Assignment on What do you Mean by Taxation?

Running head: TAXATION
Taxation
Name of the Student
Name of the University
Author Note

TAXATION1
1)
a) The Taxation Ruling 2019/11, deals with determination of the time when a business activity is
evident to have been carried out by a company.
b) Whether gifts and contributions are to be given a treatment as deduction or not is to be e
determined as per div 30, ITAA 972.
c) Highest rate of tax an individual taxpayer is obliged to pay for the year 2019-20 is an amount
of $54097 add 45% of the excess of $180,0003.
d) Both motorcycle and car can be allowed as an exemption in CGT regime as in s 118.5, ITAA
974.
e) The item that has been lost or demolished, which was priorly owned by the taxpayer would fall
under C1 event of CGT as in s 104.20, ITAA 975.
f) Any income taxpayer earns falling beyond the threshold of $18200 would not be included for
taxation.
g) The accessibility of the amount received from a former employer husband main concern in the
case of Hayes v FCT (1956) 96 CLR 476. It has been held in this case that any receipt that has been made
available to the employee by his employed in the past for the services towards employment already
rendered would be required to be treated as a CGT gain. This poses an anomaly regarding the fact that all
the incomes earned by the implementation of personal exertion are generally brought under the purview
of ordinary income but this amount although has arising from personal exertion applied in the past it has
been make taxable under the CGT regime. The reasoning that has been provided by the court in this
1 TR 2019/1
2 The Income Tax Assessment Act 1997 (Cth), div 30
3 www.ato.gov.au, "Individual Income Tax Rates", Ato.Gov.Au (Webpage, 2019)
<https://www.ato.gov.au/Rates/Individual-income-tax-rates/>.
4 The Income Tax Assessment Act 1997 (Cth), s 118.5
5 The Income Tax Assessment Act 1997 (Cth), s 104.20
6 Hayes v FCT (1956) 96 CLR 47

TAXATION2
respect is that this income has been accrued at past time and has turn into a lump sum amount which has
been received by the employer afterwards. This assigns a capital character in the asset rendering it to be a
capital asset. This makes the money to be taxable under CGT regime. However the intention of the
employee in receiving the money and the motive of the employer in extending the money is required to be
considered before arriving at a conclusion regarding this.
g) The assessability of an income can be supported by two authorities. The first authority requires
the income to be rendered income from the ordinary concepts prevailing regarding income in the minds of
a layman and does not require any statutory mandate for making and income assessable. On the other
hand, the other authority requires the income to be rendered as an income only by virtue of a statutory
mandate. Such incomes does not have any recognition where legislation supporting the same has not been
enumerated. Hence, from these authorities, it is evident that the income of a person can be classified into
two categories namely the income from ordinary concepts as well as the statutory income. Ordinary
income points towards any receipt that would be inferred as an income, even in case the tax legislation
does not expressly consider it to be an income. No authority is required for the purpose of rendering such
an amount as an income. This is because such a receipt is considered as a income even in the absence of
statutory support. On the other hand, statutory income would only be considered as an income if the same
has been expressly mentioned in the statute relating to taxation. In case the taxation statute fails to
provide for a provision and eating the same, such an income would not be included as a taxable income
within the assessable income of the taxpayer. An example of ordinary income is any income that the
taxpayer cost from personal toil and labour. On the other hand, the most appropriate example of statutory
income is the capital gain income7.
i) Two additional rates that are to be imposed open the tax liability of a person are the Medicare
levy as well as the Medicare levy surcharge. These are to be computed over the tax liability of a person
already incurred. The Medicare levy was intended to provide support towards the Medicare prevailing in
7 Barkoczy, Stephen. "Foundations of taxation law 2016." (OUP Catalogue 2016).

TAXATION3
Australia ensuring the system of public health. Any individual paying the tax would be imposed by a
Medicare levy at a rate of two percent over the net tax liability of a person. The legislative authority
regulating this form of taxation are ITAA 368 as well as the Medicare Levy Act 19869. On the other hand,
there is another levy namely Medicare levy surcharge that are to be imposed upon individuals belonging
to the higher tax brackets to make a contribution in the direction of private health Insurance. This levy has
been introduced for the purpose of keeping the burden on Medicare to be reduced. However only
individuals who already does not own any private health Insurance would be eligible for being imposed
with this levy. This form of levy is to be imposed upon the sum of fringe benefit tax and income tax of a
person. The rate for the same can be one percent, 1.25 percent and 1.5%.
2)
The two tests that are to be imposed upon the individuals who are originated from Australia but are
leaving the same are the resides test and the domicile test as in s 6-1, ITAA 3610. Two concepts contained
in the same are worth giving attention to. These are the expressions “permanent place of abode” and “
usual place of abode”. These two concepts are generally depicted as identical but the same has a
negligible amount of differences existing between them. The analysis of the same requires the prior
analysis of the expression place of abode. As per the principles established in the case of I.R.C. v.
Lysaght (1928) A.C.23411, place of abode is to be conceived as any living place of the next year where he
has been staying for the purpose of residing in a particular time. However the concept of permanent place
of abode is required to be identified with reference to the preceding in FC of T v Applegate 79 ATC
430712. In this context, the court has ruled out that a residence held by a person for indefinite period but
not forever depending upon the motive of the individual living there is to be referred to as permanent
place of abode. Again, the legal rule evolving with the case of F.C. of T. v. Jenkins 82 ATC 4098 13, any
8 The Income Tax Assessment Act 1936 (Cth)
9 The Medicare Levy Act 1986
10 The Income Tax Assessment Act 1936 (Cth), s 6.1
11 I.R.C. v. Lysaght (1928) A.C.234
12 FC of T v Applegate 79 ATC 4307
13 F.C. of T. v. Jenkins 82 ATC 4098