Australian Taxation Law: Case Studies and Applications

The assignment examines several aspects of Australian Taxation Law as outlined in the Income Tax Assessment Act (ITAA) 1997. It begins by exploring whether a taxpayer can set off capital losses against ordinary income, referencing sections 108-10 and 108-20 ITAA 1997, concluding that such losses are non-set-off due to their personal asset nature. The next question discusses the Fringe Benefit Tax (FBT) calculation under the Fringe Benefits Tax Act 1986 and TR 93/6, explaining scenarios where tax payment is not required for certain interest offsets. The third issue addresses income loss distribution in joint property ownership, using cases like FC of T v McDonald to clarify that such ownership isn't treated as a partnership for tax purposes. In discussing legal tax avoidance, the assignment refers to IRC v Duke Westminster (1936), emphasizing individual rights to arrange tax affairs legally. Finally, it evaluates timber cutting taxation under subsection 6(1) ITAA 1997, determining that income from felled timber is taxable, and considering alternative lump-sum payments as royalties. Each case study provides a practical application of specific sections of Australian Taxation Law.

Running head: AUSTRALIAN TAXATION LAW
Australian Taxation Law
Name of Student:
Name of University:
Author’s Note:

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Answer to question 1:
Issue:
The concerned issue is whether it is possible for the taxpayer to measure the amount that
is retained from the capitalistic loss or the gains which can be considered for the purpose of set
off based on the Section 108-10 of the ITAA 1997.
Laws:
i. Section 108-20 of the ITAA 1997
ii. Section 108-10 of ITAA 1997

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Application:
Application:
The present situation in connection to the taxpayer mentions that the sustained loss from
the sale of the sound system is not possible to be approved for set off purposes. This is basically
due to the fact that the loss that originates from the home sound system sales. This is also
because it possesses a characteristic of personal asset not allowed for the purpose of set off
(Devos 2012).
The profits were attained by Eric on that day which was the day of sales; the sales were
those of ordinary assets without any sort of existent year capital or even any form of reductions
also. The section 108-10 of the ITAA 1997 was followed. The guiding principles of the section
108-10 of ITAA 1997 helped in evidence regarding the loss of the collectable nature are not

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possible for consideration regarding the set off against the ordinary gains from the share sales
that are not allowed for set off (Althaus, Bridgman and Davis 2012).
Conclusion:
Depending on the conversation it has been obtained that Eric cannot possibly set off the
sustained loss from those collectables which were solely derived by him as revenue upon the
sales of assets of an ordinary nature.
Answer to question 2:
Issue:
The specific scenario in question, puts forward the issue what actually deals with the
concept of the computational procedure of the FBT that has been defined based on the Fringe
benefit Act of 1986 (Barkoczy 2016).
Laws:
i. Fringe Benefit Tax Act 1986
ii. Taxation Rulings TR 93/6
Application:
Computation of Fringe Benefit Tax

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Application:
The customers are provided with the possibility of the rulings when the profit incurred in
which case any sort of tax payment for such a sort of derived income is not required. According
to the Taxation Rulings of the TR 93/6, Brian is discharged by the bank, he will not be required
for the payment of tax depending on this. According to the guidelines of the Taxation Rulings of
the TR 93/6 the financial institutions like banks or may be other loan making companies, usually
device plans that give a person an opportunity of the interest offset of the customers (Kennya
2016).

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Conclusion:
According to the above mentioned discussion, in case the loan interest is payable at the
end of the loan, no amount of income tax needs to be paid to the bank.
Answer to question 3:
Issue:
The discussed matter is connected to the distribution of the loss that is sustained by the
taxpayers in the discussed context concerned with the joint ownership as well as the rental
property.
Laws:
i. FC of T v McDonald
ii. Section 51 of the ITAA 1997
iii. Taxation ruling TR 93/23
Application:
In compliance with the Taxation Ruling TR 93/32, the guidelines mentioned regarding
the explanation of the division of income of any type of loss connected to the rent property
among its joint owners.
In this scenario, Jack and Jill are being examined as an evaluation based on the assessable
position of the property which they have rented. In this situation Jack will be eligible for 10%
and Jill for 90% of the profits. It needs to be understood that the joint ownership of the income

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tax will not be accounted for the purpose of the partnership regarding the principles of general
law as is clear from the Jack and Jill scenario (Whait 2012).
The principles of Taxation ruling TR 92/32 clearly explain that the joint ownership
cannot be treated as any sort of partnership. In this case, Mrs Mc Donald is entitled to 75% of the
profit of the property and Mr. Mc Donald form the 25%. This was because of his wife’s income.
In a similar nature, the present situation between then would not be thought of as a partnership
under the general form of law arising out of property to be shared.
Conclusion:
The above discussion clearly states that the Jack and Jill are required to share out the loss
equally as their joint ownership will not be treated as a partnership.
Answer to question 4:
The consideration of the avoidance of tax being legal as well as acceptable is based on
the IRC v Duke Westminster (1936). The gardener was paid by the Duke weekly and his
entering the contract led to the payment of the equivalent amount of payment based on the
covenant agreement.
The Duke received the benefit because the covenant lowered the liability of the Duke to
surtax. As the case explains, every person is allowed for ordering the tax affairs. This was with
the objective of tax attachment. Under the economic framework, an individual is given an
opportunity to reduce the liability of their tax.

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Answer to question 5:
Issue:
The present issue is thought of as an assessment related to the cutting down of timber
under the subsection 6 (1) of the ITAA 1997.
Laws:
i. Subsection 6 (1) of the ITAA 1936
ii. McCauley v FC of T
Application:
Based on Bill’s present issue, it is clear that he owns the land that has numerous pine
trees. He agreed to pay $1000 for every 100 meter of timber that the logging firm can take from
Bill’s land.
It is also applicable in case of individual taxpayers indulging in the forestry activities and
according to the on the explanation of the Subsection 6 (1) of the ITAA 1936, a person
possessing connections with the forest operations will be thought of as major producer for the
income tax. In the above context it can be said that the trees were not planted by Bill, however
the amount which he received for the sale of the felled timber would be considered for proper
assessment (Deegan 2012).

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Conclusion:
Based on the above analysis, the amount received by Bill for the tending of timber, would
be considered as taxable income and in case of alternative situation, if a lump sum is got, it
would be regarded as a royalty.

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References:
Althaus, C., Bridgman, P. and Davis, G., 2012. The Australian policy handbook. Allen & Unwin.
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Deegan, C., 2012. Australian financial accounting. McGraw-Hill Education Australia.
Devos, K., 2012. The impact of tax professionals upon the compliance behaviour of Australian
individual taxpayers. Revenue Law Journal, 22(1), p.31.
Kennya, P., 2016. Small business capital gains tax concessions: The case for reform.
Whait, R.B., 2012. Developing risk management strategies in tax administration: the evolution of
the Australian Taxation Office's compliance model. eJournal of Tax Research, 10(2), p.436.