Taxation TABLE OF CONTENTS

TAXATION
TABLE OF CONTENT

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INTRODUCTION......................................................................................................................1
Question 1..................................................................................................................................1
QUESTION 2.............................................................................................................................3
QUESTION 3.............................................................................................................................5
CONCLUSION..........................................................................................................................8
REFERENCES...........................................................................................................................9

INTRODUCTION
In the current changing environment, the external market competition is increasing
day by day which increases the overall difficulties in the path of a business. Taxation plays an
integral role in ascertaining the future activities of an individual or group of individuals in the
present time by determining the tax burden of the future period in advance which helps an
individual in improving its existing position. In the current assignment, Australian taxation
system has followed to answer the tax questions belongs to different taxation concepts as this
helps in building stronger knowledge about this particular stream (Hoopes, Robinson &
Slemrod, 2018). This assignment focuses on three questions such as explaining section 393-
10 of the income tax assessment act 1997, second part emphasizes on section 8-1 about the
deduction of all the expenses incurred in the tax returns of an individual in a particular
financial year. Lastly, the third question focuses on the business revenue earned by an
individual along with the tax incurred on all the business revenues earned by an entity in a
particular period to ascertain its tax liability. A motive of this assignment is to build the
strong taxation knowledge with the help of case laws and various rules and the regulations.
QUESTION 1
Identifying issue
The current case study is about the determination of the tax liabilities incurred by
Jenny for a particular financial year. In this case, Henry is a famous jazz singer who passed
away recently as he was a tax resident of Australia. A published named as Jack wants to write
a book on the life story of Henry in the form of autobiography to inspire other people who
follow the lifestyle of Henry. After the death of Henry, jack the publisher approach his wife
Jenny who is also an Australian tax resident to take interview of her to know about the life
facts of Henry to write a book. The publisher offered an amount of $1 million to write a book
on her husband’s life. $50000 was paid to Jenny as an advance amount before taking her
interview and rest amount is paid to her after taking her interview. The tax consequences
incurred on Jenny for accepting this amount is discussed as per the Australian tax ruling and
case laws to determine the tax liability appropriately.
Explanation of Law
In the present case study, section 393-10 of Income-tax assessment act 1997 of
Australia is applicable to determine the income earned by an individual. It includes income
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received by a person from salaries, bonus, commission, fee, pension and retirement benefits
received by an employee from its employer. It also consists of income from business in the
form of subsidies received and income generated by an individual from property consider as a
part of the services deliver by personnel in an entity (Ingles & Stewart, 2018). Benefits and
press received by an employee from its employer during and after the business tenure are also
considered as a receipt of income by an individual for a particular financial year. Income
produces from the sale of property by a person is considered as an assessable income. All
these income earned by an individual is considered in context to the personal exertion as an
employee earned these during the working period of the business where they offer its quality
oriented services will form part of their personal income after leaving the organization.
Application of law
After stating all the laws and regulations relevant for the current study, the next step is
to apply all these legal principles in finding the solutions to all the problems Aim of an
individual in this case study is to determine the overall tax consequences imposed on Jenny
for receiving the amount for writing story on the life of her husband.
Jenny was offered $1 million for writing story on her husband’s life story who was a
jazz singer for which the publisher wants to take her interview. For this interview, she
received a deposit of $500000 as a deposit and rest $500000 will be paid after completing her
interview. In the above case, relevant sections of the income tax assessment act emphasize on
identifying the assessable income by majorly focuses on the personal exertion income. But in
the current case, Jenny has received money for writing a book by publisher on her husband’s
life and for which she has to give interview will change the overall tax consequences incurred
on its action. In this case, the amount received by her will not consider as a personal exertion
income and nor the personal services income.
Personal services income earned by an individual should be more than 50% of the
overall value of a contract for the services or labour of another party (Personal services
income, 2017). In the present assignment, Jenny received 50% of $1 million that is $500,000
but this does not satisfy the requirement as per the regulations, the more than 50% should be
received by an individual in form of contract but Jenny just received 50%. In determining the
tax liability of Jenny, she can disclose the personal service income in its tax returns but the
benefit of decreasing its tax returns of a particular year will not get achieved by Jenny as her
receipt does not fall under the personal services income.
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