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
Laws:......................................................................................................................................2
Application:............................................................................................................................4
Conclusion:............................................................................................................................7
References:.................................................................................................................................8

TAXATION LAW2
Answer to question 1
Issues:
Will the taxpayer be considered liable for assessment for the receipts derived during
the year from the employment under the ordinary meaning of “section 6-5, ITAA 1997”?
Will the taxpayer be allowed to claim deduction for the expenditure occurred in producing
assessable income under positive limbs of “section 8-1, ITAA 1997”?
Laws:
Receipts derived from employment and offering personal services will be subjected to
income tax for the employee or may constitute fringe benefit tax for employer. Where the
receipts holds the nexus with the personal service of the taxpayer is regarded as ordinary
income. Nexus is evidently established for general items of personal services such as salaries,
bonuses and commissions. The assessable income of the taxpayer generally comprises of the
income that are as per the ordinary concepts under “section 6-5 (1), ITAA 1997”. The
judicial concept of ordinary income is explained in “Scott v CT (1935)” (Barkoczy 2014).
The court held that income cannot be treated as a word of art and there should be application
of appropriate principles to treat receipts in accordance with ordinary concepts. Similarly, in
“FCT v Pickford (1998)” the sign-on fees that is received by the taxpayer is characterised as
payment for the future services and was assessable as ordinary income.
The court have considered the remuneration from employment in “Dean & Anor v
FCT (1997)” where it held that retention payment that was paid to the key employer in order
to remain employed for twelve months after the takeover was an ordinary income (Grange,
Jover-Ledesma, and Maydew 2015). Under “section 23L, ITAA 1936” where the employer
provides the benefit to the employee then the benefit will be considered as the non-taxable