TAXATION LAW Taxation Law Name of the University Authors

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
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1TAXATION LAW
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................7
References:...............................................................................................................................10

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Answer to question 1:
Issues
Are the taxpayers net income from the partnership made during the year of taxation
will be considered for assessment purpose under “sect 90, ITAA 1936”?
Rule:
For the purpose of income tax under “section 995-1, ITAA 1997” the definition of
partnership comprises of including the receipts made from the joint incomes of the property,
service contracts and business agreements (Tondani 2016). Conferring to the “section 995-
1”, partnership is better understood as the conducting of business activities as the partners or
getting the ordinary income and the statutory income together. To determine the partnership
net income reference should be made to the “section 90, ITAA 1936”. The net earnings of
partnership is in respect of the assessable income that is computed where the partnership was
the resident taxpayer after deducting the permissible deductions (Fairfield and Jorratt De Luis
2016).
The assessable income is held liable for taxation since it is added to the taxable
income. Mentioning “section 6-5, ITAA 1997” ordinary income includes the income made
from the ordinary concepts (Parker 2018). In “Scott v CT (1935)” the court stated that
income based on the ordinary concepts requires the characterization that whether the gain has
the character of income and are in adherence with the ordinary concepts.
A taxpayer is permitted under “section 8-1, ITAA 1997” to claim for deduction from
their taxable income any losses or outgoings that is necessarily occurred while carrying out
the business with the intent of producing taxable income or occurred in producing or gaining
the chargeable earnings (Grace 2018). However, under the “sect (8-1 (2))”, no deduction is

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permitted to the taxpayer for the loss or expenses if it satisfies any of the negative limbs. In
other words, a deduction is not allowed under the negative limbs for the expenses that are
capital, private or domestic in nature.
As per the “sect 25-10” allowable deduction is permitted for the repairs conducted on
the premises or the depreciating assets that is mainly used for generating income (Stevenson
et al. 2017). According to the “ATO TR 97/23” the item under repair should be used for
producing income for the purpose of repairs to be allowed as deductible under the “section
25-10”. This includes the repairs carried out in the course of business or made to the rental
property (Chen, Qi and Schlagenhauf 2018). There is some maintenance work that are treated
as repair under “sect 25-10”. This includes the painting done on the business buildings to
remedy the present worsening and prohibit the future deterioration.
On the other hand, if the replacement done is the part of the assets is allowed as
deductible repairs. The court in “Samuel Jones & Co (Devondale) Ltd v IRC” held the
replacement of chimney of a factory with the similar dimensions formed the inseparable
portion of the overall asset (Braithwaite and Reinhart 2019). As per the ATO, if any business
assets that is bought for $20,000 or below can be claimed as immediate deduction.
Application:
Daniel and Olivia are carrying on the business as partners within the meaning of
“section 995-1, ITAA 1997” and during the year of 2017 the made receipts from the
partnership. The receipts included the business sales in the form of cash payment and also
included the receipt of payment from the debtors. Mentioning “section 6-5, ITAA 1997”, the
cash receipts and payments from debtor’s amounts to ordinary income which is made the
partners from the ordinary concepts. Citing “Scott v CT (1935)” the business receipts had the
character of income and are in adherence with the ordinary concepts.