Utilization of Taxation Law in Business Operations and Deductions

This assignment delves into the application of taxation laws, focusing on section 8-1 of the ITAA 1997, to assess whether certain business-related costs qualify as deductible expenses. It evaluates scenarios such as moving machinery to a new site, revaluation of capital affecting insurance cover, legal expenditures for winding up petitions, and advertising expenses under GST law. The analysis incorporates relevant case laws and rulings to determine the acceptability of these deductions, providing a comprehensive understanding of taxation law utilization in business operations.

Running head: TAXATION LAW
TAXATION LAW UTILIZATION
Name of the Student
Name of the University
Authors Note

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Table of Contents
Question 1..................................................................................................................................2
part 1:.....................................................................................................................................2
part 2:.....................................................................................................................................2
part 3:.....................................................................................................................................3
part 4:.....................................................................................................................................3
Question 2:.................................................................................................................................4
References:.................................................................................................................................6

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Question 1
part 1:
Moving machinery to new site incurs cost and the issue in this regard is whether this
cost is deducted or not , this issue falls under section 8-1 of ITAA 1997. Another law section
can also be used in this case which is British Insulated & Helsby Cables. Moving machinery
to a new site involves incorporation of cost thus depreciation process incurs cost. This cost is
not allowed as acceptable deduction according to law section 8-1 of the Income tax
assessment act 1997. The main reason of not accepting this deduction is , this cost is incurred
while carrying out business operations and thus it is regarded as business expense. This is the
case under law section 8-1 of ITAA 1997. Now the second law section which is applicable in
this case is the British Insulated & Helsby Cables. According to this law the cost that is
imposed due to movement of machinery from one place to another is a transport cost but this
cost is regarded as a cost that is bared for reaping benefit and this is done by depreciating
assets which is a business related activity. In agreement with Taxation rule of TD 93/126 ,
setting machinery for the purpose of business is the incidence of cost which is treated as
revenue. Thus it can be concluded that no form of acceptable deductions will be legalized
under law section 8-1 of ITTA 1997.
part 2:
Revaluation of capital that affects cover of insurance is considered as acceptable
deduction under law section 8-1 of ITTA 1997, this issue evolved in this case. Situation here
shows that spending have connection with the fixed asset, thus while determining the
deduction it is essential to find whether expenses that is incurred while revaluating revenue
production holds while shielding the asset. Now while shielding the assets provides benefit
then it will be considered as acceptable deduction under section 8-1 of the Income Tax

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Assessment Act 1997. Conclusion that can drawn from here shows that cost that leads to
insurance cover is considered as acceptable deductions because this cost will recur and hence
allowed as acceptable deductions under section 8-1 of the ITAA 1997.
part 3:
Here the case shows whether the legal expenses that company bear for the petition
for winding up will be considered as deductions under section 8-1 of the ITAA 1997. The
taxation ruling of ID 2004/367 that is applicable in this case shows that officially approved
cost will be considered for deductions if the cost is incurred while doing the business
operations. Case of FC of T v Snowden and Wilson Pty Ltd (1958) is also applicable here
which shows that costs that are not usually incurred will become compulsory that taxpayer
should start taking legal actions because no condition can prevent the cost to be eligible as
deductible expenditure. Conclusion here that can drawn is the cost that is incurred while
opposing the petition of winding up will be not be considered as acceptable deductions under
section 8-1 of the ITAA 1997.
part 4:
This shows that whether or not the legal expenditure that is incurred while enjoying
services of legal representative with regard to the business operations of the clients will be
allowed as acceptable deductions under section 8-1 of the ITAA 1997. Application of Law
shows when a legal expense is incurred while carrying out business operations is considered
revenue and thus it will be treated as acceptable deductions. Though, exception is present,
which shows that expenses incurred accepted as capital, domestic and private in character if
the same is primarily incurred in producing the exempt and non-chargeable non-exempt
proceeds. Thus legal expenditure incurred while carrying out business operations and that
produce the taxable income should be treated as acceptable deductions in reference to section
8-1 of the ITAA 1997.

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Question 2:
Issue here is the position of Big Bank which is considered for evaluating the input tax
credit with respect to the advertising expenditure that is incurred under law section GSTR Act
1999. Thus laws that are applicable in this issue are GST Act 1999, Goods and Service
taxation ruling of GSTR 2006/3 and Ronpibon Tin NL v. FC of T.
Goods and Service tax law of GSTR 2006/3 provides methods that can be
implemented to find the input tax credit in accordance with administration for change that is
followed by financial suppliers under the new system of tax GST Act 1999.
Recent situation of Big Bank shows that, it has incurred an expense which is included
GST. Thus Big Bank Ltd follows law under the section GSTR 2006/3 because the company
recognized appropriate for input tax credit. According to the law if an entity is registered or
need to obtain registration, GST shall be billed for creation of taxable supplies. The outline
under GST law shows that an entity or an individual is needed to claim input tax credit for the
GST inclusive supplies that is acquired or import for the entity.
Case of Ronpibon Tin NL v. FC of T is applied in analysing the law of GST1. This
considers pressure in which the method of distribution adopted must sensible in such a
situation of the particular enterprise. Requirements of paragraphs 11-5 and 15-5 (a) for an
acquisition to meet the criteria as creditable, the acquisition must be for creditable purpose2.
In case the acquisition is partly for creditable use then it is crucial to determine the degree of
1 Treasury, A. and Baxter, H., Accounting evidence. interpretation, 89, p.95.
2 "Legal Database". Ato.gov.au, 2017. Online. Internet. 8 Sep. 2017. . Available:
https://www.ato.gov.au/law/view/document?docid=GST/GSTR20063/NAT/ATO/00001.

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the creditable use. Now the subsection 15-25 shows that import shall be viewed as creditable
if it is kept creditable use. Now section 11-15 or 15-10 an acquisition eligible to be creditable
if an entity makes the supplies for the use of claiming input tax credit. It is worth mentioning
that advertising expense incurred by Big Bank Ltd was for the use of creditable
acquisition.Conclusion here thus shows that Big Bank Ltd will be entitled to claim input tax
credit in regard to the GSTR 2006/13 for the amount that is incurred due to advertising
expenses for the use of the creditable acquisition.

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References:
"Legal Database". Ato.gov.au, 2017. Online. Internet. 8 Sep. 2017. . Available:
https://www.ato.gov.au/law/view/document?docid=GST/GSTR20063/NAT/ATO/00001
Treasury, A. and Baxter, H., Accounting evidence. interpretation, 89, p.95.

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