Taxation Theory, Practice and Law | Assignment | Answers

Running head: TAXATION THEORY, PRACTICE AND LAW
Taxation Theory, Practice and Law
Name of the Student
Name of the University
Author Note

TAXATION THEORY, PRACTICE AND LAW1
Table of Contents
Question 1....................................................................................................................................2
Material Facts and Issues.............................................................................................................2
Law...............................................................................................................................................2
Application...................................................................................................................................3
Conclusion...................................................................................................................................4
Question 2....................................................................................................................................4
Issue.............................................................................................................................................4
Law...............................................................................................................................................5
Application...................................................................................................................................6
Conclusion...................................................................................................................................6
References....................................................................................................................................8

TAXATION THEORY, PRACTICE AND LAW2
Question 1
Material Facts and Issues
Emmi is working part time in the Crown Melbourne Restaurants while also studying
accounting at Holmes Institute. Hence, the primary issue is that Emmi is a part time employee.
Due to the nature of her job, she receives tips from customers visiting the restaurant. The issue in
this regard is to determine whether the income earned by her is a voluntary payment or not. After
which, it is necessary to determine whether the tips will be a part of the income earned by her or
not. She has received a gift in the form of a perfume worth $250. As Emmi is not using the
perfume and has given it to her mother, there are two issues here. The primary issue is to
determine the nature of the payment and whether it can be included as a gift or not. The second
issue is to determine whether the amount of gift is taxable in Emmi’s assessable income or not.
The next item is the $380 paid by her for employer for the meals consumed by her in a given
taxation year. She considers it to be a part of the rewards received by her for her hard work. The
issue is to determine the nature of this reward and whether it can be considered as a part of her
annual assessable income for the given taxation year or not. The final item is the $15000
Christmas gift received by her from her father. The issue is to suggest whether this amount is
taxable in her hands or not.
Law
The assessable income of an individual in Australia is a combination both ordinary
income under s6-5 and statutory income under s6-10 of ITAA 1997. Ordinary income includes
income earned by an individual during the normal course of the business or regular employment
like salaries, rent, wages and interest and other regular sources of income. The basis of