Taxation Case Studies: Analysis and Application of Tax Laws

This taxation assignment provides a detailed analysis of several case studies related to Australian taxation law. The assignment examines issues such as calculating capital gains and losses from the sale of assets, determining fringe benefit tax (FBT) liabilities for bank employees, and the division of profits and losses from jointly held rental properties. It also explores the legal case of IRC v Duke of Westminster regarding tax avoidance and analyzes income derived from the sale of timber. The assignment references relevant taxation directives and case law, including the ITAA, TR 93/6, TR 93/32, and the case of F.C. of T. v McDonald, to support its conclusions. Overall, the assignment provides a comprehensive overview of key taxation principles and their application to real-world scenarios.

Running head: TAXATION
Taxation
University Name
Student Name
Authors’ Note

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Assignment Question 1:
Issues that can be hereby recognized from the case analysis:
The present segment elucidates in detail regarding ascertainment of capital gain otherwise
loss from Eric’s transaction of antique vase. The current scenario mentioned in the case helps
in knowing the fact that Eric got possession of various resource counting antique vase as well
as chair, sound system for home, paintings as well as shares of particular listed business
corporations. Nonetheless, Eric marketed all the above mentioned resources only after
acquisition of the stated ones. Essentially, this case aims to establish the accurate capital gain
otherwise loss from the said trade. Yet, this process of establishment of the right capital gain
else wise loss can be correlated to specific bylaws of tax that is 108-20 decree asserted by
ITAA. Plainly this issue mentioned herein the case can be understood after proper orientation
to the tax diktat (108-20) articulated by ITAA (Woellner et al., 2016).
Taxation dictates that is pertinent to the current case under deliberation
Taxation bylaws that can be referred to in the present section involve the following
mentioned ones:

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Application linked to taxation directive
As per taxation diktat 108 (20) asserted by ITAA, it can be deciphered that a loss amount of
$1000 arises from the sale of home sound gadget cannot be permitted for subtraction from the
assessable earning. Due to the fact that losses derived from clearing of resources for personal
usage cannot be calculated. Essentially, the modus operandi for balancing undertaken is
rooted in the regulations stipulated under rule numbered 108 -110 asserted by ITAA – 1997
(Woellner, 2013). Since Eric has acquired gains from disposal of usual assets of the business,
capital deduction is not permissible under law in the current financial year. As a consequence,
overall profit value of Eric amounts to $15000.
Concluding observation:
Accordingly, it can thus be asserted that Eric is not eligible to refund the loss undergone from
various firm’s collectables just because the profits are derived from disposal of usual reserve.

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Assignment Question 2:
Issues that can be hereby recognized from the case analysis:
The study refers to a case on business dealings connected to a particular bank official named
as Brian. The case illustrates that the employer of the specific granted Brian a loan amounting
to $1 million with attached interest rate of nearly 1% every year. Nevertheless, the present
set-up also divulges the fact that the banking official employed 40% of this lent amount for
making income and met all the loan obligations concerning the interest expense. The current
question is to spell out the measurable value of fringe benefit enumerated for the year 2016 as
well as 2017. In addition to this, this present section also intends to assess whether the answer
derived might possibly be completely in case of payment of interest on lent amount at the
termination period of the loan agreement instead of monthly disbursements of interests.
However, it is vital to comprehend if the bank sets frees Brian from paying back the amount
of interest on borrowed funds. Therefore, the current case study under deliberation can be
attached to the resolving of concerns in the process of ascertainment of FBT-taxation (fringe
benefit). Essentially, this again can be connected to taxation decree asserted under bylaw TR
93/6 (Wallschutzky, 2012).
Taxation dictates that is pertinent to the current case under deliberation
Calculation of Fringe Benefit Tax (FBT)

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Application linked to taxation directive
Critical analysis of instructions of taxation articulated under TR 93/6 aids in gaining
comprehensive awareness regarding the entire procedure of ascertaining fringe benefit tax
Krever & Black, 2013). In accordance with a particular instruction clearly communicated by
the law, in case if the bank granting finance sets free or in other words liberates the individual
from the liability of paying off the interest amount, then that individual might be released
from the accountability of interest payments (Hamilton et al., 2012). Thus, Brian can be
released from the accountability of paying off tax amount.
Concluding observation:
Finally it can be asserted that there is no compulsion to clear up the tax commitment by
making outgoings on the part of the banking official because he is set free from the duty of
interest disbursement by the lending bank that offered the credit.
Assignment Question 3:
Issues that can be hereby recognized from the case analysis:

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The concern in the given case can be related to proper terms of division of profit otherwise
loss among two different co-carrier of rental assets (property) (Halligan, 2015).
Taxation dictates that is pertinent to the current case under deliberation
Application linked to taxation directive
As rightly indicated by Ganghof & Eccleston (2014), taxation instruction articulated under
TR 93/32 presents ways of treating profits otherwise losses arising from jointly holding rental
properties. As per the instructions articulated under by law TR 93/32, rental possessions
jointly held cannot be referred to as partnerships in the process of tax assessment (Eccleston,
2014). The relevant guideline as cited under this ruling explicates the fact that partnership
accord that includes both either in written format or by word of mouth is said to exert any
impact on the overall process of distributing proceeds derived from the jointly held rental
property. Moreover, the diktat under this bylaw also stresses the fact that co-owners of a
specific rental possession under contemplation cannot be viewed as partners particularly
under common circumstances of the ruling. Fundamentally, treaties of joint venture cannot
have any effect on the combined amount of either profit or else loss divided between the co-
possessors of the property. As per the given case study, proportion s of liability of Jack as
well as his wife is essentially 90% and 10% respectively. The verdicts of the case on F.C. of
T. v McDonald (1987) 18 ATR 957 can be referred to in this regard. This law case verdict
states that partner of the spender of tax laid hands on two diverse title in a specific shared
venture (Eccleston, 2012). Based on this it can be said that the treaty helped in validating that
two different holders of assets (in this case Jack and Jill) can acquire earnings in the specific

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percentage fraction of particularly 75% and 25% respectively. In the light of the instructions
mentioned herein, both the co-owners that is Jack along with wife Jill have the right on the
proceeds of the property as joint renters.
Concluding observation:
In conjunction with the instruction articulated in the bylaws TR 93/32, it can thus be made
out that in cases of joint holders of rental possessions, loss undergone can be justifiably
scattered among the two different possessors, despite the fact that joint holding of rented
possessions cannot be considered to be treated in the similar manner as the dealings carried
out in partnerships.
Assignment Question4:
Case on “IRC v Duke of Westminster [1936] AC 1” narrates about tax shirking. This
particular instance bears mention about the fact that all individuals have the permission to
direct specific state of affairs for allowing deductions from the measured obligation of tax
(Eccleston, 2014). Necessarily, this legal case speaks about the “Duke of Westminster” who
deployed a gardener and paid compensation from the substantial earnings derived post tax
from essentially the Dike. However, for the purpose of lessening the overall taxed value, the
Duke also discontinued to provide wage to that specific gardener and instead developed a
pact to carry out disbursements that is of equal value. Nevertheless, the decrees of tax gave
Duke the authority to claim for a deduction in the process of his tax assessment (Ganghof &
Eccleston, 2014). Essentially, this subsequently decreased the overall liability of the payer of
tax as both the income tax as well as the surtax got lessened. As such, the Inland Revenue as
a matter of fact lost in the legal case that was against the Duke. This case talks about the
individuals seeking for ways of evading tax legally by generation of specific circumstances.
However, in the present circumstances, the principle in Australia explicates that if a specific

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individual can attain success for getting to the conclusion, the entire Inland Revenue in such
case might possibly be subjugated for their format (Halligan, 2015).
Assignment Question5:
Issues that can be hereby recognized from the case analysis:
The recognized matter in the present state revolves around analysis of earnings arising from
the takings of the company from the sales of felled timber. Basically, this particular amount
can be observed under taxation bylaw articulated under 6-1 of the rule for Assessment of
Income (that is to say, Income Tax Assessment Act-1936) (Eccleston, 2014).
Taxation dictates that is pertinent to the current case under deliberation
Application linked to taxation directive
Detailed evaluation of the case reflects that Bill necessarily possesses a particular land that
has pine trees. Moving further, the case under reflection also asserts that Bill has the intention
to put the land to use for the purpose of grazing by sheep and get it cleaned. Over and above
this, Bill got the impression that a logging entity is all set to pay $1000 for timber. Setting
apart all the matters of concern related to the taxation attached to capital gains, Bill is given
recommendations concerning the takings from the specific scheme.
Essentially, decree of taxation articulated under TR 95/6 indicates towards upshots of
taxation that necessarily crop up from the productions with works on plantation and forestry
works (Keating, 2015). In addition to this, this specific ruling dictates divulges the bindings
or else limitations as regards takings from the business that arise out of the sales of the timber

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derived from the land. Fundamentally, this requires enquiry regarding the fact that whether
the person paying the tax is in any way in a partaker in the forestry works. 6-1 stipulated
under taxation act -1936, manufacturing can be linked to activities of plantation (Krever &
Black, 2013). Detailed assessment of the case of Bill reveals that Bill did not carry out any
kind of plantation work. However, Bill received the takings derived from selling the felled
timber. Therefore, this can be observed as a measurable income of the person paying the tax.
Concluding observation:
Finally, it can be hereby ascertained that acceptance of different takings that are generated
from sales that is in this specific case obtained from sales of timber can be viewed as
measurable income as per directive articulated under 6 –(1) pronounced by ITAA.

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References
Eccleston, R. (2012). Taxing times: a political retrospective. Austl. Tax F., 17, 287.
Eccleston, R. (2014). Thirty year problem: the politics of Australian tax reform,
The. Australian Tax Research Foundation Research Studies, 206.
Ganghof, S., & Eccleston, R. (2014). Globalisation and the dilemmas of income taxation in
Australia. Australian Journal of Political Science, 39(3), 519-534.
Halligan, J. (2015). Learning from experience in Australian reform: balancing principle and
pragmatism. Learning from Reform.
Hamilton, R., Deutsch, R., & Raneri, J. (2012). Guidebook to Australian international
taxation. St Leonards, N.S.W.: Prospect Media.
Keating, P. (2015). Reform of the Australian taxation system: Statement by the treasurer (No.
315). Australian Government Publishing Service.
Krever, R., & Black, C. (2013). Australian taxation law cases 2007. Pyrmont, N.S.W.:
Thomson ATP.
Wallschutzky, I. G. (2012). The effects of tax reform on tax evasion (No. 8). Australian Tax
Research Foundation.
Woellner, R. (2013). Australian taxation law 2012. North Ryde [N.S.W.]: CCH Australia.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C., & Pinto, D. (2016). Australian Taxation
Law 2016. Melbourne, Vic.: Oxford University Press.

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