Taxation Theory, Practice and Law

TAXATION THEORY,
PRACTICE AND LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
QUESTION 2...................................................................................................................................3
REFERENCES................................................................................................................................7

INTRODUCTION
Tax is charged by Government to generate revenue that is used to make public expenditure.
In order to give relaxation to the people in tax payment Government prepare rules in respect to
the deductions which one can receive if fulfil some conditions. In the present research study case
of Emmi is analysed and relevant provisions are discussed to identify areas where she can
receive deduction in income tax. In second part of the report capital gain tax provisions are
discussed in respect to Liu. In this way, entire research work is carried out.
QUESTION 1
As per given case Emmi get a monthly entertainment event that is paid by the restaurant owner.
On meal Emmi whatever amount spend, owner give budget of $380. It is basically a reward to
the Emmi. In this case 51 AEA of the ITAA 36 applied. This section state that no tax will be
charged on the Emmi. Instead tax will be charged on the employer and as per rules it has to pay
50% of overall bill as tax to the Australia Government. This rule applies when in a Fringe benefit
year employer select division 9 A of the part 3rd of Fringe benefit tax assessment Act 1986 and
sub division C not chosen by the employer. Tax payer can also follow rules of 37 CA of Fringe
benefits tax assessment Act 1986. Under this law for overall expenditure that is made by the
employer in respect to fringe benefit provided to the employee’s particular formula will be used
to determine taxable amount (Income tax act 1936., 2019).
Section 51 AH indicate rules on deductions that are not allowable in case expenses that
are incurred by employee are reimbursed. This rule applied when employee on behalf of the
employer make any payment to the third party. Section 51 AJ indicate deductions that are not
allowed for the private component of the contributions for fringe benefits. In case any employee
receives fringe benefits like airline transport benefit, board benefit, loan benefit, property benefit
and a residual benefit. All such kind of benefits are paid by the employer to his employees for
office purpose. Hence, employee cannot be considered that can claim fringe benefit exemption in
tax (Assessible income., 2019). It can be said that rules and regulations in the Australia are
tightly prepared and no one by taking advantage of any rule can get exemption in the income tax.
Section 78 A applied in case of Emmi as it receives gift from the father on Christmas
valued at $15000. On Christmas time Emmi receive expensive perfume of value $250. As per
rule of the ITA 1997 if any gift is given by one person to another as cash or any other thing like
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