TAXATION. Taxation Name of the Student Name of the Univ

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

1TAXATION
Answer 1 a
The method for the evaluation of the assets that undergoes depreciation is covered
under the Taxation Ruling TR 2018/41 for the purpose of tax assessment.
Answer 1 b
The Division 13 contained in the ITAA 972 enumerates the details of tax offsets
available.
Answer 1 c
Top rate of tax for the year 2018/19 can an amount of 54,097 and an additional charge
of 45% above an income of 180, 001 or any income exceeding that.
Answer 1 d
Residential property is an exemption from taxation under capital gain that has been
provided under section 118.13 contained in the ITAA 973.
Answer 1 e
The B1 CGT Event as contained in section 104.15 of the ITAA 97, subjects, the right
relation to enjoyment and usage of a CGT asset before the actual passing over of the title of
ownership, to tax4.
Answer 1 f
The formula provided in section 4.10(3) of ITAA 975 provides for the calculation of the
income tax of a taxpayer. The income tax of a taxpayer is required to be calculated by
1 Taxation Ruling TR 2018/4
2 The Income Tax Assessment Act 1997 (Cth), Div. 13
3 The Income Tax Assessment Act 1997 (Cth), s. 118.13
4 The Income Tax Assessment Act 1997 (Cth), s. 104.15
5 The Income Tax Assessment Act 1997 (Cth), s. 4.10(3)

2TAXATION
deducting the tax offsets available from the product of the total income subjected to tax and
the rate of tax applicable.
Answer 1 g
Each and every expenditure that has been made by the taxpayer in proceeding with the
generation of income, which is taxable is to be allowed under the general deduction available
to the taxpayer under section 8.1 of the ITAA 976. It has been contended by the high court
while delivering a decision in the case of FC of T v Day 2008 ATC 20-0647. Before this, the
courts used to base their decision upon the presumption that all expenses of personal nature
are to be refused deduction under the section. But with this decision, it has been made evident
that any expense that can be traced to have charged owing to an income generation process
would be permitted to deduction for the purpose of the section.
Answer 1 h
The difference between the marginal rate of tax and average rate of tax is to be assessed
with respect to the target that it affects. Average tax rate implies a rate of tax that needs to be
calculated and applied upon the total taxable income of a taxpayer. However, marginal rate of
tax of a person, on the other hand, is applied and computed over the increment that has been
accrued to the total income of a taxpayer. In this respect, it can be stated that average tax rate
needs to be applied for the assessment of the total income tax of a person. Whereas the
marginal rate of tax is applied to compute the income tax that is required to be paid for the
increment that has occurred above his total income.
6 The Income Tax Assessment Act 1997 (Cth), s. 8.1
7 FC of T v Day 2008 ATC 20-064

3TAXATION
Answer 1 i
Consumption tax depicts a form of tax, which is to be applied and levied on the use and
consumption that has been availed of services and goods that a person purchases. This kind of
tax is to be applied either directly or indirectly. Consumption tax includes excise duties, sales
tax and any other forms of taxes that are imposed on the consumption of services and goods
availed.
Answer 2 a
The general deduction that has been contained under section 8.1 belonging to the ITAA
978, is applicable to any losses or expenses that a taxpayer may have suffered in earning the
income that is taxable. This construes the fact that any expense or loss that taxpayer suffers as
a contribution to his income earning process in relation to taxable income will be permitted
for the purpose of the this section as a deduction. Similarly, in this case as the loan availed by
Brett has been suffered for the purpose of paying the employees’ wages and these employees
are hired for the purpose of running the business of Brett, which aids him to earn his taxable
income. This will construed as an the expenditure to be allowed as a deduction under this
section irrespective of the security he has used for the obtaining of this loan.
Answer 2 b
The general deduction that has been contained under section 8.1 belonging to the ITAA
979 is applicable to any losses or expenses that a taxpayer may have suffered in earning the
income that is taxable. This construes the fact that any expense or loss that the tax payer
suffers as a contribution to his income earning process in relation to taxable income will be
permitted for the purpose of this section as deduction. In case, a loss or expense can be partly
attributed to the personal use and partly to the process of income earning, the deduction is to
8 The Income Tax Assessment Act 1997 (Cth), s. 8.1
9 The Income Tax Assessment Act 1997 (Cth), s. 8.1