Australia Taxation Law Assignment: Deductions, GST, and Income Tax

This assignment provides a comprehensive analysis of Australian taxation law, addressing key aspects such as allowable deductions under section 8-1 of the ITAA 1997, the application of GST input credits for businesses like Big Bank Ltd, and the calculation of income tax for individuals including Angelo's income with foreign tax offsets, and partnership income for Johnny and Leon. The assignment examines relevant case studies, financial figures, and legal provisions to illustrate the practical application of tax laws. It covers machinery transfer expenses, GST expenses, revaluation costs, and solicitor expenditures, providing a detailed understanding of tax implications for various business operations and income scenarios. The document includes figures illustrating key financial data, and references to relevant legislation and academic sources.

Running head: AUSTRALIA TAXATION LAW
Australia Taxation Law
Name of the Student:
Name of the University:
Authors Note:

1AUSTRALIA TAXATION LAW
Table of Contents
Question 1: Discussing whether deductions are allowable under s 8-1 of ITAA 1997.............2
Question 2: Big Bank Ltd..........................................................................................................3
Question 3: Angelo’s income.....................................................................................................5
Question 4: Johnny and Leon.....................................................................................................7
Reference and Bibliography:......................................................................................................8

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Question 1: Discussing whether deductions are allowable under s 8-1 of ITAA 1997
Under the section 8-1(1) of the ITAA 1997 income taxpayers are able to conduct
relevant evaluation, which could help in claiming deductions from them. This section mainly
indicates relevant deductions that could be allowed for taxpayers. Furthermore, section 4-15
of the Income tax Assessment Act 1997, directly states that taxable income can be reduced by
conducting relevant deductions, which is allowable by the Australian government (Barkoczy
2016). Under the section there are two types of deductions that could be conducted firstly for
producing a gaining assessable income, and for caring on the activity related to business.
Therefore depicting whether the expenses is deductible in nature or not.
1 The first expenses are mainly identified, as the overall Machinery transfer
expenses, which needs to be evaluated under the section 8-1 of ITAA 1997.
Therefore, the machinery needs to be in working condition and used by the
organisation. Then the overall GST expenses are deductible under the act, which
could directly consider under tax credit. there are relevant cases such as Smith v
Westinghouse Brake Company (1888) and Granite Supply Association Ltd v Kitton
(1905), where the overall expenditure conducted on relocating the plant is
deductible as expense and are not considered to be capital expenditure.
2 Relevant cost of revaluation of an asset is not considered, as a deductible expense,
under the section 8-1 of ITAA 1997.
3 Under the section 8-1 of ITAA 1997 directly states that any kind of expenditure
conducted on lawful proceedings, is considered to be under deductible expenditure.
4 Any kind of solicitor expenditure that is conducted by a business organisation for
earning relevant income is mainly deductible in nature, Under the section 8-1 of
ITAA 1997.
.

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Question 2: Big Bank Ltd
It is stated in the GST Act 1999 that organisations that have operations, which allow
them to own business income, could take up credit for GST payments. Under the GST Act
1999 any kind of purchases that is conducted by an organisation, relevant GST input credit is
only allowed when organisation is able to provide relevant transaction document (Barkoczy
2017).
Issue The main issue that could be identified from the case is the overall
expenditure that is conducted by Big Bank Limited on advertisements. The
expenditure on advertisements $1,650,000 is mainly conducted inclusive of
GST, which is now the big bank limited is aiming to get input credit for the
expenditure.
Rules Under the GST Act 1999, chapter 2, Organisations are able to get relevant
permissions to take tax input credit on the GST. This is relevant tax input
credit on the GST is mean be allowed when relevant expenditure is been
conducted by the organisation. As stated in the GST 1999, if any kind of
expenses that is conducted by the organisation, which is considered to be a
normal course of business operations then the expenses on GST can be taken
under tax credit.
Application From the evaluation of the case study it would be identified that big bank
limited has been controlling relevant structures, all around the country, which
is directly helping in supporting its operational capability. Hence, the overall
expenditure on the advertisement is mainly identified to be $1,650,000, which
could directly help in detecting the deductible GST and non deductible GST.
Out of $1,650,000 only $550,000 is detected, as Advertisement expenses
which are conducted on new product add only amounts to 2% of the total

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revenue. Therefore, the remaining amount $1,100,000 is mainly identified as
the expenditure conducted on advertisements, which food help in
enumerating services and products provided by the Big Bank Limited.
Therefore, it could be understood that expenditure of $550,000 can be
identified as capital expenditure which does not compensate under the GST
1999 act. Therefore, there will be no Tax credit provided on the expenses of
capital expenditure.
Conclusion:
Therefore, from the overall evaluation of the case study, only the GST imposed on
$1,100,000 is mainly deductible. In addition, the overall 2% of expenditure conducted on
$550,000 can be considered under tax input credit, as expensive conducted will provide
relevant income for the company.
Figure 1: Input tax credit allowed by bank
(Source: Created by Author)

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Question 3: Angelo’s income
Angeles overall income is mainly evaluated on the subdivision 717A, which directly
indicates all the relevant Income Tax offset that could be conducted by an individual.
Figure 2: Income Tax Payable of Angelo
(Source: created by Author)

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Figure 3: Income Tax Payable of Angelo exclusive of foreign incomes
(Source: Created by Author)
The above figure mainly helps in identifying the overall income tax people of Angelo,
where adequate foreign tax offset can be identified. The overall limit for a foreign tax offset
is mainly identified with the help of above table (Taylor and Richardson 2013). Hence, the
limit could be identified as (13,040.18 – 4,221.68) = $8,818.51. Moreover, it foreign tax paid
is less than the foreign tax offset, which directly depicts the overall foreign tax offset limit of
$4,400.

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Question 4: Johnny and Leon
Figure 4: Depicting the net income of the partnership
(Source: created by Author)

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Reference and Bibliography:
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Barkoczy, S., 2017. Core Tax Legislation and Study Guide. OUP Catalogue.
Cao, L., Hosking, A., Kouparitsas, M., Mullaly, D., Rimmer, X., Shi, Q., Stark, W. and
Wende, S., 2015. Understanding the economy-wide efficiency and incidence of major
Australian taxes. Treasury WP, 1.
Snape, J. and De Souza, J., 2016. Environmental taxation law: policy, contexts and practice.
Routledge.
Taylor, G. and Richardson, G., 2013. The determinants of thinly capitalized tax avoidance
structures: Evidence from Australian firms. Journal of International Accounting, Auditing
and Taxation, 22(1), pp.12-25.