Taxation Theory, Practice, and Law

Taxation Theory, Practice,
and Law
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Table of Contents
Introduction......................................................................................................................................3
Question 1 Fringe Benefits Tax.......................................................................................................3
Question 2 Capital Gains Tax..........................................................................................................3
Question 3 Goods and Services Tax................................................................................................4
Question 4 Taxation of Companies..................................................................................................5
Question 5 Tax Avoidance, GAAP, ITR, etc...................................................................................6
Question 6 Trading Stock, Partnerships and Trust..........................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................7
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Introduction
This project contains 6 questions related to Australian Tax System and its allied concepts.
Facts related to these specific tax laws in relevance to the questions asked are discussed below to
come to the related conclusions. Required calculations have also been made to demonstrate
practical application of the taxation problems.
Question 1 Fringe Benefits Tax
Facts:
GoodMates Pty Ltd has provided an amount of $5000 to an employee for one month at
no interest. Realising inability of the employee to pay back, loan repayment was waived off on
compassion basis.
Rules and/or cases:
If an employer waives an employee's debt repayment obligation, it is considered as debt
waiver fringe benefit. However, in case of written off of genuine bad-debt, it does not account
for debt waiver fringe benefit.
Application:
In this case, company realised that employee has no assets to pay back the loan and harsh
measures would endanger him further and therefore, decided to write it off as bad-debt. It is a
case of genuine bad-debt.
Conclusion
It can be concluded that it is a case of write off of genuine bad-debt and hence, doesn't
account for debt waiver fringe benefit. Therefore, company does not require to pay any fringe
benefit tax.
Question 2 Capital Gains Tax
Calculation:
Particulars Amount (in $) Indexed Amount (in $)
(A.) Purchase price 5000 6645
(B.) Incidental cost 50 66.45
(C.) Improvement cost 1500 1833
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