Taxation

Running head: TAXATION
Taxation
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1TAXATION
Table of Contents
Answer to Question no. 1......................................................................................................................2
Answer to Question no. 2......................................................................................................................3
Answer to Question no. 3......................................................................................................................3
Answer to Question no. 4......................................................................................................................5
References.............................................................................................................................................7

2TAXATION
Answer to Question no. 1:
Issue:
In accordance with the act of ordinary perception in “S 6-5, ITAA 1997”, for the annual
payments receipt responsibility comes under the taxpayer.
Rule:
Any income is usually falls into the category of taxable income and thus, is exposed to
income tax. Beneath the “S 6-5, ITAA 1997” the ordinary income is regarded as taxable in
contradiction with the ordinary concepts. The earnings of the taxpayer are under ordinary
concepts. Following the case law method, the judicial concept explains about the ordinary
income. In “Scott v FC of T (1935)” the Federal Court of Law it is held that whether below
the ordinary concept the income that is established by the receipt is contingent on the features
in the hand of the receipt. At the time of the receiving of the payment a suitable esteem
should be compensated to the whole circumstances. According to the commissioner of
taxation it is held that a characterisation is required by the gains for the determination of
whether the income character is carried by the gains (Becker et al 2015).
According to the ordinary income, the characterisation of a receipt is not practised other than
fulfilling the cash fundamentals or the cash convertibles or the gains of the taxpayer. On
contradiction the earnings rudiments are satisfied, and if an earning has its relevant structures
then the gain is considered as the ordinary income. Thus, the gain is regarded as regular or
the stream of notion or erratic proceeds (Biddle et al 2017).
Ordinary income is the periodic or consistent gain, despite of the gains which are
remunerated in the large summation method. In the event of the “Blake v FC of T (1984)”,
the constant receipt is regarded as the nature of the income as per the Federal Court of Law.
The taxpayer receives the component of the earnings features. The law court detained in the
event of “FC of T v McNeil (2007)” that the derivation condition of the taxpayer is judged
from the nature of the item as the system of income as well as deprived of the regard payment
it must have derived by any other person. Moreover, “Hochstrasser v Mayes (1960)”it is
held by the court to own the income nature of the items which is gained by the derivatives of
taxpayer. The law court detained that in “FC of T v Dixon (1952)” that the stream of income
which is paid periodically or annually is to be named as income (Brown 2017).
Application:
According to the obvious case of Lotteries commission, lotteries are conducted where amount
of $50000 is billed to the winner for an annual period for 20 years. During the expiry of
winner, the outstanding amount is paid by the lottery commissioner to the lifeless estate.
Referring to “S 6-5, ITAA 1997” as per the ordinary concepts the lottery amount is
considered as the ordinary income (Brown 2017).
Moreover, it is viewed that the amount of $50000 is considered as the annual payments
income as the taxpayers gains as well as the cash prerequisites are satisfied. The periodic or
the regular receipts according to the “Blake v FC of T (1984)” is the gain of $50000
(Cardwell and Hartanti 2018).