Understanding Taxation Law: Key Concepts and Implications

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

1TAXATION LAW
Table of Contents
Part A:........................................................................................................................................2
Part B:.........................................................................................................................................6
Facts of the case:....................................................................................................................6
Decision and main principle applied in the judgement:.........................................................6
Relevance of case and likely decision on similar facts:.........................................................6
References:.................................................................................................................................8

2TAXATION LAW
Part A:
Personal service income includes employment income such as salary, wages, bonus,
allowance etc. received as employee. The taxpayers usually derives most of the income based
on the ordinary concepts of “section 6-5, ITAA 1997” (Barkoczy, 2014). The gross salary of
Jane is a personal service income from employment which is taxable under ordinary concepts
of “section 6-5”.
As “per TR 98/1”, employment income is assessable under receipts method
irrespective if it relates to past or future earnings (Jover-Ledesma, 2015). The performance of
$25,000 is assessable for Jane despite it relates to future earnings period of June. Whereas the
receipt of clothing allowance received by Jane is included for taxation purpose under
“section 6-5, ITAA 1997” as ordinary income.
The federal court in “Mansfield v FCT (1996)” stated that cost of ordinary apparel
such as office suits is non-deductible under “section 8-1, ITAA 1997” (Kenny et al., 2018).
The expenses on office formal clothing and Jewellery incurred by Jane is not allowed for
income tax deduction because it is not related to specific clothing and constitute ordinary
article of apparel.
Ordinary prize winning is not an income however, it will be treated as income if there
is nexus with the earnings activities of the taxpayer. The court in “Kelly v FCT (1985)” held
that award for being the best player was taxable since it was related to employment of the
taxpayer (Deutsch, 2018). The award received by Jane for best financial controller is taxable
as ordinary income because it relates to her employment. In “Cooke and Sherden v FCT
(1980)” gains that are non-convertible to money’s worth is not an income. The computer
received by Jane hold’s money’s worth and hence constitute income under “section 26 (e)”,