Taxation Law Assignment Solution, BUS303, Murdoch University

This document presents a comprehensive solution to a taxation law assignment, addressing key aspects of Australian tax law. The assignment delves into several critical areas, including the taxation of companies, capital gains tax (CGT) implications, and various deductions. The solution provides detailed answers to specific questions, such as calculating a company's total tax payable, franking account balance, and shareholder tax liabilities. It also examines CGT scenarios related to property sales and the treatment of assets. Furthermore, the assignment explores deductible expenses, including self-education expenses, superannuation contributions, and interest on loans for superannuation. It also covers non-deductible items like penalties and fines. The analysis incorporates relevant sections of the ITAA 1997 and case law, such as FCT v Anstis (2010) and FCT v Finn (1961), to support the conclusions. The document includes a list of references, which are used to justify the answers.

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

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Table of Contents
Answer to Companies Q1:.........................................................................................................2
Answer to Capital Gains Tax Q1:..............................................................................................3
Answer to Capital Gains Tax Q2:..............................................................................................3
Answer to Deductions Q1:.........................................................................................................4
Answer to Deductions Q2:.........................................................................................................5
Answer to Combination Q1:......................................................................................................7
References:.................................................................................................................................8

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Answer to Companies Q1:

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Answer to Capital Gains Tax Q1:
Answer to Capital Gains Tax Q2:
As given within the “common law”, anything that is fixed to land is regarded as the
part of land. This means that there is only one item of property and improved property. For
the purpose of CGT there are exceptional cases that is set out under “subdivision 108-D”

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where an asset may be commonly treated as general asset should be considered as being more
than one asset. Under the “sec 108-55 (2)” a structure or building which is built on or
following the 20/9/1985 on land purchased earlier that date would continuously be considered
as the “separate CGT asset” from the land (Woellner et al., 2016).
If the taxpayer has purchased the building prior to the 20/19/1985 and makes any such
major capital improvements following that date, the portion of capital gains that is made by
the taxpayer will be held as CGT event and will attract tax liability.
In the current situation if Quick decides to sell the property for Nil; $400,000 or
$2million, the property will be viewed as “separate CGT asset” under the “sec 108-55 (2) of
the ITAA 1997” (Sadiq, 2019). Any capital gains derived by Quick will be considered
taxable and would attract the CGT liability.
Answer to Deductions Q1:
When it is noticed that the taxpayer has incurred expenditure for the self-education
purpose then these expenditure are normally considered as tax deductible where the
outgoings are occurred in keeping or improving the abilities of the taxpayer in the profession
in which it is presently employed. Deduction is allowed to the taxpayer particularly where the
outgoing helps in improving the prospects of taxpayer’s promotion or deriving greater
amount of income (Morgan et al., 2018). The common examples of self-education
expenditure that is allowed for deduction is the cost of registration, travel expenses incurred
for attending the professional conferences and university, cost relating to the course fees, cost
of text books, stationary etc.
As evident in the present situation of Brown, he takes up the position as tax officer at
the ATO and soon undertakes a university degree. Brown incurred expenses on HELP fees
and under the “sec 26-20” he cannot claim deductions relating to the HELP fees. Apart from

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this, he also incurred expenses on university fees, textbooks, photocopying and writing aids.
As noticed in “FCT v Anstis (2010)” where a taxpayer occurs self-education outgoings, the
expenses is probably allowed for deduction where the receipt of income is regarded as
conditional on the basis of the fact that the receiver is making an acceptable educational
improvement (Freudenberg et al., 2017). Similarly, in case of Brown he can claim deduction
for the aforementioned expenditures as these expenses are necessarily occurred in making an
acceptable educational improvement.
According to ATO, when a taxpayer undertakes self-education, they are allowed to
claim deduction for the “work-related self-education” where the courses requires the
taxpayer to be momentarily away from their home for one or additional nights. In “FCT v
Finn (1961)” the taxpayer was permitted to claim deduction for daily travel such as travel
outlays incurred from work to the place of tutoring and back (Robin & Barkoczy, 2020).
Correspondingly, Brown will be permitted to claim deduction under “sec 8-1 ITAA 1997” for
travel expenditures because it was devoted to collation of information associated to the
income generating activities.
Alternatively, even though Brown failed to pass any of the subjects in the first year,
he will still be permitted to claim deduction for the self-education expenditures because the
outgoings were devoted to opportunities for promotion and earning grater income.
Answer to Deductions Q2:
Item 1:
As per the ATO, a taxpayer is allowed to claim deduction relating to the personal
superannuation contribution that is made by them during the year to the complying
superannuation fund or the retirement savings account given the taxpayer receives income
from salary or wages and self-employed personal business. In the current situation the sum of

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$7,000 paid by a self-employed person for superannuation contribution will be permitted for
tax deduction.
As per the ATO, for the year 2018-19, the concessional superannuation contribution
cap is 25,000. If the contribution is greater than $25,000, then in such case the taxpayer
would be required to pay more tax. Similarly, if the superannuation contribution is $40,000,
then in such case more tax will be required to be paid by the taxpayer.
Item 2:
As per the ATO, an individual taxpayer is permitted to claim deduction for the
interest paid on borrowing for contributing to the superannuation fund. Similarly, the interest
amount of $350 that is paid on loan obtained for the superannuation fund will be allowed for
tax deduction.
Item 3:
As per the “sec 26-5 of the ITAA 1997” penalties or fines that is imposed due to the
breach of Australian law is not allowed for deduction (Taylor et al., 2017). Examples include
speeding fines that is occurred by the taxpayer on work travel. The speeding fines of $700
paid by taxi-driver is non-deductible under “sec 26-5”.
Item 4:
As per the ATO, a taxpayer is entitled to claim deduction for the shares donated to the
deductible gift recipient given that;
a. The shares are listed at a value of $5000 or less and
b. The taxpayer acquired the shares for a minimum of 12 months before it is donated.
In the current case, the taxpayer will only be allowed to claim deduction for an amount of
up to $5000 despite the fact that the shares were held for greater than 12 months.

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Item 5:
As per the “sec 25-10 ITAA 1997”, deduction for repairs is only allowed when the
property is completely used for generating income. Initial repairs taken to correct the defects
that existed while acquisition is treated as non-deductible capital expenditure. As noted in
“W Thomas & Co Pty Ltd v FCT (1965)” repairs taken at the later time would be treated as
initial repairs given the defects were existent when acquiring the asset. Similarly, the cost
incurred for replacing a new roof on the rental property will be regarded as initial repair and
non-deductible under “sec 25-10 ITAA 1997”.
Answer to Combination Q1:

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References:
Freudenberg, B., Chardon, T., Brimble, M., & Isle, M. B. (2017). Tax literacy of Australian
small businesses. J. Austl. Tax'n, 19, 21.
Morgan, A., Mortimer, C., & Pinto, D. (2018). A practical introduction to Australian
taxation law 2018. Oxford University Press.
Robin & Barkoczy Woellner (Stephen & Murphy, Shirley Et Al.). (2020). Australian
Taxation Law 2020. OXFORD University Press.
Sadiq, K. (2019). Australian Taxation Law Cases 2019. Thomson Reuters.
Taylor, J., Walpole, M., Burton, M., Ciro, T., & Murray, I. (2017). Understanding Taxation
Law 2018. LexisNexis Butterworths.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C., & Pinto, D. (2016). Australian Taxation
Law 2016. OUP Catalogue.