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HI6028 :Taxation Theory, Practice and Law Assignment

Added on - 30 Oct 2019

Taxation Principles and Theory

In this report, we are going to study Taxation Principles and Theory and will give the answer the following questions: Question 2: Calculating Fringe Benefits Tax for the year 2016-17 and discussing the impact on Brian if he becomes free from the payment of interest on loan 4 Question 3: Describing the loss allocated for tax purpose in case of Jack and Jill and demonstrating the situation if they decide to sell the property 6 Question 4: Discussing the principle established in IRC v. Duke of Westminister [1936] AC 7 Question 5: Providing advice to Bill related to the capital gains tax issue. You can also check "Sample Assignment on Taxation Law" for a better understanding.

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TAXATION THEORY, PRACTICE & LAW
Table of ContentsIntroduction......................................................................................................................................3Question 1: Calculating net capital gain or net capital loss.............................................................3Question 2: Calculating Fringe Benefit Tax for the year 2016-17 and discussing the impact onBrian if he become free from the payment of interest on loan........................................................4Question 3: Describing the loss allocated for tax purpose in case of Jack and Jill anddemonstrating the situation if they decide to sell the property........................................................6Question 4: Discussing the principle established in IRC v. Duke of Westminister [1936] AC......7Question 5: Providing advice to Bill related to capital gains tax issue...........................................9Conclusion.....................................................................................................................................10Reference List................................................................................................................................112
IntroductionIn this task, the specialist has planned to show the tax collection arrangement of a specific nationwith the assistance of five diverse contextual investigations. It has likewise been expected tolook for finish comprehension of ramifications of tax assessment with these given casereferences. Notwithstanding these, the researcher has chosen to take assistance from standardsand laws gave by the overseeing body and certain enactment.Question 1: Calculating net capital gain or net capital lossEric has acquired certain shares and assets in the course of the most recent a year and he soldthese shares and asset a week ago in the same year. If the shares or asset are held for a year ornot as much as a year then it will be called as short-term asset. Likewise, if the respective thingsare held for over a year, it will be called as long-term assets (Yingeret al.2016). For thissituation, Eric has held them for not as much as a year and sold them around the same time.Thus, it can be said that net capital losses or gain will be calculated in the context of short-termassets in case of Eric.Calculating short-term capital losses or gainsFor the year ended on 20XXAsset purchased during theyearAmount ($)Asset sold during the yearAmount ($)Sound System12000Sound System11000Painting9000Painting1000Antique chair3000Antique chair1000Shares of listed company5000Shares of listed company20000Antique vase2000Antique vase3000Asset purchased (Total)31000Asset sold (Total)36000In order to calculate short-term capital gains following formula is used-Short capital gains in current year = Total asset sold – total asset purchased= $36000- $310003
= $5000Question 2: Calculating Fringe Benefit Tax for the year 2016-17 anddiscussing the impact on Brian if he became free from the payment of intereston loanAs observed from the case of Brian, he has gotten a credit as a piece of his compensation bundlefor a long time, since he is a bank official, he got advance added up to $ 1 million at a uniquerate of 1%. 40% of the advance was utilized for money creating purposes and for meeting allpremium installment commitments. For this situation, Brian has gotten FB or Fringe Benefit onthe advance sum for the year 2016-2017. Furthermore, it can likewise be seen that credit hasbeen given on 1 April 2016. The calculation of assessable wage of Brian for the year finished on30thJune 2017 is given beneath.Details of loan taken by BrianSpecificationsDate of disbursement of loan1stApril 2016 (the loan is taken for 3 years)Rate of interest15%Sanctioned loan amount$1 millionUsage of loan amount($1 million * 40%) = $400000Repayment modeMonthly installmentInstallment to be paid for next 15 months$(1000000 * 1% /12) * 15= $ 12500Computing taxable income to be bear by Brian for the year ended on 20106 – 2017ParticularsAmount (in $)Income100000Less: Installments (Interest)400000Less: Installments (Principal)10000Less: Expenses250000 (333334-83334)Taxable income (Total)340000Thus, from above computation it can be said that the total taxable income of Brian is $340000including monthly installments along with principal. As Brian will pay installments for repayingloan his taxable income will reduced by $21667. On the other hand, taxable income of Brian willdiffer as calculated if he will pay installment at the end of loan.4
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Taxation theory practice & law

From the above report, we have Calculated Fringe Benefit Tax for the year 2016-17 and discussing the impact on Brian if he become free from the payment of interest on loan Endeavors have been made to assess the distinctive case references as for the tax assessment law. In light of the assessment, it has been discovered that in the main case study Eric has earned capital pick up of $ 5,000 and from the second contextual analysis, it can be presumed that on the off chance that if the portion ought to be paid toward the finish of the credit residency, Brian needs to pay the charge on $ 600,000.