Taxation Law

This document provides a comprehensive study material on Taxation Law. It includes answers to questions, explanations of rules and applications of GST, and references to relevant cases and laws.

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

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Table of Contents
Answer to question 1:.................................................................................................................2
Issues:.....................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................3
Conclusion:............................................................................................................................4
Answer to question 2:.................................................................................................................5
Issues:.....................................................................................................................................5
Laws:......................................................................................................................................5
Application:............................................................................................................................6
Conclusion:............................................................................................................................7
References:.................................................................................................................................8

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Answer to question 1:
Issues:
The present problem is based on the determining the GST consequences for the
numerous transactions that are reported by the taxpayer.
Rule:
The conception of supplies associated with Australia is considered relevant in
ascertaining whether the supply is the taxable supply and it is subjected to GST. According to
the “section 9-5, of the GSTR 1999” an individual makes the taxable supply if the supply is
made for consideration (Woellner et al., 2016). It also includes the supply an individual
makes during the course of carrying on the enterprise or the supplies which is associated with
Australia.
Where the supply involves gifts then it is not treated as taxable to either the giver or
the receiver of gift. The ATO in certain situation might have the reason of imposing tax on
the gifts where the amount of gifts goes past more than $10,000 during the year. Gifts below
the stated limit is considered as GST-free supplies and attracts no tax liability.
As per ATO, if an individual is considered registered for GST or they are required to
be registered for goods and service that is sold in Australia then it is generally considered as
the taxable sales unless the provision of GST-free or input taxed is applied (Barkoczy 2016).
An individual is required to pay GST on the taxable sales that one makes when they lodge the
activity statement. However, the ATO also allows a taxpayer to claim GST credits that is
included into the purchase price to make the taxable sales.
There are several transactions that comprises of exchange of numerous rights and
obligations among the parties that are under the transaction. The court in “C of IR v. New
Zealand Refining Co. Ltd (1997)” explained that the actual character of transaction may be

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characterised as payment that has the condition on the contract instead of provision of non-
monetary consideration (Freudenberg et al., 2017). For instance, in several cases, agreeing to
enter in the contract of receiving supply for the specific time period is regarded as non-
monetary consideration for that supply.
Application:
Craig as the GST registered business is required to charge and collect GST. The GST
that is collected from the sales is greater than the GST credits that is claimed in the expenses.
Therefore, Craig is required to send the differences to the ATO to pay the GST tax liability.
Craig should file the GST return in every three months and must put aside the GST collected
so that he can meet the obligation when they fall due.
During the year in February 2018 Craig made gift to his son for no consideration. The
gift that is made by Craig to his son is considered as the unconditional gift and under
“section 9-5, of the GSTR 1999” there no consideration of supply is made by Craig. No GST
will be payable on the gifts made to Son because it is non-taxable supply (Sadiq 2019).
In the later part of the case it is also noticed that Craig hired a tree stump grinder
based on the condition that $300 that is deposited will be not be refundable if the equipment
was not damaged and stump grinder is returned on the agreed date. Craig under this
circumstances is only required to pay GST for the hiring charge of stump grinder while the
refundable amount of $300 is payment is being made as conditional on the stump grinder
were not regarded as consideration for any supply since there was no kind of binding
commitment to make the supplies. The payment was made by Craig for maintaining the
structural framework based on which the supplies of stump grinder was anticipated to be
made. The purpose that the stump grinder remained operational should be considered
separate from any kind of supply of service. Therefore, citing “C of IR v. New Zealand

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Refining Co. Ltd (1997)” in this particular situation of Craig the necessary link among the
supply of specific services and consideration cannot be established.
Below stated is the total amount of GST that Craig should pay relating the receipts
and payment during the year is given below;
Calculation of Total Income
For the year 2017/18
In the books of Craig
Particulars Price (Ex
GST)
Input
Tax
Net
Receipts/Payment
Receipts
Fees from clients 25454.55 2545.45 28000
Sale of second hand ride mower 2090.91 209.09 2300
Total Receipts 2754.54 30300
Expenses Allowed as deductions
Fuel for vehicle and equipment 1454.55 145.45 1600
Equipment repairs 1080 0 1080
Rubbish tip fees 190.91 19.09 210
Wages 3000 3000
Water Rates 1454.55 145.45 1600
Telephone [phone]
New Equipment 11400 11400
New Equipment 200 200
Landscape supplies 15800 15800
Repayment of Business loan
(interest)
1000 1000
Total Expenses 444.54 37370
Total GST Payable 2310
Conclusion:
On a conclusive note it can be stated that the gift that is made by Craig to his son is
considered as the unconditional gift. With respect to “section 9-5, of the GSTR 1999” there
no consideration of supply is made by Craig. No GST will be payable on the gifts made to
Son because it is non-taxable supply. While the refundable amount of $300 is also not

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subjected to GST since it was entirely conditional and were not consideration for any supply
since there was no kind of binding commitment to make the supplies.
Answer to question 2:
Issues:
The current issue is based on deciding whether the payment that is received in
consideration for a supply has adequate connection between the supply and the payment.
Laws:
According to the “ruling of GSTR 2001/6” the test for ascertaining whether the
payment is regarded as the consideration for the supply involves adequate connection among
the supply and payment (Morgan, Mortimer and Pinto 2018). The consideration for supply
may comprise of acts, rights, or duties that are provided in relation with the responses or
relating to the incentive of supply. Nevertheless, things in the form of acts, rights and
obligation can be omitted as the payment because they do not have economic worth and they
are independently identified separate from the transaction.
In order to treat the payment for the supply, it should be having economic value and
independent identity that is given as payment for making supply. As held in “Customs and
Excise Commissioners v. Westmorland Motorway Services Ltd (1997)”, it should be capable
of being valued and must be a thing which the acquirer may frequently or commercially pay
money to obtain (Morgan and Castelyn 2018).
Whether the payment forms the consideration for the supply it is dependent on the
actual nature of the deal (Robin 2019). Consideration represents the supply of something
which the supplier gets for the purpose of making supply. Even though non-monetary
payment may take the character of consideration, the nature of the transaction can be

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determined whether it becomes the part of consideration that is received by the supplier for
the purpose of making supply.
Application:
As evident in case of Kim she contracted a gardener to supply her with fresh
vegetables in return for the free meal for him and his family. The provision of free meal by
Kim to the market gardener cannot be treated as the part of price paid for the services because
it does not constitute payment or does not has value for Kim in return for the supplies.
Furthermore, the free meal that is provided does not adds any economic value to Kim in
return for purchase of vegetables. Citing “Customs and Excise Commissioners v.
Westmorland Motorway Services Ltd (1997)” the provision of meal to the market gardener
cannot be regarded as consideration in relating with the supply made by Kim (Robin and
Barkoczy 2019). There is no non-monetary consideration for Kim and hence no GST liability
arises in this occasion.
Kim also began baking cookies made from special local ingredients so that it can be
exported to Japan. Section 38-185 involves the exports of goods which is GST free.
According to the section 38-185 even though the supply of goods is associated with
Australia, the goods that are exported will be treated as GST-free. Similarly, exporting the
baked cookies to Japan by Kim will be treated as GST free supply under “section 38-185”.
Later Kim decides to provide meals to her former colleagues at a GST-exclusive
prices. If Kim provides the meals excluding GST, then this will be treated as non-monetary
consideration. However, the cost that would be incurred on meals and on-charged as the part
of cost for her services, GST would be payable on this charge because they represent extra
costs for the supply of Kim’s services.

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Conclusion:
The free meals to market gardener does not has any economic value and no GST will
be charged. While the export of cookies to Japan will be considered as GST free supply.
Finally, providing meals at GST exclusive price will require Kim to pay for on charge
expenses of preparing meal because they represent additional costs for the supply of Kim’s
services.

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References:
Barkoczy, S., 2016. Foundations of taxation law 2016. OUP Catalogue.
Freudenberg, B., Chardon, T., Brimble, M. and Isle, M.B., 2017. Tax literacy of Australian
small businesses. J. Austl. Tax'n, 19, p.21.
Morgan, A. and Castelyn, D., 2018. Taxation Education in Secondary Schools. J.
Australasian Tax Tchrs. Ass'n, 13, p.307.
Morgan, A., Mortimer, C. and Pinto, D., 2018. A practical introduction to Australian
taxation law 2018. Oxford University Press.
Robin and Barkoczy Woellner (Stephen & Murphy, Shirley Et Al.), 2019. Australian
Taxation Law Select 2019: Legislation and Commentary. Oxford University Press.
Robin, H., 2019. Australian Taxation Law 2019. Oxford University Press.
Sadiq, K., 2019. Australian Taxation Law Cases 2019. Thomson Reuters.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation
Law 2016. OUP Catalogue.