it would not be treated as
deduction since it is directly not considered to be related to income.
Answer 4
a)The category of F2 in the CGT events is considered to be dealt with the lending o or
renting of any kind of property or land which is in possession of an individual. It also includes a
fresh grant of lease which can be renewed or extended with the previous lease. Nevertheless,
there would be no availability of fifty percent discount in any CGT event. Therefore, the seven
thousand dollars received by John who is the owner of the land or the property is considered to
be CGT event F2 from David which would be exposed to CGT without any kind of discount
which is fifty percent23.
b)
Computation of CGT
21 The Income Tax Assessment Act 1997 (Cth), s 8.1
22 Ibid
23 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016)

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2018-19
Item $ $
IOOF Shares
Net CGT gain 1200
Cost Proceeds 6700
Cost Base 5500
Greencross Shares
Net CGT gain 5880
Cost Proceed 14160
Cost Basse 20040
Net CGT Loss
4580
c) In the legal provision which has been laid down in the Sec 118.100 ITAA, 9724. If
there is a property or a land which has been engaged and unavailable by an individual with the
intention of treating it as a permanent residence the profits from such kind of a sale would be
considered as an exemption from CGT. For using such kind of an exemption, the land or the
property needs to be used and resided as a central residence. The borrowing of the land or the
property would not be considered as residential property. Similarly, if there is any kind of
business which is being carried out in that property and the other part is being used for residence
then such a sale of that property and the earnings of such sale would be exempted where the only
part which would be calculated would be the residential part.
d) The cost base is considered to imply the expense which has been sustained for the
attainment of any kind of asset under Sec 110.25 of the ITAA, 9725. This kind of cost includes
24The Income Tax Assessment Act 1997 (Cth), s 118.100
25 The Income Tax Assessment Act 1997 (Cth), s 110.25

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the value or the price of that asset and additionally it also includes the cost or the value of
holding and the cost of disposal which is relating to the asset or the property. There are five
components available which are the acquisition cost, owning cost, preservation cost, incidental
cost and conversion cost.
The reduced cost base is different and distinct from cost base and is considered to be
intended to be calculated by transaction or transfer of capital nature which has not presented any
kind of gain. The amount needs to be evaluated to discover any kind of loss which has been
sustained from such transaction. It has been laid down under Sec 110.55 ITAA, 9726.
Answer 5
a)Income, which can be earned through illegal ventures, might not be evaluated.
Nonetheless, it can only be considered to be evaluated if it is implemented in such a way which
would denote that it is for business.
b) Any kind of interest that might have been earned by fixed amount of money would be
considered to be ordinary income. In the case of Adelaide Fruit and Produce Exchange Co Ltd v
DFC of T (1932) 2 ATD 127the income that has been earned by exploiting a property by renting it
would be considered as an ordinary income. In this situation, from a bank if there is five hundred
dollars it is considered to be measurable but the rent amount which is two thousand dollars
would be measured as an income as well as any winnings from a casino.
26 The Income Tax Assessment Act 1997 (Cth), s 110.55
27 Adelaide Fruit and Produce Exchange Co Ltd v DFC of T (1932) 2 ATD 1

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c) If an amount is handed over to any employee as an allowance by the employer of that
company for the employment it will be a measured within the taxable income for the employee
as stated in sec 15.2 ITAA, 9728. Therefore, it is a taxable as an income.
d) For the income of $ 20,000,
no imposition of Medicare Levy
For the income of $ 24900,
2% Levy amounting to $ 498
For the taxable income $100,000
2% Levy amounting to $ 2000.
e) For income amounting to $ 25,000, tax rate applicable will be 19 percent over $18,200
($25000 – $18200) * 19% = $6800 * 19% = $ 1,292
The gross payable tax = $1292.
For income amounting to $ 40,000, tax rate applicable will be 3,572 and 32.5 percent over $
37,000
$3572 + (40000-37000) * 32.5% = $ 3572 + 32.5% * $3000 = ($3572 + $975)
The gross payable tax = $ 4547.
For income amounting to $ 95,000, tax rate applicable will be 20,797 and 37 percent over $
90,000
$ 20,797 + (95,000-90,000)* 37% = $20,797 + 37% * $5000 = ($20,797 + $1850)
28 The Income Tax Assessment Act 1997 (Cth), s 15.2

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The gross payable tax = $ 22647.

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Bibliography
Adelaide Fruit and Produce Exchange Co Ltd v DFC of T (1932) 2 ATD 1
Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).
Evans v. F.C. of T. 89 ATC 4540
F.C. of T. v. Jenkins 82 ATC 4098
FC of T v Applegate 79 ATC 4307
Hayes v FCT (1956) 96 CLR 47
I.R.C. v. Lysaght (1928) A.C.234
Levene v. I.R.C.(1928) A.C.217
Lodge v Federal Commissioner of Taxation [1972] HCA 49
The Income Tax Assessment Act 1936 (Cth)
The Income Tax Assessment Act 1997 (Cth)
The Medicare Levy Act 1986
TR 2019/1
www.ato.gov.au, "Individual Income Tax Rates", Ato.Gov.Au (Webpage, 2019)
https://www.ato.gov.au/Rates/Individual-income-tax-rates/

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