Taxation laws : Sample Assignment

Running head: TAXATION
Taxation
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................4
Question 3..................................................................................................................................6
Reference List............................................................................................................................9

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Question 1
In this particular question, it is needed to understand that the income earned by an
individual by form of salaries, bonus and fees can be treated for constituting the sum as
earned by the taxpayer through personal exertion (Yap, 2015). This had been mentioned in
the provisions as per Section 6 of the ITAA 1936. In addition to that, it is clearly mentioned
in the Section 6-5 where separate provision are given to most of the accrued income with
respect to taxpayer and this can be dealt under ordinary income. As far as current case is
concerned, MeJenny is an individual who is receiving over millions of dollars in return of her
narrating stories to her husband who had already passed away presently (Woellner et al.,
2016). Initially, she had to pay a sum of $500000 as an advance and hand it to the publisher
in order to go through that interview. In this question, the main focus is to advice Jenny on
her tax consequences. The same had been properly explained in the section with the help of
using relevant and accurate law as well as legislation for that case. Henry was a tax resident
of Australia as well as famous Jazz singer who had passed way recently. A publisher named
as Jack had shown interest in the life story of Henry. After that, Jack had eventually
approached wife of Henry that he is interested in writing a bibliography on the life of Henry.
In that case, it can be found out that Jenny was also a tax resident of Australia wanted to
interview her on matters relating to know life story of Henry (Shevchenko, 2016).
In that case, it is noted that any item that can be derived by the taxpayer that have the
character of an income can be considered under the provisions as mentioned in the Section 6-
5 (Robin & Barkoczy Woellner, 2018). As per the given scenario, it can be seen that an item
that that have the character of an income can be derived from that. Furthermore, the income
that had been received by making it available for the narration of her story and compare it
with her husband so that lending of name can be done as it is going to be written by the
publisher who are being assessed based on the assessable income as mentioned in the case of

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Brent v Federal Commissioner of Taxation (1971) ATC 4195. It is important to consider the
fact where some of the related provisions of the case of Federal Commissioner of Taxation v
Holmes will be stating the fact in the event of receipt of salvage reward payment and this can
be done by the mariner and it will be coming under the assessable income (Richardson,
2015).
In most of the cases, it can be seen that the amount received by the taxpayer for
rendering the services and still the person is not in employment status and this takes into
account receipts in case of most of the sponsorship programs as it is being received especially
from the commercial firms as well as receipts that is received by the taxpayer as they had
attended the event for the case. As far as present case is concerned, it can be noted that Jenny
had received the income by her for making herself available for meeting constitutes receipts
from the service but in actual, it us not in employment purpose. Therefore, it is clearly
mentioned in the Section 6-5 of the ITAA 1997, where the income that is being received by
Jenny had to be treated under ordinary income (Porter, 2016).
It is clearly mentioned under the provisions of Taxation Ruling 2005/01 and this get
linked with the business activities that is being run by professional artist. In that case, there
are different features as well as nature of the profession of the art. It is mainly formed by
following the guidelines that are being issued by the Taxation Ruling and it is understood that
whether the individual can be dealt like an artist or he is carrying out the business in the
capacity of the professional artist or not in that case (O'Connell & Young, 2017).
The question asked by Jenny based on the relevance attributes cannot be ignored by
any chance. In that way, the main reason lies behind if the story had been written by herself
the income would have been treated by her and come under income that is being earned based
on the ordinary concepts as mentioned in the Section 6-5 of the ITAA 1997. In addition to

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that, it can be seen that the reason being can be treated same and it is earned by Jenny while
dealing with ordinary course of carrying out the business activities. It can be explained by
citing an example where it can be seen that most of the individuals who are being engages in
the procession of arts are really self-motivated where they are only focussed upon creativity
and the main purpose they think is holding their work for influencing the opinion of the
public (Long, Campbell & Kelshaw, 2016). Therefore, if the book had been originally written
by Jenny, then the treatment would come under income as it would have been derived by it
and could be even assessed as mentioned in the Section 6-5 of the ITAA 1997.
Question 2
It is clearly mentioned in the Section 8-1 of the ITAA 1997 that deduction being
allowed to an individual will be done based on its expenditure and this need to be incurred by
him or the loss as it is needed to be borne by that individual to an extended level (Hansell &
Rafi, 2018). In that way, the expenses will be incurred for the purpose of rendering the
taxable income where it is treated to be essential so that business can be conducted in an
effective way. Therefore, it is mentioned in the Section 8-1 (2) where it restricts any type of
deductions in respect of the individual as the expenses incurred by the individual will be
treated capital by nature. In this question, it is needed to advice Sally of her tax
consequences. In this case, it is seen that Sally is a single parent who is being employed as an
accountant. As she was employed, she had to put her young child in a day-care centre. She
treated the expense a necessary one and incurs in gaining her income. In this case, it is
needed to find out whether Sally will be entitled for any tax deduction under Section 8-1
(Grey & Harrison, 2015).
On the other hand, it can be seen in the Section 8-1 (2) where the section reveals
about the concern that fails to allow any individual to go through any type of deduction that
are actually private or domestic by nature. In that case, the deduction made can be incurred at

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the time of acquiring exempted income and this can be treated as one of the fact of the
present case where Sally is single parent as well as employed as an accountant who is
incurring child care expenditure for the purpose of attending her work.
It is clearly mentioned in the Section 8-1 (2) (b) that any type of outgoing or in that
case losses can be incurred by the taxpayer in same manner that it will not get deducted from
the assessable income for the taxpayer. In addition to that, the condition of non-deduction of
this expenditure can be considered as either an expenditure that will not be able to meet the
positive limbs or in that case deduction as it is not allowed under the second negative limbs at
the same time. It is properly given in the case of Lodge vs Federal Commissioner of Taxation
where the expenditure have been incurred for the purpose of meeting the expenditure for
child care activities. In addition to that, it would not be allowed as deduction at any cost of
time. This is due to the reason why expenditure incurred from the child care cannot be
incidental to the business as well as cannot be taken into account for the purpose of granting
table income. Therefore, the deduction for the same activity will not be available in this case
(Eslake, 2015).
It is properly given in the Section 51 (1) that the taxpayer will not be allowed to claim
for any of the deduction in respect of expenditure that have been incurred for the purpose of
generating taxable income in cases where the same kind of art can be either private or
domestic by nature. As far as present case is concerned, the expenditure incurred by Sally in
respect of the child care activities will not be allowed as deductions. This is due to the reason
as child care expenditure are not treated as significant as well as same cannot be generated
under taxable income for the taxpayer. Therefore, as mentioned in the provisions of 8-1 of the
income tax assessment act 1997, it can be seen that prohibitary sort of deduction is dealt with
in this case (Drew & Dollery, 2015).

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Question 3
It is clearly mentioned in the Taxation Ruling 97/11 that all the details on matters
relating what actually constitute the business of major primary production altogether. In that
case, the ruling had laid down statement where several guidelines are issued for determining
whether particular business is carried out by some person who actually is responsible for
constituting a business of primary production. In this question, it is needed to advice Joseph
of the tax consequences of the business venture. The same case had been explained in this
section by citing relevant law as well as legislation (Dixon, 2016).
In addition to that, it is all about the process that should be used for carrying out the
production as well as propagation for the plants or in that case products as it is being rendered
from in a given physical environment. However, it can be seen that every scenario is treated
as unique by its nature as well as matter is treated based on specific cases for determining the
nature of production that is being carried out by the taxpayer who in practical tries in laying
out specific guidelines as it need to be applicable on most of the cases. In order to understand
the fact of the given business venture, it is important to look at these guidelines that are
already mentioned in the Paragraph 25 of the TR 97/11. It is important to understand the fact
that guidelines as laid or in that case rulings takes into account determining of whether the
business activity is being carried on or by the business entity as it had several features of
carrying out the business activity. Therefore, it can be seen that it is important to determine
the fact whether the given taxpayer himself have the intention in earning profit apart from the
profit that is being generated from the business venture altogether (Bevacqua, 2015).
As far as this case is concerned, it is important to keep in mind the plan of his
retirement as it had actually taken him a lot to purchase land as well as commended the
farming of wild flowers where he actually have intention in conducting business on

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harvesting as well as selling in the market. It is clearly mentioned in the Paragraph 14 of the
Taxation Ruling of TRY 98/17 that it is not even needed for the taxpayer in deriving most of
the income that is generated out of primary production. Rather, it is the willingness shown by
the taxpayer or own will whether they want to stay employed elsewhere or decide to carry out
the profession in some other places. In that case, it is hereby essential to understand the fact
that there are several fact that need to be taken into consideration on whether the activities
involved are concerned at the time of carrying out the primary production amount to business
or any other places at the same time. In one of the case laws named under Evans v Federal
Commissioner of Taxation 1953, it had been properly mentioned on how the above case can
be determined and perceived under general view as to whether conducting the activities
performed or dealing with understanding the nature of commerce (Berg & Davidson, 2016)..
It is clearly mentioned in one of the cases of Ferguson v Federal Commissioner of
Taxation 1979 ATC 4261 where there had been accounted for several factors that need to be
observed as well as ascertained at the same time. In addition to that, there are various factors
that takes into account nature of the activity as well as intention of the taxpayer who are
carrying out the business operations and mode of operations conduction. These factors
altogether plays important role at the time of evaluating whether the business of primary
production is being carried out or not for a given period of time. The main objective of these
activities need to have motive behind and this motive will be to generate profit for the
business and the way the business is running. In this case, the activities indicates that Joseph
had been engaged in the process of carrying out the business in a given way. Based on the
observations, it can be seen that it is important to fund out the taxpayer earning revenue or in
that case having some type of regular income as like salaries and it is even engaged in some
of the primary production in an effective way (Barkoczy, 2016)..

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As far as current case is concerned, it can be seen that there is significant amount of
commercial purpose that is eventually involved in the course of business. In addition to that,
the scale of the business venture as it is being carried out by Joseph was big enough and they
had to make sure that the business can generate profits in the near future or upcoming
financial years. It will take around 5 years of time for the business to grow even if the income
generated are huge or earning huge profits for the same. It is all about the generated revenue
that is being earned at the time of conducting commercial activities that will eventually
engaged in by the taxpayers. It is all about the activities that takes into account plantation of
wild flowers as it had some of the elements of a business (Bain et al., 2015). Therefore, it can
be seen that Joseph planted as well as harvested wild flowers for the purpose of conducting
commercial activities.
It is important to consider the fact that profits that are going to be earned or generated
from Joseph from such activities will be liable for taxation as mentioned in the Section 6-5 of
the ITAA 1997 as it is treated under the proceeds from business activities. In order to claim
for deduction, it is required for Joseph where he had to state the items like interest on loan,
required costs in respect to fertilizers as well as involved cost in the process of native
seeding. Therefore, the main reason behind the activity is that the expenses are being incurred
for carrying out the business as well as same is being related for income generation activities
(Ali et al., 2017).

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Reference List
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compliance: Evidence from Australia and the United Kingdom and suggestions for
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Barkoczy, S. (2016). Foundations of taxation law 2016. OUP Catalogue.
Berg, C., & Davidson, S. (2016). Submission to the House of Representatives Standing
Committee on Tax and Revenue Inquiry into the External Scrutiny of the Australian
Taxation Office.
Bevacqua, J. (2015). ATO accountability and taxpayer fairness: An assessment of the
proposal to split the Australian taxation office. UNSWLJ, 38, 995.
Dixon, B. (2016). Land transactions and the new Australian foreign investment
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Drew, J., & Dollery, B. (2015). Careful what you wish for: Rate-capping in Victorian local
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Eslake, S. (2015). Reforming the Australian taxation system: a principled
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Grey, B., & Harrison, P. (2015, March). Right projects, right way, right results: building
portfolio, program and project capability: the Australian Taxation Office journey.
In presentation to the ProjectCHAT conference (Vol. 17).

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Hansell, D., & Rafi, B. (2018). Firm‐Level Analysis Using the ABS’Business Longitudinal
Analysis Data Environment (BLADE). Australian Economic Review, 51(1), 132-138.
Long, B., Campbell, J., & Kelshaw, C. (2016). The justice lens on taxation policy in
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Porter, D. (2016). Mission possible: Building an effective business continuity team in seven
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Richardson, D. (2015). Corporate tax avoidance. The Australia Institute, 1-16.
ROBIN & BARKOCZY WOELLNER (STEPHEN & MURPHY, SHIRLEY ET AL.).
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Australian Taxation Office data. CSIRO Technical Report EP164438.
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Law 2016. OUP Catalogue.
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