Taxation Law

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

1TAXATION LAW
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................6
References:.................................................................................................................................8

2TAXATION LAW
Answer to question 1:
Issue:
Is the taxpayer liable for taxation for the income derived under partnership business?
Rule:
As per “sec 91, ITA Act 1997” taxpayers should file income tax return to provide the
allocation of profit among the partners. As per “Sect 92 ITAA 1997” any profit or loss
distributed among partners is liable for taxation. Under the “sec 6-5 of the ITA Act 1997” the
income earned by the taxpayers are referred as ordinary income (Abel 2017). In “Scott v CT
(1935)” determination of income under ordinary concepts requires the application of
necessary facts and principles (Manning, Sciacca and Alford 2016). Business receipts are
taxable as ordinary income under “sec 6-5, ITA Act 1997”.
Referring to “sect 8-1, ITA Act 1997” deduction is allowed to taxpayers for expenses
which relates to the derivation of taxable income or occurred during the ordinary business
phase (Edgar, O'Brien and Cockfield 2015). However, “sect 8-1 (2) of ITA Act 1997”
prohibits the taxpayer under the negative limbs to obtain deduction for private, domestic or
capital outgoings.
The elucidation of ATO requires the taxpayer to immediately write-off the assets that
has the purchase value of less than $20,000. While “sub-sect 25-10, ITAA 1997” allows
deduction to the taxpayers for the repairs that is occurred in correcting the defects or damage
on the assets (Lang et al. 2018). However, a deduction is denied to the taxpayer for repairs
that involves extensive capital expenses. As held in “FCT v Western Suburbs Cinemas
(1952)” deduction for capital expenses was denied to the taxpayer.