In-depth Case Study: Analysis of Australian Taxation Laws

This case study provides an analysis of Australian taxation laws, focusing on income tax regulations and their implications for individuals like Jane Herman. It examines assessable income, deductions, and compliance requirements under Australian law. The study also includes an analysis of the Federal Commissioner of Taxation V. Cooke and Sherden case, highlighting issues related to confidentiality, contract law, and the importance of understanding legal agreements in business. It further discusses compensation packages and the implications of transferring money from overseas, emphasizing the need for individuals to understand their tax obligations and rights as Australian residents. Desklib offers this case study as part of its collection of solved assignments to aid students in their understanding of legal and taxation principles.

Running head: AUSTRALIAN TAXATION LAWS 1
Australian Taxation Laws
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AUSTRALIAN TAXATION LAWS 2
Australian Taxation Laws
Over the years, nations have been supporting themselves on the platform of imposing
an income tax on its citizens to increase its revenue. This is because the government cannot
function without funds. Thus, to ensure that there are enough funds to operate the nation’s
activities, they typically collect taxes from their citizens. The term income tax can be defined
as a tax imposed on a taxpayer that varies depending on an individual’s income or profits,
(Buenker, 2018). It has been a major concern to many governmental institutions such as the
Australian government on the rise of collaborative innovations/economy and the phenomena
of the ‘micropreneurship’ and related concepts. This has resulted to the notion of its negative
impact to the global market on the serious risk it often raises in relation to public safety,
worker’s rights, accessibility, and tax (such a tourism and hotel taxes), (Ault & Arnold,
2010). Therefore from the Australian government ideological perspective saw these concepts
through analytical research that they usually exists in a regulatory grey area or in outright
contravention of existing laws despite the fact that these services have proven popular and
beneficial to many consumers.
Expenses divide by the gross salary (45,000 + 5,865) ^ 50,000= 1.0% income tax
payable by Jane Herman. Through the deductions experienced by Jane due to the her jobs and
employment cannot be compared to the amount she receives through purchasing of shares,
investment property, the Accounting professional job she has in the State of New South
Wales. Jane Herman does not depend on the gross salary she receives from Milton Hotels in
Sydney. Thus, all the benefits/amounts she received from her earnings with respect to
employment are added in a assessable income such as performance bonus of $25,000, and
clothing allowance from Milton Hotels of $4,500. According to the Australian Taxation Law
states that the beneficiary tax offset is available if you receive certain Australian Government
allowances and payments. You pay no tax for the year if you only receive any of the

AUSTRALIAN TAXATION LAWS 3
qualifying benefits and allowances, and have no other taxable income. Thus, Jane Herman is
exempted from paying tax of benefits and allowances received during that year.
Jane Herman has received a lot of benefits from her property which totals to $13000
as the rental income and the related outgoings on the property is approximately $2200. As an
Australian Citizen, she is entitled to pay her income tax every month, (Oats, 2012).
Therefore, this shows that she is also entitled to income tax purposes and they have to lodge
an Australian tax return, (Johnson, S. and Breunig, R., 2016). According to the Australian
Taxation Office all benefits received by an individual should be included in the assessable
income. The term assessable income can be defined as gross income including rent,
dividends, salary and wages, and interest before any tax deductions are allowed. Thus,
earnings Jane received will be added to her income before any tax is deducted by the
Australian Government. Examples include dividends, income from investments, bonuses, and
overtime income received by an employee. All these are included in the assessable income of
Jane Herman. Jane Herman in the end of the year 30 June 2018 she has received bonuses,
allowances, income from investment, dividends that were included in the assessable income.
The management, unions and the state play a major role in improving the satisfactory
and participatory of employees. The state legislative rules that governs the labour market and
provided a social safety web has reduced the amount of financial condition. As for
management, there's no denial of the importance of structure culture (shaping of workplaces)
in worker satisfaction. However, some fail to acknowledge the impact they need in shaping it.
It’s typically believed that cultures of a geographic point area unit planned, tho' this can be
false, (McCallum, 2008). Australian law deduct outgoings incurred for Australian income tax
purposes. However, Expenses specified under income tax law as non-deductible include:
fines and penalties imposed under an Australian or foreign law, or ordered by the courts and
borrowing expenses related to a loan that was taken out to pay a federal tax liability.

AUSTRALIAN TAXATION LAWS 4
In accordance to the Australian income tax purpose is that an individual who is a
citizen of that country either by birth or registration entitled to be taxed by the government
based on your income earning per month. Thus, the higher the pay the higher the amount of
income taxed, (Woellner, R., et al., 2016). Jane Herman has incurred some outgoings in the
year 30 June 2018 such as travel expenses, insurance, water rates, property agent
commission, and repairs and maintenance. Therefore, these outgoings will be deductible to
her for Australian income tax purposes. However, certain charges and implications from the
Australian income tax can be avoided if she employs certain procedures. An income tax
return can be defined as document you file with the Internal Revenue Service or the state tax
board reporting your income, profits and losses of your business and other deductions as well
as details about your tax refund or tax liability, (Buenker, 2018).
The term compensation packages refers to total sum of benefits an individual enjoys
such as salary, allowances, bonus, commission and other indirect benefits (such as insurance,
pension plans, vacations). There are forms of executive compensation packages which are
Base Pay, overtime pay, stock options, travel/housing allowance/meal, commissions,
bonuses, merit pay, and profit sharing, (Rodriguez-Fernandez, M. 2016). Another
compensation package that the board members enjoy is Executive Perquisites (Perks), which
are non-cash items that have a status value as they imply the board executive members are
important personnel in the company. For example they can offer tax substantial savings
because some perks are not taxed as income, (Boynton, 1995). The executive members also
enjoy the benefit of Long Term Performance Incentives, which helps them to enjoy long-term
growth and success of the company based on the executive performance ‐ based incentives.
There are implications associated with the transfer of money from a retirement
annuity to an Australian bank account. Such as the money can be blocked and handed over to

AUSTRALIAN TAXATION LAWS 5
an authorized dealer, also, may incur termination penalties for withdrawing early. According
to this case study: Piper and David Chapman on the issue of transfer of money from South
Africa to an Australian bank account there are always some implications or income tax
liability seen, (Berger, L.L., 2016). During the transfer of this funds Piper will be charged a
higher tax rate because of the sum of money been transferred. Money transactions that exceed
$10,000 or alert a suspicion are always by law reported by the banks. According to the
principle of law it states that people should pay taxes in proportion to the amount of services
or benefits they receive. An individual like Jane Herman according to this law she is not
entitled to pay any tax whatsoever but the company she works for, Milton Hotel.
Generally, it is evident from the above paper that without the fundamental knowledge
of income tax an individual can be paying more than he earns. Thus, Jane Herman is entitled
to be imposed income tax purposes due to the reason of been Australian residents. The
Australian Law does not deduct allowances and bonuses made by an employee. However, the
earnings Jane received will be added to her income before any tax is deducted by the
Australian Government.

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PART B
Federal Commissioner of Taxation V. Cooke and Sherden
Facts
The Federal Commissioner of Taxation V. Cooke and Sherden was an appeal filed by
two couples (Mr. and Mrs. Cooke and Mr. and Mrs. Sherden) against the trials court
judgment linking them to the commissioner of Taxation in bringing to tax as assessable
income the value of holidays provided to and enjoyed by the taxpayers, (Conaghan & Rittich,
2005). He was able to defer the taxes due from the sale due to a provision in the lawn and
invested that cash in another investment, (Bennett, 1994). The two parties made agreements
to accept the retail distributing rights for the sale of the Company’s product in other district.
The Agreement contained a Confidentiality and Non-Disparagement provision where the
parties not to reveal to third parties the contents of the agreement. On March 31, 1996, the
bank reached an agreement with the lenders and the parties involved to reinstate the loan and
the parties entered into a settlement agreement
Issues
1. Did the two appellants, The Federal Commissioner of Taxation V. Cooke and
Sherden, breach the terms of the Confidentiality and Non-Disparagement provision that they
had signed with the manufacturing companies.
2. Did the two parties fully and clearly understand the terms as stated out in the
Private Placement Memorandum?
Decision
1. Yes, the two appellants, in this case, breached the terms of the confidentiality and
Non-Disparagement provision.

AUSTRALIAN TAXATION LAWS 7
2. Yes, from the proceedings, it is evident that the two appellants clearly understand
the terms and conditions as set out in the Private Placement Memorandum.
Reason
The confidentiality and Non-Disparagement provision is a clause that is present in the
Business law. The provision claims that under no circumstance should business agreements
be disclosed to parties that are outside the agreement. Thus, the fact that the two couples,
knowing of this, decided to disclose information about the agreement he had reached with
FINRA is a contradiction of law.
The Private Placement Memorandum required that all investors should state in writing
that they had sufficient knowledge and experience in financial and business issues and that
they were capable of evaluating the risks that were inherent and that they had the ability to
protect their own interests in connection with such investments, (Latimer, 2011). The two
couples signed these terms willingly and by entering into these requirements, he proved that
he was knowledgeable in business matters, (Basu, 2016).
There was no service which the respondent retailer rendered to the manufactures. The
relationship was essentially one of the seller and the buyer, (Squelch, & Guthrie, 2010). Also,
the provision of holidays was not part of any contractual relationship and cannot be said to
have been directly or indirectly for the services rendered by the taxpayers. Thus, the appeals
should be dismissed with costs. The decision and the main principle applied in the judgement
takes the concept of the facts presented by each defendant and plaintiff in response to the case
presented in the law. According to the ruling made by Jenkinson J. in the Supreme Court of
Victoria was on the side of the manufacturers rather than the distributors in that there was not
agreement that was signed to show if what the Plaintiff said was true.

AUSTRALIAN TAXATION LAWS 8
The above case is relevant today in that it helps business partners to undergo for
contract law document that show an abiding policy of their agreement based on the contract
given by two parties. A contract can be defined as any legal promise established between two
or more parties, therefore a breach of contract can be stated as a legal cause of action in
which a binding covenant is not met by one or more parties by performance or non-
performance in the contract. There should be the existence of a valid or legitimate contract to
ensure both parties abide to those laws.

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