Tax Law and Case Analysis

The assignment examines the concepts of tax avoidance through legal case analysis, focusing on precedents like *IRC v Duke of Westminster* (1936) and *Ramsay v. IRC*. It delves into the complexities of tax structures and how individuals can exploit loopholes. Additionally, it explores the Australian context of applying these principles and uses a specific scenario involving timber sales to illustrate the application of relevant taxation laws.

Running head: TAXATION LAW
UTILIZATION OF TAXATION LAW
Name of the student:
Name of the University:
Author’s Note:

1UTILIZATION OF TAXATION LAW
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................3
Answer to question 3..................................................................................................................4
Answer to question 4:.................................................................................................................5
Answer to question 5:.................................................................................................................6
Reference List:...........................................................................................................................8

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Answer to question 1:
This case shows issue that relates to the determination of gain or loss that is received
from the sale of assets and this case is defined under section 108-20 of the ITAA 1997. Laws
that are applicable in this case are : Section 108-20 of the ITAA 1997 &Section 108-10 of
ITAA 1997
Application of Law section of 108-20 of the ITAA 1997 shows that loss incurred due
to sale of home sound system is not acceptable due to set off, the reason behind this is losses
faced from dumping of used assets cannot be taken. The second law used 108-10 of the ITAA
states that , losses cannot be set off by the profits that is accepted from the sale of shares1.
Moreover, the offset can also be considered as per Section 108-10 of ITAA 1997. In this
1 Lindell, G., 2013. Judicial review and the dismissal of an elected government in 1975: then and now?.

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current case Eric has gained earning on the dumping of assets and there is absence of current
year capital, also Eric has current stands as $15,000.
Conclusion drawn from the issue is, Eric cannot balance the loss that he incurred from
items because he has gained earnings from the dumping of assets.
Answer to question 2:
The issue in this case is the ascertainment of FBT that is with the “Taxation Ruling
of TR 93/6”. Law applicable in this case is Taxation rulings of TR 93/6
Application
Computation of Fringe Benefit Tax
Law section of TR 93/6 enacted states that economic institutions strategy of offsetting
the account is recognized as interest offset agreement. These commodities are arranged for

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offsetting the interest which is incurred by consumers.2Thus the consumers are not
accountable for paying any sum for the income tax with respect to earnings that is gained
from the account. According to the Taxation Rulings of TR 93/6, bank if does not permit
Brian from getting interest on loan then no sum of income tax Brian will be accountable for
paying.
Thus the conclusion here is, Brian is not liable to pay sum of income tax burden if he
is free from the domain of paying interest by the bank.
Answer to question 3
Distribution of tax is the main issue that revolve in this case, here tax is distributed
that is imposed on the rental property which is run by the joint ownership of Jack and Jill.
Laws applicable are Section 51 of the ITAA 1997, Taxation rulings of TR 93/3 and
F.C. of T. v McDonald (1987)
Applications of the above law mentioned are, law section of TR 93/32, mainly deals
with the justification of divisionary income or loss that is derived from rental property owned
by co-owners of the property under consideration3. The current case shows that Jack and Jill
liable to be evaluated for tax position of the rental property. Now the law section TR 92/32
shows that Co-ownership of rental property is known as one partnership for income tax and
the loss of generated from the rental property is managed through the Co-ownership of rental
property as well as from the sharing of partnership profits and losses 4.The current case of
2 Ferran, E. and Ho, L.C., 2014. Principles of corporate finance law. Oxford University Press.
3 Gordon, R., 2016. Increasing use of tax-transparent entities by private groups due to BEPS. Tax Specialist, 19(4), p.136.
4 Sadras, T., Perugini, M., Kok, C.H., Iarossi, D.G., Heatley, S.L., Brumatti, G., Samuel, M.S., To, L.B., Lewis, I.D., Lopez, A.F. and Ekert,
P.G., 2014. Interleukin-3-mediated regulation of β-catenin in myeloid transformation and acute myeloid leukemia. Journal of leukocyte
biology, 96(1), pp.83-91

5UTILIZATION OF TAXATION LAW
Jack and Jill shows that co-ownership for the rental property between them cannot be
regarded as the partnership in consideration with the general law. This particualr case shows
that partnership agreement should not affect the affects earnings or losses
F.C. of T. v McDonald (1987) 18 ATR 957 shows that in this case joint renters own
little units is being owned by husband and wife
The agreement established between them considers the earnings that is obtained from
the rental property. Here in this rental property will be allocated in the form of 25 percent to
McDonald and 75 percentto Mrs McDonald. Now the total loss sum will be borne by Mr
McDonald.
The above discussion thus shows that both Jack and Jill must distribute loss equally
and joint ownership does not accounts as partnership business.
Answer to question 4:
IRC v Duke of Westminster [1936] AC 1 shows the incidence of tax avoidance. This
case shows one principle which is, each man is permitted to order his dealings for allowing
the taxation assigning which is made in appropriate Act.5. This law has not pointed that this
law is mainly in an opportunity that can be obtained by avoiding of tax and this is mainly due
to complex design of the tax structure and this issue has been overlooked by the court that
failed to assess the overall impact.
Citing an example of the court in the forthcoming stages is more significant and thus
adopted under the WT Ramsay v. IRC principle. This case mainly focuses on transactions that
took place he transaction has arranged artificially and this is served not in the shape of
5 AbdulRazaq, M.T. and Adam, K.I., 2015. Anti-Avoidance Legislations: Issues & Doubts in the Application of Tax Rules in
Nigeria. AGORA Int'l J. Jurid. Sci., p.1.

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commercial purpose. The perfect rule was imposition of tax for extending the deal as a total
fact.
In the current state, this principle within Australia depicts that if individual meet goals
, then Inland Revenue will be obtained and the individuals are not being forced to pay tax. It
is understandable that this feature permits individuals and corporations for constructing
financial document, it also addresses the objectives of decreasing tax and that is based on the
design of laws
Answer to question 5:
Current case deals with the evaluation of income from the sale of timber that is
assessed under subsection 6 (1) of the Income Tax Assessment Act 1936. Applications of law
show that law used from Subsection 6 (1) of the Income Tax Assessment Act 1936 and
McCauley v. The Federal Commissioner of Taxation is used.
In the current case, this is found that Bill owns a piece of land where the plantation of
pine tree is a significant one. Here the case shows that Bill mainly focused for gazing of
sheep in this land. Bill recognized a company that pay him $1000 for every 100 meters of
timber. The taxation used here is 95/6, set down the income tax sequences originating from
the activities of chief production and forestry .6The law shows that there should be limit to
receipts those are derived from sale of timber. The subsection 6 (1) of the Income Tax
Assessment Act 1936
shows that activities of operations related to forest these are concerned as main creator.
The case shows that trees are not being planted by Bill but he enjoys the whole
6 Azam, R., 2017. Minimum Global Effective Corporate Tax Rate as General Anti-Avoidance Rule. Colum. J. Tax L., 8, p.5.

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amount of profit. Here the amount of profit obtained from the land shows amount of earnings
that are obtained and this regarded as measurable income. Thus the case shows that that sale
is showing as a combination of complete or partial assets of a business, the trees undertaken
as assessable income of the tax payers under subsection 6 (1) of the Income Tax Assessment
Act 1936.
Here in this case the tax payers did not planted the trees with a view of earning
profit. As held in McCauley v. The Federal Commissioner of Taxation payments obtained by
the grantor is under the appropriate domain.
Conclusion drawn is, that earning received from cutting timber is taken as tax laws
under subsection 6 (1) of the ITAA 1997.

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Reference List:
AbdulRazaq, M.T. and Adam, K.I., 2015. Anti-Avoidance Legislations: Issues & Doubts in
the Application of Tax Rules in Nigeria. AGORA Int'l J. Jurid. Sci., p.1.
Azam, R., 2017. Minimum Global Effective Corporate Tax Rate as General Anti-Avoidance
Rule. Colum. J. Tax L., 8, p.5.
Ferran, E. and Ho, L.C., 2014. Principles of corporate finance law. Oxford University Press.