Taxation Law: Understanding Taxable Income, Deductions, and Regulations

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
Headings:................................................................................................................................2
Issues:.....................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................4
Conclusion:............................................................................................................................8
References:.................................................................................................................................9

2TAXATION LAW
Answer to question 1:
Headings:
This is a taxation law problems related to the determination of the taxable income and
tax treatment of items occurred.
Issues:
The issues involved in the case is whether the receipts derived by the taxpayer is
liable for taxation within the ordinary concepts of “section 6-5, ITAA 1997”. Whether the
taxpayer is eligible for claiming allowable deduction for expenses occurred under the positive
limbs of “section 8-1, ITAA 1997”.
Rule:
“Section 6, ITAA 1936” states that income from personal exertion refers to the
income covering salaries, wages, allowances, bonuses etc. received working as employee for
the services rendered or any business proceeds derived from carrying on the business
activities. As per “section 6-5, ITAA 1997” regularly most of the income that is earned by the
taxpayer is held as ordinary income1. The commissioner in “Scott v CT (1935)” held that
income should not be viewed as an art and requires the necessary application of principles to
treat the receipts as income within the ordinary concepts and usage.
As per “taxation ruling of TR 93/30” where a taxpayer uses the home as their place of
business a relevant portion of occupancy and running expenses are allowed for deductions.
As held in “Swinford v FCT (1984) 15 ATR 1154” the commissioner allowed deduction to
the self-employed scriptwriter for the portion of flat rent where the taxpayer used the room of
her flat for writing scripts and did not any other separate business premises2.
1 Barkoczy, Stephen, Foundations Of Taxation Law 2014.
2 Grange, Janet, Geralyn A Jover-Ledesma and Gary L Maydew, 2014 Principles Of Business Taxation.