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
Answer to question 1:.................................................................................................................2
Issues:.....................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................4
Conclusion:............................................................................................................................8
References:.................................................................................................................................9

TAXATION LAW2
Answer to question 1:
Issues:
Is the taxpayer liable for assessment for the income derived by working in capacity of
the employee under “section 6-5, ITAA 1997”?
Rule:
“Section 6 ITAA 1997” explains that income that is derived by the taxpayers from the
private exertion comprises of the wages, salaries, bonus, commissions, gratuities etc. which is
received by a person for the services they render in capacity of the employee. As defined in
the “section 6-5, ITAA 1997” explains that the ordinary income represents the income that is
earned with regard to the ordinary concepts1. The court in “Scott v FCT (1935)” interpreted
that gains require appropriate characterisation and it should be interpreted in accordance with
the use of mankind and ordinary concepts.
A receipt derived by the taxpayer from the employment and rendering personal
service might be the subject of income tax for the employee and may constitute fringe benefit
for the employer. The court considered the remuneration from the employment in “Dean v
FCT (1997)” stated that the retention payment that is paid to the important employees so that
they will remain employed for the period of twelve even after the employment was
considered income2.
A gain cannot be treated as ordinary income if the amount is not cash or not be
converted into cash. The court in “Payne v FCT (1996)” held that the item should be readily
1 Barkoczy, S. (2018). Foundations of Taxation Law 2019 eBook. Melbourne: OUPANZ.
2 Grange, J., Jover-Ledesma, G., & Maydew, G. 2014 principles of business taxation.