Taxation Law Assignment: University Taxation Law Principles and Cases

This taxation law assignment presents five case studies concerning various aspects of Australian taxation law. The first case analyzes the calculation of capital gains and losses, referencing "Section 108-20 of the ITAA 1997" and "Section 108-10 of ITAA 1997." The second case focuses on Fringe Benefits Tax (FBT) and relevant rulings like "Taxation Ruling of TR 93/6." The third case examines the allocation of losses from a jointly owned rental property, citing "Taxation rulings of TR 93/32" and "F.C. of T. v McDonald (1987)." The fourth case discusses tax avoidance, referencing "IRC v Duke of Westminster [1936] AC 1" and the "WT Ramsay v. IRC principle." The final case study explores the assessment of income from the sale of timber, referencing "subsection 6 (1) of the Income Tax Assessment Act 1936." The assignment includes calculations, references, and appendices to support the analysis.

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Running head:TAXATION LAW
Taxation Law
Student Name
University Name

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Table of Contents
Question 1: Answer- Case Study of Eric.........................................................................................4
Regulations to the case....................................................................................................................4
Application to the case.....................................................................................................................5
Questions 2 Answer: Case Study of Brian......................................................................................5
Issue.................................................................................................................................................5
Regulations to the case....................................................................................................................5
Application to the case.....................................................................................................................5
Question 3: Case study of Jack and Jill...........................................................................................7
Issue.................................................................................................................................................7
Regulations to the case....................................................................................................................7
Application to the case.....................................................................................................................7
Question 4: “IRC v Duke of Westminster [1936] AC 1”.................................................................8
Question 5: Case study of Bill.........................................................................................................8
Regulations to the case....................................................................................................................9
Application to the case.....................................................................................................................9
References and Bibliography.........................................................................................................10
Appendices....................................................................................................................................12
Calculations for Question 2...........................................................................................................13

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Question 1: Answer- Case Study of Eric
Issue
In the given case, the main issue deals with the calculation of capital losses and gains from sale
of assets as per the rules and regulations defined “under section 108-20 of the ITAA 1997”
Regulations to the case
i. “Section 108-20 of the ITAA 1997”
ii. “Section 108-10 of ITAA 1997”

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Application to the case
The given analysis has been done as per Australian Taxation rules and regulations. In accordance
to “section 108-20 of the ITAA 1997”, loss of $1,000 for the home sound system cannot be
considered as set off, because losses cannot be considered on disposal of any kind of personal
assets for any considered parties (Fry 2017). In the given case, Eric obtained a considerable
amount of profit $15000 from the sale of ordinary assets. This offset can be considered as per
“Section 108-10 of ITAA 1997”.
Conclusion
From the above analysis, it can be concluded that Eric has gained profit from the sale of ordinary
assets, therefore, he cannot offset the loss from the given collectables. This is also inevitable
from the analysis and calculation as shown in the following table.
Questions 2 Answer: Case Study of Brian
Issue
The main issue highlighted in this case us with regards ascertainment of FBT as per ““Taxation
Ruling of TR 93/6”.
Regulations to the case
“Taxation Ruling of TR 93/6”
Application to the case
The application of the given case can be evaluated with the help of computation of FBT

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The above table reflects that the taxable value of the loan fringe benefit is around 27900
for the amount of loan 1000000. As per “taxation rulings of TR 93/6 states that financial
organizations often makes plans for offsetting the loan account that is referred as interest offset
agreement”. Due to this reason, the concerned clients are not at all liable to pay income tax from
the profits earned from their account. From the above tax ruling, it can be deduced that if the
concerned bank disagrees to refund interest on loan to Brian, then he will not liable to pay any
amount of income tax (Kenny 2013)
Conclusion

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It can be concluded that Brian will not liable to pay any kind of income tax if the bank do not
refund his interest on loan.
Question 3: Case study of Jack and Jill
Issue
The given case deals with the issue regarding allocation of loss amount derived from the rental
property which is under joint ownership of Jack and Jill.
Regulations to the case
 “Taxation rulings of TR 93/32”
 “F.C. of T. v McDonald (1987)”
Application to the case
As per the “Taxation rulings of TR 93/32”, co-ownership in any kind of rental property
can be considered as an ordinary partnership. This is also for the purpose of paying appropriate
income tax (Saad 2014). This is applicable for any kind of individual parties. In the given case
study, Jack and Jill has a rental property, under their co-ownership which is also mainly for
taxable purposes and cannot be considered as partnership under general law. However, since
they are co-owners for the given property, then they are bound to share the profit and losses
which are arisen from their given rental property.
With reference to the case, “F.C. of T. v McDonald (1987)”, the tax payer and his wife
jointly owned two state units. The rate of percentage of profit and losses was pre-determined by

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both the parties. Similarly, in this case, since it is not pre-determined, therefore, the losses will be
divided equally.
Conclusion
It can be concluded that the losses between Jack and Jill will be divided equally and joint
ownership business do not account for partnership business.
Question 4: “IRC v Duke of Westminster [1936] AC 1”
The given case “IRC v Duke of Westminster [1936] AC 1” is considered as one of the
prime examples of occurrence of tax avoidance. This case depicts one principle that each tax
payer is allowed to order all his/her affairs. However, this ruling cannot be considered that useful
in case of complex tax structures under the law.
“WT Ramsay v. IRC principle” can be considered as more restrictive in comparison to
the previous case discuss above. This principle reflects that if an individual is successful in the
given result, then he is not bound to pay any increased amount of tax and it also allows
individuals as well as corporates to restructure all their agreements in order to meet their
respective objectives of lowering down the taxable amount.
Question 5: Case study of Bill
Issue
The given case study deals with the “assessment of income from the sale of felled timber is
deduced under subsection 6 (1) of the Income Tax Assessment Act 1936”

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Regulations to the case “Subsection 6 (1) of the Income Tax Assessment Act 1936” “McCauley v. The Federal Commissioner of Taxation”
Application to the case
In the given case study, Bill is the owner of a piece of land which consists of seven pine
trees. He primarily aimed for grazing of sheep and wanted to clear it. He finds a lodging
company who is willing to pay him $100 for every 100 meters of land. As per “taxation ruling
related to 95/6” gives a proper view regarding the tax consequences for income generated from
the activities of primary production. The ruling states that there is a limit to the receipts derived
from the sale of timber (James 2016). In the given case, Bill is the owner of land, but he did not
plant trees in the given land. However, the whole amount that constitutes from the sale of timber
is his assessable income. Therefore, it can be inferred that the considered trees are taken as
assessable income of the tax payers “under subsection 6 (1) of the Income Tax Assessment Act
1936”. On the contrary, if Bill pays an amount of $50,000, then the receipts can be considered as
Royalties, as per section 26 (f). The total amount earned by Bill as royalty is his assessable
income.
Conclusion
From the above analysis, it can be inferred that income from cutting timber from trees
can be considered as taxable income for Bill as per “subsection 6 (1) of the ITAA 1997”.

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References and Bibliography
Brennan, G., 2016. The church on tax reform?. St Mark's Review, (235), p.1.
Campbell, S., 2015. A mater of trusts: CGT issues when creating and dealing with
UPEs. Taxation in Australia, 50(6), p.332.
Choi, S.K., 2016. The Determinants and Trends in Public-Private Wage and Fringe Benefit
Differential.
Daley, J. and Wood, D., 2015. Fiscal challenges for Australia. Grattan Institute.
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.
Gabbay, D.M. and Smets, P. eds., 2013. Quantified Representation of Uncertainty and
Imprecision (Vol. 1). Springer Science & Business Media.
Hogg, C. and Bush, A., 2012. Genotyping in primary ciliary dyskinesia: ready for prime time, or
a fringe benefit?. Thorax, 67(5), pp.377-378.
Hussein, A., 2015. The use of triangulation in social sciences research: Can qualitative and
quantitative methods be combined?. Journal of Comparative Social Work, 4(1).
James, K., 2016. The Australian Taxation Office perspective on work-related travel expense
deductions for academics. International Journal of Critical Accounting, 8(5-6), pp.345-362.
Jorgensen, R., 2017. Division 7A structuring: The contortionist revisited. Tax Specialist, 20(3),
p.118.

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Karlsson, S. and Kullingsjö, L.H., 2013, November. GPS measurement of Swedish car
movements for assessment of possible electrification. InElectric Vehicle Symposium and
Exhibition (EVS27), 2013 World (pp. 1-14). IEEE.
Kenny, P. 2013. Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths.
Krever, R. 2013. Australian taxation law cases 2013. Pyrmont, N.S.W.: Thomson Reuters.
Lin, C.Y.Y., Edvinsson, L., Chen, J. and Beding, T., 2013. National intellectual capital and the
financial crisis in Australia, Canada, Japan, New Zealand, and the United States. Springer
Science & Business Media.
Milton, 2013. The taxpayers' guide 2013 & 2014. Qld.: Wrightbooks.
Nguyen, P. and Rahman, N., 2015. Which governance characteristics affect the incidence of
divestitures in Australia?. Australian Journal of Management, 40(2), pp.351-374.
Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-
Social and Behavioral Sciences, 109, pp.1069-1075.
Woellner, R. 2013. Australian taxation law select 2013. North Ryde, N.S.W.: CCH Australia.

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Appendices
Calculations for Question 1:-
Asset Description Cost
Base
Capital
Proceeds
Capital
gains
Capial
loss
Antique Vase 2000 3000 1000
Antique Chair 3000 1000 2000
Painting 9000 1000 8000
Home Sound System 12000 11000 1000
Shares in listed company 5000 20000 15000
Computation of net capital loss for the year
Particulars Amount
($)
Loss on sale of Antique Chair 2000
Loss on sale of Painting 8000
Less: Gain on sale of Antique Vase 1000
Total Collectable loss to be carried
forward
9000
Computation of Net capital gains for the year
Particulars Amount
($)

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Gains on sale of shares $15,000
Calculations for Question 2
Taxable value of the loan fringe benefit
In the books of Brian for the year ended 2016/17
Computation under statutory interest rate and actual Interest rate
Statutory
rate
Actual
rate
Particulars Amount ($) Amount
($)
Amount of Loan 1000000 1000000
FBT Amount 40% business use 400000 400000
Statutory Interest rate @ 5.65% 2825.00 500.00
(Amount of loan x Statutory interest rate) - (Amount
of loan x Actual interest rate) / 12 x 60% business
use
Taxable value of the loan fringe benfit 2325
FBT on end of the loan on payment of interest at the end of loan
Statutory Actual