Taxation Law Analysis Assignment - [University Name]

This assignment provides a comprehensive analysis of Australian taxation law, addressing several key issues through detailed explanations and relevant case law. The solution begins by examining capital gains and losses under Section 108-10 of the ITAA 1997, clarifying the rules regarding offsetting losses and gains, particularly concerning personal assets and collectibles. The assignment then delves into Fringe Benefits Tax (FBT) and the application of the FBT Act 1986, focusing on interest offset programs. Further, the assignment explores the allocation of losses in joint property ownership, referencing Taxation Ruling TR 93/32 and relevant case law such as FC of T v McDonald (1987). The discussion extends to tax avoidance strategies, referencing IRC v Duke of Westminster 1936 and subsequent court decisions. Finally, the assignment examines the assessment of income from timber cutting, referencing subsection 6 (1) of the ITAA 1997 and Taxation Ruling TR 95/6, differentiating between income from forest operations and royalties.

Taxation
Name of the Student
Name of the University
Authors Note
Course ID

Answer to question 1:
Issues:
The existing question introduces the issues of ascertainment of the capital gains and
losses that is incurred in the present context with reference to “Section 108-10 of the ITAA
1997”.
Laws:
I. “Section 108-10 of the ITAA 1997”
II. “Section 108-20 of the ITAA 1997”
Applications:
In consideration of the “Section 108-20 of the ITAA 1997” Eric is not permitted to
offset the loss arising from the sale of personal asset. Additionally in considerations of the
“Section 108-10 of the ITAA 1997” collectibles cannot be considered for offset against the
ordinary gains from disposal of shares because they are only allowed to be offset in the event
of capital gains (Barkoczy 2016). Eric has only produced gains from sale of ordinary assets
with no current year income, his net capital gains is arrived at $15,000.
Conclusion:
No loss will be allowed to offset upon making a gains from the sale of personal asset.
As a result, Eric yielded gains from the sale of assets only.
Answer to question 2:
Issue:
The existent question introduces the matter relating to the ascertainment of the FBT in
agreement with the “FBT Act 1986”.

Laws:
I. “FBT Act 1986”
II. “Taxation Ruling TR 93/6”
Applications:
The “taxation ruling TR 93/6” decisively puts forward that bank on certain
occasions undertakes the preparation of offsetting loan of the taxpayers (Robin 2017). Such
offset is viewed as preparation of interest offset. In agreement with the “Taxation Ruling
TR 93/6” if Brian is released by bank from making payment of any kind of interest then
Brian under such case will not be liable for paying income tax.
Conclusion:
With the help of corrective interest, offset program Brian will not be required to pay
tax if Brian is released from paying any interest for loan acquired by him.
Answer to question 3:
Issue:
The present question introduces the circumstances of allocation of loss suffered by the
taxpayers from the joint ownership of the property rented by them.
Laws:
I. “Taxation Ruling TR 93/32”
II. “FC of T v McDonald (1987)”
III. “Section 51 of the ITAA 1997”

Application:
From the existing scenario of Jack and Jill it is found that they undertook the decision
of forming a partnership to take a rental property in the form of joint ownership. The
agreement between Jack and Jill contained that Jack will be getting a profit of 10% from such
rental property with Jill getting 90% of the profit from the property. Additionally, the
agreement also contained that Jack will be bearing 100% of the loss from that property.
Taking into the account of “Taxation Ruling 93/32”, Joint owners of the rental property will
not be considered as partnership under the general law unless the ownership is treated as
business executing the commercial functions (Coleman and Sadiq 2013). In context of the
present situation, the joint ownership between Jack and Jill will be treated as partnership for
income tax purpose but will not be treated as partnership under the General Law. The reason
behind is that partnership between Jack and Jill does not qualifies as carrying on of a business
activity.
As it is discerned from “FC of T v McDonald (1987)”, where the taxpayers were the
owners of a unit that construed in the nature of Joint Tenants (Kenny 2013). The agreement
contained that Mr and Mrs McDonald were entitled to profit in the ratio of 25% and 75%
with losses to entirely shoulder by Mr McDonald. The Judgement defined that no partnership
existed between the husband and wife and the distribution of loss was to advance the income
of his. In reference to the present case, Jack intentionally sought to advance the income of
Jill. In respect of “Section 51”, losses should be allocated equally and does not permits
deductions by virtue of agreement (Krever 2013).
On the contrary, if Jack and Jill undertake the decision of selling the property, both
the cost base and reduced cost base should be considered in the amount. As it is understood

that Jack and Jill are the joint holders so the capital gains and loss will be allocated based on
the ownership of interest.
Conclusion:
With reference to “Taxation Ruling of TR 93/32” the co-ownership does not
accounted as partnership in respect of the general law and the losses must be equally
allocated between Jack and Jill.
Answer to question 4:
“IRC v Duke of Westminster 1936” is constantly quoted wherever there is a
situation of tax avoidance. In respect of the above stated case it can be stated the each
taxpayer have the opportunity to make order for their tax affairs so that tax allocation is made
in less amount than it may have actually been (Morgan, Mortimer and Pinto 2013). The
above stated ruling is viewed as subject of attraction for those that seek to avoid tax. The
federal court in the later stages took the decision of adopting restrictive approach under the
judgement passed in “WT Ramsay v. IRC”. The appropriate approach was the implement
tax to the outcomes of the business entirely.
In the current age of Australia it is understood that no taxpayers would be required or
forced to pay any extra amount of tax as the individual taxpayers are allowed to structure
their tax agreements in such a manner that it is within the context of the legal framework.
Answer to question 5:
Issue:
The existing question brings forward the matter regarding the assessment of income
generated from the cutting of timbers with reference to “subsection 6 (1) of the ITAA
1997”.

Laws:
I. “Subsection 6 (1) of the ITAA 1997”
II. “Taxation Ruling TR 95/6”
III. “Subsection 36 (1)”
IV. “McCauley v FC of T (1944)”
Application:
The present circumstances of Bill reflects that he is the owner of a large piece of land
that has huge amount of pine trees. Bill originally thought of using the land for sheep grazing
however after being approached by a logging company that agreed to pay $1000 for every
100 meters of timber, Bill decided to accept the offer. The “Taxation ruling of TR 95/6” is
applicable in respect of Bill since he is engaged in the activities of forest operations for
selling the timber.
According to the guidelines issued under “subsection 6 (1) of the ITAA” an
individual indulged in a forest operations will be treated a primary producer for taxation
purpose (Woellner 2013). Bill, in regard to “Subsection 6 (1) of the ITAA 1997” will be
treated as primary producer for being indulged in the forest operations of tending timber.
Even though bill did not planted the pine trees in his land, he will be treated as primary
producer for felling trees and income received by him from felling of timber would be treated
as assessable income under “subsection 36 (1) of the ITAA 1997”. The sales constituted the
part of the business assets and the value of pine trees constitutes a taxable proceeds in the
current circumstances of Bill.
On the contrary, if Bill is provided with a large sum of $50,000 for simply granting
the right to the logging company of removing the required amount of timber from land that is
owned by him, then under such situation the amount received by Bill would constitute

royalties under “section 26 (f) of the ITAA 1997” (Woellner et al., 2014). According to the
decision made under “McCauley v FC of T (1944)” payment received for granting the right
of tending down the trees for timber would be regarded as royalties. Hence, amount received
by bill would be treated as royalties and would attract tax liabilities.
Conclusion:
From the analysis, it is understood that amount received by Bill for cutting down the
timber would constitute assessable income under the forestry activities, as he was the primary
producer. While receipt of lump sum for granting right to cut timber would be treated as
royalties under “section 26 (f)” which will be held for taxation.

Reference list:
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Coleman, C. and Sadiq, K. (n.d.). Principles of taxation law 2013.
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.
Morgan, A., Mortimer, C. and Pinto, D. (2013). A practical introduction to Australian
taxation law. North Ryde [N.S.W.]: CCH Australia.
ROBIN, H., 2017. AUSTRALIAN TAXATION LAW 2017. OXFORD University Press.
Woellner, R. (2013). Australian taxation law 2012. North Ryde [N.S.W.]: CCH Australia.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D. (n.d.). Australian taxation
law 2014.