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On a Question of the Generalized Taxation Laws

   

Added on  2021-06-18

12 Pages2961 Words340 Views
Finance
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Running head: TAXATION LAWSTaxation LawsName of the Student:Name of the University:Author’s Note:
On a Question of the Generalized Taxation Laws_1

TAXATION LAWS1Table of ContentsFacts of the Case law.......................................................................................................................2Issue:................................................................................................................................................3Conclusion:......................................................................................................................................3Requirement of A (i):.......................................................................................................................4Requirement of A (ii):.....................................................................................................................5Requirement of (b):..........................................................................................................................5Requirement of question (c):...........................................................................................................6Requirement of question B:.............................................................................................................7Requirement of Part B:....................................................................................................................7Requirement of question i:...............................................................................................................7Requirement of question B:.............................................................................................................8Requirement of question C:.............................................................................................................8Requirement of question D:.............................................................................................................8Requirement of question E:.............................................................................................................9Reference.......................................................................................................................................10
On a Question of the Generalized Taxation Laws_2

TAXATION LAWS2Arthur Murray (NSW) Pty Ltd v FCT (1965) 114 CLR 314Facts of the Case lawThe situation which was there in the case of Arthur Murray Pty ltd was that the businesscharged tuition fees on the basis of hours of class of dancing. The dancing tutorials was one ofthe activities of the business which was focused to generate revenues for the business. The factswhich are surrounding the case is quite simple and easy to understand. The management of thecompany was engaged in the business of providing dancing class which were provided indifferent slots as per time requirement of the company. The payment for respective courses weremade either on a lumpsum basis or on an installment basis for which the business charged a fixedamount per installment and also allowed variable discounts in case of immediate payments as perthe policy of the company.The books of accounts which was maintained by the business recorded the fees that thebusiness received as advances immediately. The revenues of the company are credited to specialaccounts which are not regular (Jones 2017). The amount which was recorded in such an accountreflected the fees which was received by the business from the tuitions it provided. The amountwhich was recorded in Unearned Deposits account were on a periodical basis transferred to“Earned Tuition Account”. The company has filed income tax returns with the tax authority ofAustralia and for the same any income which is received in advance will be considered to be apart of the income which is assessable for tax for the year (Corak 2013). The commission was ofthe opinion that the tuition fees which was received by the business formed part of the income ofthe recipient from the moment the same was received by the Recipient during the year.
On a Question of the Generalized Taxation Laws_3

TAXATION LAWS3The case analysis makes it clear that the tax payer treated the fees amount which itreceived as prepaid income as the fee was received in advance and was only recorded as incomein the books of accounts when the dancing tuition was completed which were provided to thestudents. Such prepaid income was not included in the taxable income of the taxpayers of thebusiness for the year. It was discovered that such prepaid income was included in the calculationof taxable income and the same form part of the assessable income of the business. The taxcommissioner was of the view that the prepaid income formed part of the assessable incomeduring the period in which the course lesson was provided or when the payment for the coursefees was received (Smailes 2015). The prepaid tuition fees which the business received for thedancing class formed a part of the ordinary income of the business as per the tax provisions ofthe country.Issue: The main issued which arise from the case was that whether the prepaid income whichthe business receives from the advance fees forms part of the taxable income of the business?Another issues was that whether the income derived from tuition fees were assessable in the yearof receipt of such fees?Conclusion: The main purpose behind the case was to understand whether the prepaid income which abusiness earns can be held taxable or not. The decision which was passed in respective of thecase was that the fees which the business received as advances for the services which thebusiness is yet to provide will not form a part of the taxable income of the business. As per theverdict which was passed by the court was that an agreement needs to be present between the
On a Question of the Generalized Taxation Laws_4

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