The receipt of salary and performance bonus

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Table of Contents
Answer to Part A:.......................................................................................................................2
Answer to Part B:.......................................................................................................................4
References:.................................................................................................................................7

TAXATION LAW2
Answer to Part A:
When a taxpayer receives income from employment for rendering any individual
services then it will be the subject of income tax for the employee or may be held as fringe
benefit for the employee. Mustafa reports the receipt of salary and performance bonus from
his employer at the end of the year. Citing “Hayes v FCT (1956)” the salary and yearly
bonus received by Mustafa is a receipt from personal exertion and will be taxable as ordinary
income in “sec 6-5 ITAA 1997” (Woellner et al. 2016). The amounts hold adequate nexus
with earning activity of Mustafa.
A gain cannot be taxable if it is not money or translatable into money. In “Payne v
FCT (1996)” frequent flyer points were not considered as taxable earnings because it is a
non-cash welfares. The frequent flyer point of Mustafa in respect to work-related travel is a
non-cash welfares that cannot be transformed in cash and hence non-taxable as ordinary
income.
Unexpected or voluntary disbursements that is received by a taxpayer as the ordinary
occurrence of occupation represents taxable ordinary earnings. As noticed in “Calvert v
Perry (1965)” tips that is received by taxi driver is a voluntary payments and taxable as
ordinary income (Barkoczy 2016). As noticed Mustafa reports the receipt of cash tips from
the satisfied customers. Citing “Calvert v Perry (1965)” cash tips received by Mustafa is a
voluntary employment receipt and will be chargeable as ordinary pay under “sec 6-5 ITAA
1997”.
Periodic receipts and annuities are regarded as ordinary income. Interest represents
returns which flows from lending the money. As noted in “Riches v Westminster Bank
(1947)” capital amount lent is not effected by the payment of interest. Mustafa reports the
receipt of interest from the fixed deposit made in bank (Taylor et al. 2017). Citing “Riches v