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
Heading:............................................................................................................................. 2
Issues:................................................................................................................................ 2
Rules:................................................................................................................................. 2
Application:......................................................................................................................... 4
Conclusion:......................................................................................................................... 6
References:............................................................................................................................ 7

2TAXATION LAW
Answer to question 1:
Heading:
The following case study takes into the accounts the issues of tax consequences of
receipts that is received from the personal exertion while rendering services.
Issues:
The issues that are involved in the study is;
a. Is the income from individual effort or receipts derived from rendering services in
capacity of the employee will be chargeable as ordinary earnings under “section 6-
5, ITAA 1997”?
b. Is the taxpayer entitled to any deduction under “section 8-1, ITAA 1997” from the
expenditures arisen while making the assessable returns during employment?
Rules:
Where a taxpayer receives payment that is related to the execution of contracts or
performing any services then the receipts are regarded as the character of earnings in the
hands of recipient under “section 6, ITAA 1936”. The court in “FC of T v Hayes (1956)”
explained that income from the personal exertion is generally treated as the product of
employment or the reward for providing services1. While “section 23L ITAA 1936” explains
that if the employer gives a benefit to the worker then under such circumstances the
employee is treated non-assessable for the benefits but the employee held for fringe benefit
tax relating to the amount of benefits given.
Usually, receipts of payment related to employment is taxable as ordinary earnings
under “section 6-5, ITAA 1997”. The decision in “FC of T v Kelly (1985)” explained that
the taxpayer received the award of best footballer2. The amount was chargeable for the
reason that it is related to usage of skills and employment of taxpayer. There are two
positive limbs under “section 8-1, ITAA 1997” where the taxpayer is allowed to claim
deduction. This includes that expenditures that is occurred at the time of generating taxable
earnings and outgoings that necessarily incurred in the course of making income. The
decision in “FC of T v Weiner (1978)” stated that travel expenses between two workplaces
is deductible where none of the place is taxpayer’s home.
1 Woellner, Robin, et al. "Australian Taxation Law 2016." OUP Catalogue (2016).
2 Barkoczy, Stephen. "Foundations of taxation law 2016." OUP Catalogue (2016).