TAXATION LAW 14: Deductions, GST, and Legal Expenditure Analysis

This taxation law assignment solution analyzes several key issues related to Australian tax law. Question 1.1 examines whether the cost of moving a machine to a new site is an allowable deduction, concluding it is not, based on ITAA 1997 and relevant rulings. Question 1.2 assesses the deductibility of asset revaluation expenses for insurance, determining they are deductible due to their repetitive nature. Question 1.3 addresses the deductibility of legal expenses incurred to oppose a winding-up petition, concluding they are not deductible as they are capital in nature. Question 1.4 considers the deductibility of solicitor services for business functions, determining they are deductible. Question 2 focuses on input tax credits related to GST supplies, specifically advertising expenses, analyzing the applicability of the GST Act 1999 and relevant rulings like GSTR 2006/3 and case law such as Ronpibon Tin NL v FC of T, and detailing how Big Bank Ltd can claim input tax credits. The assignment provides thorough analysis of the issues, rules, and applications, and offers clear conclusions for each scenario.

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 Question 1.1:.............................................................................................................3
Issue:..........................................................................................................................................3
Rule:...........................................................................................................................................3
Application:................................................................................................................................3
Conclusion:................................................................................................................................4
Answer to question 1.2:..............................................................................................................4
Issue:..........................................................................................................................................4
Rule:...........................................................................................................................................4
Application:................................................................................................................................4
Answer to question 1.3:..............................................................................................................5
Issue:..........................................................................................................................................5
Rule:...........................................................................................................................................5
Application:................................................................................................................................5
Answer to question 1.4:..............................................................................................................6
Issue:..........................................................................................................................................6
Rule:...........................................................................................................................................6
Applications:..............................................................................................................................6
Conclusion:................................................................................................................................7
Answer to question 2:.................................................................................................................7
Issue:..........................................................................................................................................7

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Rule:...........................................................................................................................................7
Applications:..............................................................................................................................8
Conclusion:..............................................................................................................................10
Answer to question 3:...............................................................................................................10
Answer to question 4:...............................................................................................................12
Reference List..........................................................................................................................14

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Answer to Question 1.1:
Issue:
The issues relating to the study has been seen in terms of whether the cost involved
for moving the machine to the new site shall be considered for non-allowable or allowable
deductions.
Rule:
I. “Section 8-1 of the ITAA 1997”
II. “Britissh Insulated & Helsby Cables”
III. “Taxation ruling of TD 92/126”
Application:
Individual taxpayers shall be entitled for deductions in case the expenditure has been
seen to take place for the purpose of assessable income. As per “Section 8-1 of the ITAA”
the different expenses relating to moving the machine is seen to represent an additional
increase in the acid cost. Based on the present context it has been discerned that the cost of
moving the machine in the new site shall be not entitled for the purpose of allowable
deductions. The sole reason for this is due to the fact that these non-allowable entitlements
need to an increase in the cost of asset (Barkoczy 2016).
As signified in “British Insulated & Helsby Cables” the cost involved in the
transportation signifies that there is a persistent benefit for the business by allocating the
depreciable asset in a new location. As defined in “Taxation ruling of TD 92/126”,
installation of the machine and starting of the business process is viewed as a part of the
revenue. Henceforth, it can be suggested that the expense incurred in carrying the machine to

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the new site location shall be treated as per cost of capital and not be entitled under allowable
portion of deductions (Datt et al. 2017).
Conclusion:
The consideration of the above explanation shows that the cost in moving the machine
is not entitled for the total allowable deductions from the time such costs are seen to be
portraying an outlay of the capital.
Answer to question 1.2:
Issue:
The main issue as per the present case has been subjected to the main concern
whether the revaluation of the asset expense with the effect of insurance cover shall be
entitled with “Section 8-1 of the ITAA 1997” for the purpose of allowable deductions.
Rule:
I. “Section 8-1 of ITAA 1997”
Application:
As for the given situation it can be clearly seen that the cost has taken place as a result
of revaluation of the assets for insurance cover which needs to be considered for allowable
deductions. With reference to “Section 8-1 of the ITAA 1997”, it has been discerned that the
expense needs to be treated under allowable deductions as it has outlaid the features which
are repetitive in nature. The outlay considered for asset evaluation is for the thing to be done
on a straight-line basis which is related to the assets which are fixed (Saad 2014). The
consideration of taxable return has been obligated to be determined for nature of deductibility
of expenditure and evaluate whether it can be considered during the evaluation stage due to
increase in the revenue generated from the activity or precaution of the asset. As evident with

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the cost, the impermanent nature of advantage and aspects of repetitive nature needs to be
entitled for the deductions under “Section 8-1 of the ITAA 1997” (Deutsch 2014).
Conclusion:
As inferred from the above explanation it can be said that the outlay encoding the
devaluation of asset is to be entitled for deductions as per “Section 8-1 of the ITAA 1997”
with the main reason being the nature of repetitiveness.
Answer to question 1.3:
Issue:
based on the current situation the main question has been raised whether the legal expenditure
incurred by an individual taxpayer for the purpose of opposing the petition winding up needs
to be considered for allowable deductions.
Rule:
I. “FC of T v Snowden and Wilson Pty Ltd (1958)”
II. “Section 8-1 of the ITAA 1997”
Application:
As per the given case study can be discerned that any winding up of business activity
needs to be normally treated under the outlay of the business functions and shall not be
regarded as entitlement for the allowable deductions under “Section 8-1 of the ITAA 1997”.
As stated under the “Taxation ruling of ID 2004/367” the main cost of carrying out of
business operations needs to be considered for allowable deductions. The main rationale for
this is due to the expenses which are delectable in nature as the cost is incurred by the
taxpayer for producing the visible income (Millar 2014).

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With reference to the case “FC of T v Snowden and Wilson Pty Ltd (1958)”,
the expense or the whole place are seen to be arising from ordinary course and the individual
taxpayer is required to held admissible for the allowable deductions.
The various types of legal expenses with the present context for opposing the
winding of the edition shall not be entitled for admissible deductions. Despite of the various
types of expenses which have been qualified and that the positive limbs, it shall not be
considered for allowable deductions as it is deep-rooted within the business structure.
Various incidence of the legal cost shall not be treated for admissible deductions as it is
owned by the features of capital (Fry 2017).
Conclusion:
as per the denoted assessments it can be inferred that the various types of cost for
opposing the petition for winding up of business needs to be barred from allowable
deductions as it owns the attributes of capital under “Section 8-1 of the ITAA 1997”.
Answer to question 1.4:
Issue:
The most significant issue has been held in consideration with whether expenses of
the services of solicitor for the business needs to be considered as for the deductions under
“Section 8-1 of the ITAA 1997”.
Rule:
I. “Section 8-1 of the ITAA 1997”
Applications:
As for the aforementioned ruling the legal expenditure associated to the trading
activities needs to be considered for admissible deductions. It has been further seen to be

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worth noting that for the purpose of meeting the criteria of the legal expenditure trading
activities shall be directly linked to produce higher revenue. As per the rulings of “Section 8-
1 of the ITAA 1997” in case the various types of legal outlay seen to be of personal, capital
and domestic in nature then it cannot be regarded as a non-exemption, non-admissible and
non-assessable deductions. With relevance to the present issue, the individual taxpayers who
are seen to be incurring the legal expense, the solicitor responsible for discharging the
business functions needs to be treated as an exemption of the expenses as the individual will
qualify for the allowable deductions as per “Section 8-1 of the ITAA 1997”.
Conclusion:
Based on the conduction of interpretations of legal expenditure, various services of
the solicitor for discharging of business functions needs to be taken into consideration as per
the rulings of allowable deductions as stated under “Section 8-1 of the ITAA 1997”. The
main rationale for this is that the legal expenditure is considered as a liability reduction as it
has been incurred with the revenue generating activities.
Answer to question 2:
Issue:
The main form of existing issue has been seen in terms of data mining the input tax
credit associated to the GST supplies which has been made under “GST Act 1999”.
Rule:
I. “Ronpibon Tin NL v FC of T”
II. “Goods and Service Taxation Ruling of GSTR 2006/3”
III. “GST Act 1999”

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Applications:
Based on the given case of the Big Bank is seen to be concerned for the determination
of GST supplies based on input tax credit as for the advertisement expenses. It is for the
noting that the second chapter of “GST Act 1999” has been able to provide vital
consideration for commercial units which needs to be permitted for claimed input tax
incurred by the organisation as for normal course of business operations. Despite of this, the
claiming process of input tax must be considered by adding of the GST amount. The given
case study of Big Bank Ltd has been able to bring about the various types of financial
services put forward to the customers in more than 50 branches in the country. Big Bank has
been further able to bring about the services associated to program of insurance and home
content into the market aside from providing various types of facilities of deposits and loans
to its customers. With reference to “Taxation Ruling of GSTR 2006/3” important rules and
regulations laid down in the process of tax computation has been observed (May 2016).
As per “division 11-15 and 129 of the GST Act 1999” the total creditable amount
for acquisition and imposition for the ruling has been previously mentioned. As per the
taxation rulings of “GSTR 2006/3” in organisation has exceeded the financial invitation for
acquisition in the purview of lower input tax credit.
It has been further evident from the case study of Big Bank Ltd that the organisation
has incurred its expenses based on the advertising and which is inclusive of the “Goods and
Service Tax”. As per the present issues brought forward by Big Bank Ltd it can be clearly
stated that the main rulings under “GSTR 2006/3” is applicable for the given situation. The
main reason for GST application is seen with “GSTR 2006/3” as Big Bank has been able to
successfully qualify self for tax credit claiming input. Based on the principle as per “GSTR
2006/3”, it is in discern that in case a commercial concern is registered under the ruling of

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“GST Act 1999”, or it needs to get the registration, can be stated that such an concern needs
to make payment of GST with the amount of financial supplies available.
The total GST rulings as per “GSTR 2006/3” has been able to state that the various
types of commercial entities are able to claim for the input tax credit associated to supplies of
financial assistance including the GST amount. On the contrary, in case the commercial
entities goes beyond the financial acquisition limit then in such a case the taxable entity will
not be permitted to claim for the full amount of input tax credit. However, it will be eligible
for claiming of only a portion of the same.
As per the case denoted under the ruling of “Ronpibon Tin NL v FC of T” the most
significant feature of GST ruling of “GSTR 2006/3” has been determined in terms of
“extent” and “to the extent” for the total GST supplies made. As per this legislation, that is
meant of GST as the based on responsibility and fairness of the commercial entities. As noted
in the “para 11-5 and 15-5” the various types of GST rulings for “GSTR 2006/3” has been
based on a commercial entity and the financial acquisition is as been able to qualify for the
purpose of creditable acquisitions which has been made partially or fully (Coleman and Sadiq
2013) .
As a significant issue with respect to “para 11-5 and 15-5” of the GST rulings as per
“GSTR 2006/3” has been able to qualify for the creditable acquisition. On the contrary, on
assessing the acquisition which is partly eligible for creditable purpose, the degree of
creditable purpose needs to be ascertained.

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It has been further discern that as per “Section 11-5 and 15-10”, the appropriate GST
legislation of “GSTR 2006/3” will be levied on the various types of financial supplies which
has been made in the commercial entity inclusive of the sum of input tax and the tax which is
to be claimed (Cassidy 2017). It has been further evident with Big Bank Ltd that the financial
supplies are associated to the various types of creditable supplies. By consideration of the
present indications with Big Bank Ltd the GST ruling of “GSTR 2006/3” has exceeded its
limit of the financial acquisition and henceforth the concern needs to bring forward the input
claim for tax credit on the sum of GST supplies (Cao et al. 2015).
Conclusion:
Based on the aforementioned discussions it can be inferred that “GSTR 2006/3” is
mainly applicable for Big Bank Ltd as it has been able to qualify for the input tax credit based
on advertising expenditure.
Answer to question 3:
Computation of Taxable Income of Angelo

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Answer to question 4:
Assessment of net income pertaining to partnership

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Reference List
Barkoczy, S., 2016. Foundations of Taxation Law 2016. 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.
Cassidy, J., 2017, January. A GST with GRRRRRR: Legislative responses to GST tax
avoidance in Australia and New Zealand. In Australasian Tax Teachers Association
Conference 2017.
Coleman, C. and Sadiq, K. (n.d.). 2013 Principles of taxation law.
Datt, K., Nienaber, G. and Tran-Nam, B., 2017. GST/VAT general anti-avoidance
approaches: Some preliminary findings from a comparative study of Australia and South
Africa. In Australian Tax Forum (Vol. 32, No. 2, p. 377). Tax Institute.
Deutsch, R.L., 2014. Australian Tax Handbook 2006.
Fry, M., 2017. Australian taxation of offshore hubs: an examination of the law on the ability
of Australia to tax economic activity in offshore hubs and the position of the Australian
Taxation Office. The APPEA Journal, 57(1), pp.49-63.
May, S., 2016. Applying the GST to imported digital products and services: Problems and
solutions. Tax Specialist, 19(3), p.110.
Millar, R., 2014. Grappling with basic VAT concepts in the Australian GST: the meaning of
‘supply for consideration’. World Journal of VAT/GST Law, 3(1), pp.1-31.
Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers’
view. Procedia-Social and Behavioral Sciences, 109, pp.1069-1075.