Taxation: Deductions and Taxable Income
Added on 2023-01-05
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Running head: TAXATION
Taxation
Name of the Student
Name of the University
Author Note
Taxation
Name of the Student
Name of the University
Author Note
TAXATION1
Answer 1
a) The point of time during which a business venture is said to be carried out by a company is required to
be assessed by the legal principles enumerated in in Tax Ruling 2019-11.
b) The legal provision underlining the deduction with respect to contributions as well as gifts is contained
in ITAA97, div 302.
c) The maximum rate of tax that the taxable income of a person can be applied with as for the tax brackets
in the year 2019/20 is :
For the individuals earning more than $180,000, to be applied with an amount of $54,097 with another
45% on any amount exceeding the base amount3.
d) A motorcycle or a car is required to be allowed as an exemption from being subjected to CGT as per
the legal provisions mentioned in ITAA97, in s 118-54.
e) The owner of an asset under the CGT regime, which has been demolished or lost, is required to be
subjected to taxation as a C1 event as provided for in the legal rule mentioned in ITAA97, s 104.205.
f) The tax free threshold existing in the current tax period with respect to an individual resident is
applicable for an individual having an income below the threshold of 18,200 dollars6.
g) The decision arrived at in the case of Hayes v FCT (1956) 96 CLR 477 has a great significance with
respect to the taxability of the receipt received from previous employer against the past rendered services.
Under the general concepts any income received from an employer is required to be treated as an income
from personal exertion and the same is required to be subjected to taxation as an ordinary income.
1 TR 2019/1
2 The Income Tax Assessment Act 1997 (Cth), div 30
3 www.ato.gov.au, "Individual Income Tax Rates", Ato.Gov.Au (Webpage, 2019)
<https://www.ato.gov.au/Rates/Individual-income-tax-rates/>.
4 The Income Tax Assessment Act 1997 (Cth), s 118.5
5 The Income Tax Assessment Act 1997 (Cth), s 104.20
6 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).
7 Hayes v FCT (1956) 96 CLR 47
Answer 1
a) The point of time during which a business venture is said to be carried out by a company is required to
be assessed by the legal principles enumerated in in Tax Ruling 2019-11.
b) The legal provision underlining the deduction with respect to contributions as well as gifts is contained
in ITAA97, div 302.
c) The maximum rate of tax that the taxable income of a person can be applied with as for the tax brackets
in the year 2019/20 is :
For the individuals earning more than $180,000, to be applied with an amount of $54,097 with another
45% on any amount exceeding the base amount3.
d) A motorcycle or a car is required to be allowed as an exemption from being subjected to CGT as per
the legal provisions mentioned in ITAA97, in s 118-54.
e) The owner of an asset under the CGT regime, which has been demolished or lost, is required to be
subjected to taxation as a C1 event as provided for in the legal rule mentioned in ITAA97, s 104.205.
f) The tax free threshold existing in the current tax period with respect to an individual resident is
applicable for an individual having an income below the threshold of 18,200 dollars6.
g) The decision arrived at in the case of Hayes v FCT (1956) 96 CLR 477 has a great significance with
respect to the taxability of the receipt received from previous employer against the past rendered services.
Under the general concepts any income received from an employer is required to be treated as an income
from personal exertion and the same is required to be subjected to taxation as an ordinary income.
1 TR 2019/1
2 The Income Tax Assessment Act 1997 (Cth), div 30
3 www.ato.gov.au, "Individual Income Tax Rates", Ato.Gov.Au (Webpage, 2019)
<https://www.ato.gov.au/Rates/Individual-income-tax-rates/>.
4 The Income Tax Assessment Act 1997 (Cth), s 118.5
5 The Income Tax Assessment Act 1997 (Cth), s 104.20
6 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).
7 Hayes v FCT (1956) 96 CLR 47
TAXATION2
However, as per the decision of this case it has been rendered that being received from a former employer
for the past services the amount it's the essence of a capital asset and is required to be treated as a CGT
event. However, for the purpose of bringing that asset under the purview of capital gain taxation two
requisites are required to be considered. One of the requisites that requires consideration is the motive that
has been regulating the payment made by the employer. On the other hand, the sense in which the
payment has been received by the employee is also required to be considered for the purpose of assessing
such a receipt as having a capital nature.
h) All the receipts as well as income that are required to be considered for the purpose of taxation
pertaining to a resident individual can be classified into two categories. These two categories include
ordinary income as well as statutory income. The receipts that are required to be classified under the
ordinary income would be those receipts which does not need any recognition in the statue for the
purpose of being regarded as taxable income. On the contrary, there are certain receipts that are required
to be recognised by the statutes for the purpose of being able to subject to taxation. These are referred to
as statutory income owing to the fact that require statutory recognition for the purpose of being rendered
taxable. Hence, concept of ordinary income is assessable even in the absence of any statutory mandate.
However, the statutory income has no recognition in the absence of the statutory mandate. Income from
personal exertion is required to be treated as an ordinary income and the same does not require any statute
for the purpose of being subjected to taxation. On the other hand, the capital gain assets are required to be
subject to taxation as per the provisions of the taxation laws prevailing and has no recognition in its
absence8.
i) There are two levies that are imposed upon the tax liability of a person paying the tax in addition to the
income tax they have been remitting. These include the Medicare Levy as well as Medicare Levy
Surcharge. These additional rates are applicable for the taxpayers who are eligible to pay the same. The
Medicare Levy is a rate of tax that has been imposed upon the taxpayers for the purpose of aiding the
8 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).
However, as per the decision of this case it has been rendered that being received from a former employer
for the past services the amount it's the essence of a capital asset and is required to be treated as a CGT
event. However, for the purpose of bringing that asset under the purview of capital gain taxation two
requisites are required to be considered. One of the requisites that requires consideration is the motive that
has been regulating the payment made by the employer. On the other hand, the sense in which the
payment has been received by the employee is also required to be considered for the purpose of assessing
such a receipt as having a capital nature.
h) All the receipts as well as income that are required to be considered for the purpose of taxation
pertaining to a resident individual can be classified into two categories. These two categories include
ordinary income as well as statutory income. The receipts that are required to be classified under the
ordinary income would be those receipts which does not need any recognition in the statue for the
purpose of being regarded as taxable income. On the contrary, there are certain receipts that are required
to be recognised by the statutes for the purpose of being able to subject to taxation. These are referred to
as statutory income owing to the fact that require statutory recognition for the purpose of being rendered
taxable. Hence, concept of ordinary income is assessable even in the absence of any statutory mandate.
However, the statutory income has no recognition in the absence of the statutory mandate. Income from
personal exertion is required to be treated as an ordinary income and the same does not require any statute
for the purpose of being subjected to taxation. On the other hand, the capital gain assets are required to be
subject to taxation as per the provisions of the taxation laws prevailing and has no recognition in its
absence8.
i) There are two levies that are imposed upon the tax liability of a person paying the tax in addition to the
income tax they have been remitting. These include the Medicare Levy as well as Medicare Levy
Surcharge. These additional rates are applicable for the taxpayers who are eligible to pay the same. The
Medicare Levy is a rate of tax that has been imposed upon the taxpayers for the purpose of aiding the
8 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).
TAXATION3
health system in Australia relating to the public. The tax liability of attack speed is required to be imposed
with this form of levy. Rate under this tax regime is limited to flat 2%. This levy is required to be
regulated by the provisions of ITAA36 and the Medicare Levy Act 1986. Again, the Medicare Levy
Surcharge is to be levied for the purpose of insisting the taxpayers belonging to higher tax brackets to
make payment towards the health insurance of private nature with a view to curb the burden upon the
Medicare. However, this levy is only applicable if the taxpayers are not covered by any other private
health Insurance. The tax liability that are covered for the purpose of computing this form of levy are the
fringe benefits tax and the income tax pertaining to a particular taxpayer. This form of tax can be levied at
a rate varying among 1%, 1.25% as well as 1.5%9.
Answer 2
Any person who has satisfy the conditions contained in ITAA36, s 6.110 would be considered as a resident
of Australia for the purpose of taxation. Under this section 3 examinations are required to be carried out
for the purpose of assessing the residency. These include the test relating to resides, domicile, 183 day
and superannuation. With respect to the domicile test and the resides test two concepts are required to be
analysed with respect to the striking similarities that it has apparently representing. These concepts are
‘permanent the place of abode' and ‘usual place of abode'. Again, the concept of place of abode is
required to be considered before the analysis of these two concepts. The term place of abode can be best
illustrated using the principles established during the judgement in I.R.C. v. Lysaght (1928) A.C.234 11.
The expression place of abode covers the residence of a person. Such a residence can be retained by a
person both by way of owning as well as renting. The weightage is required to be extended to the object
of the year residing in a particular place for the purpose of declaring the same as a place of abode.
9 Ibid.
10 The Income Tax Assessment Act 1936 (Cth), s 6.1
11 I.R.C. v. Lysaght (1928) A.C.234
health system in Australia relating to the public. The tax liability of attack speed is required to be imposed
with this form of levy. Rate under this tax regime is limited to flat 2%. This levy is required to be
regulated by the provisions of ITAA36 and the Medicare Levy Act 1986. Again, the Medicare Levy
Surcharge is to be levied for the purpose of insisting the taxpayers belonging to higher tax brackets to
make payment towards the health insurance of private nature with a view to curb the burden upon the
Medicare. However, this levy is only applicable if the taxpayers are not covered by any other private
health Insurance. The tax liability that are covered for the purpose of computing this form of levy are the
fringe benefits tax and the income tax pertaining to a particular taxpayer. This form of tax can be levied at
a rate varying among 1%, 1.25% as well as 1.5%9.
Answer 2
Any person who has satisfy the conditions contained in ITAA36, s 6.110 would be considered as a resident
of Australia for the purpose of taxation. Under this section 3 examinations are required to be carried out
for the purpose of assessing the residency. These include the test relating to resides, domicile, 183 day
and superannuation. With respect to the domicile test and the resides test two concepts are required to be
analysed with respect to the striking similarities that it has apparently representing. These concepts are
‘permanent the place of abode' and ‘usual place of abode'. Again, the concept of place of abode is
required to be considered before the analysis of these two concepts. The term place of abode can be best
illustrated using the principles established during the judgement in I.R.C. v. Lysaght (1928) A.C.234 11.
The expression place of abode covers the residence of a person. Such a residence can be retained by a
person both by way of owning as well as renting. The weightage is required to be extended to the object
of the year residing in a particular place for the purpose of declaring the same as a place of abode.
9 Ibid.
10 The Income Tax Assessment Act 1936 (Cth), s 6.1
11 I.R.C. v. Lysaght (1928) A.C.234
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