TAXATION 1 Assignment: Taxation Law, Cases and Tax Avoidance

This document presents a comprehensive solution to a TAXATION 1 assignment, addressing various aspects of Australian taxation law. It begins by analyzing fringe benefit tax computations related to a loan. The assignment then delves into the allocation of profit from a jointly owned rental property, e...Read More

Running head: TAXATION
Taxation
Name of the University
Name of the Student
Authors Note
Course ID

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Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................2
Answer to question 3..................................................................................................................3
Answer to question 4:.................................................................................................................4
Answer to question 5:.................................................................................................................4
Reference List:...........................................................................................................................6

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Answer to question 1:
Answer to question 2:
Computation of Fringe Benefit Tax
The above table mainly represents the change n taxable value of loan fringe benefit of
the loan was paid at the end of the month. As per the Taxation Rulings of TR 93/6, if Brian

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was released from refunding the interest on loan then he will not be liable to pay any kind of
income tax (Woellner, 2013).
Answer to question 3
The overall issue that could be identified from the case is that allocation of profit from
the rental property which is jointly owned by two owners. There are different types of laws
that need to be evaluated such as Section 51 of the ITAA 1997, Taxation rulings of TR 93/32,
and F.C. of T. v McDonald (1987). The above identified laws and cases could eventually help
in solving the current situation of the co owners of rental property. As per the taxation rulings
of TR 93/32, all the relevant provisions that needs to be conducted by co owners of rental
property for dividing the income or loss are adequately depicted. The situation directly
indicates that Jackie Chan title to 10% of the overall profit value, while Jill is entitled to 90%
of the property value. However, the taxation ruling mai1nly states the overall taxable position
of the co owners responsible for selling the property (ROBIN, 2017).
However there are two different types of ownership pattern that need to be followed
under Taxation rulings TR 92/32. Taxation ruling directly indicates that co-ownership is
mainly considered as partnership in terms of income tax, which in general laws, is not
considered. However, partnership in general laws mainly indicates that are relevant business
practices needs to be conducted by the partners. Therefore, under the taxation ruling and only
for taxation purposes Jack and Jill could show the rental properties as Partnership.
Hence, Jack and Jill will hold the property as joint renters, which could help in
supporting the common factor for income tax purpose. Moreover, the case F.C. of T. v
McDonald (1987) 18 ATR 957, directly states that Agreement between taxpayers wife and
legal authority for owning the property as joint renters. Therefore, any kind of game from
there and field property will be distributed as 75% for Mrs McDonald and 25% for

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McDonald. Consequently, from the evaluation of Jack and Jill case it could be understood
that they are joint renters, where any kind of loss or profit from the sale of property will be
entertained according to the share (Milton, 2013). However, this overall joint ownership does
not account for any kind of partnership business between Jack and Jill, as per the taxation
ruling and court case.
Answer to question 4:
IRC v Duke of Westminster [1936] AC 1 is mainly one of the regularly quoted tax
avoidance measure, which is used by taxpayers in Australia. The principle of the relevant
case directly indicates that Taxpayers are able to establishment principle from which they are
allowed to reduce tax liability. This type of ruling mainly attracted for maximum of the
taxpayers, as they allow reducing the tax liability by making adequate agreements with
appropriate authority. Adequate cases could be evaluated such as WT Ramsay v. IRC
principle, where the court was mainly restrictive regarding the leniency provided to
taxpayers. However this case directly indicated that transaction was rearranged and did not
show the form of commercial purposes, where directly indicates that the perfect rule for
imposing tax was when transaction had been conducted (Kenny, 2013).
However, under different situation there are relevant principles that are used in
Australia by individuals, which secure their overall inland revenues and do not force them to
pay higher tax due to increased revenue. This also allows the organisation structure adequate
financial agreements, which directly helps in decreasing the tax liability and fixing your
objectives, which in turn provides structure within structure of laws.
Answer to question 5:
The main issue that could be identified from the evaluation of the question is the sale

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of field Timber under the Income Tax Assessment Act 1936. Moreover, for the evaluation of
the Income-Tax adequate laws are used such as Subsection 6 (1) of the Income Tax
Assessment Act 1936 and McCauley v/s The Federal Commissioner of Taxation. These
identified laws could eventually help in detecting the relevant Income Tax that needs to be
paid. The evaluation of the case it could be identified that build own a large piece of land
where several Pine trees grow, But you wants to use the land for grazing sheep’s, which
needs a cleared forest. Therefore, Bill discovers a Lodging company that could pay him
$1,000 for every 100 M of timber situated in it premises. Bring company could eventually
clear out the whole forest and provide adequate come to Bill for the timbers. Under the
taxation ruling of 95/6, it directly indicates that Income Tax consequence is generated from
any kind of activities conducted in production and forestry (Barton, 2013). Under the
subsection 6(1) Income tax assessment act 1936, individuals who are indulging forest
operation are mainly considered as primary creator, where adequate Income Tax needs to be
imposed on Revenue generation.
The trees planted in the land for not conducted by Bill, but in one instance or other
relevant receipt of money is conducted, which indicates that relevant tax needs to be paid.
Under different circumstances have a lump sum amount of $50,000 is received by Bill and
provide right to the logging organisation for removing all the relevant timber. This could
directly resulted royalties under the section 26(f) receipt of loyalties. Under these
circumstances, Bill will not be considered as trader for the forest operations. As from the start
he did not plan to sell the trees for gaining profit from the overall endeavour. As per
McCauley v/s The Federal Commissioner of Taxation, All the Income will be considered
under taxation law (Barkoczy, 2016). Therefore, it could be understood that the cutting of
timber is considered as a taxable income under subsection 6 (1) of the ITAA 1997.

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Reference List:
Barkoczy, S., 2016. Foundations of Taxation Law 2016. OUP Catalogue.
Barton, 2013. Management of the Australian Taxation Office's property portfolio. ACT:
Australian National Audit Office.
Kenny, P. 2013. Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths.
Milton, 2013. The taxpayers' guide 2013 & 2014. Qld.: Wrightbooks.
ROBIN, H., 2017. AUSTRALIAN TAXATION LAW 2017. OXFORD University Press.
Woellner, R. 2013. Australian taxation law select 2013. North Ryde, N.S.W.: CCH Australia.