Taxation Law Assignment: Analysis of Tax Deductions and GST

This assignment addresses several key issues in taxation law, providing detailed answers to four questions. The first question examines the deductibility of various expenses, including the cost of moving machinery, revaluation of assets for insurance purposes, legal expenses related to winding up a business, and legal expenditure for business operations. The second question focuses on the input tax credit for advertising expenditure under the GST Act, specifically concerning Big Bank Ltd. The assignment utilizes relevant sections of the Income Tax Assessment Act 1997 and the GST Act 1999, along with case law such as British Insulated & Helsby Cables and Ronpibon Tin NL v. FC of T, to support its arguments. The analysis considers capital expenditure, business operations, and creditable acquisitions. The assignment concludes with a comprehensive list of references, citing legal databases, textbooks, and journal articles related to taxation law.

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

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Table of Contents
Answer of Question 1.................................................................................................................2
Answer of part 1:....................................................................................................................2
Answer of part 2:....................................................................................................................3
Answer of part 3:....................................................................................................................4
Answer of part 4:....................................................................................................................5
Answer to Question 2:................................................................................................................6
Conclusion:................................................................................................................................9
Answer to question 3:...............................................................................................................10
Answer to question 4:...............................................................................................................12
References:...............................................................................................................................13

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Answer of Question 1
Answer of part 1:
Issue Arised:
Issue that arises here in this case is uncertainty with cost that can be incorporated in
moving machinery to a new site will be treated as acceptable deduction in regard to under law
section section 8-1 of the ITAA 1997.
Law used:
a. Section 8-1 of the Income Tax Assessment Act 1997
b. British Insulated & Helsby Cables
Application of the above law used:
Cost incurred while locating machinery to the new site represents asset in nature and
no acceptable deduction is allowed in this matter of 1 of the Income Tax Assessment Act
1997. Moving machinery to new site during depreciation has incurred cost of asset1. Cost
occurrence due to moving the machinery considers a cost that is incurred due to small
changes and should be allowed as acceptable deductions under section 8-1 of the Income
Tax Assessment Act 1997. Reason behind incorporating the expenditure for acceptable
deductions is the cost incurred is part of business expenses of business operations.
British Insulated & Helsby Cables verdict shows that cost that is implicated in
transportation represents constant benefit on the business-related premises by shifting the
depreciable assets2. In agreement with Taxation Ruling of TD 93/126 that is on the setting up
1 Taylor, G. and Richardson, G., 2012. International corporate tax avoidance practices: evidence from Australian firms. The International
Journal of Accounting, 47(4), pp.469-496
2 Tan, K.K. and Goh, L., 2013. Revenue and tax law. Singapore Academy of Law Annual Review of Singapore Cases, (Annual Review
2013), p.490.

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of the machinery and evolution business activities the incidence of cost to bring the machine
in operation will be treated as revenue.
Conclusion Drawn:
Conclusion drawn in this case is, cost incorporated while moving the machine to new
site represents movement of assets from one place to another will be taken as capital
expenditure. Here no form of acceptable deductions will be legalized under section 8-1 of the
Income Tax Assessment Act 1997.
Answer of part 2:
Issue Arised:
The situation that crop up here is regarding the revaluation of assets that affect the
cover of insurance will be viewed as acceptable deductions under section 8-1 of the Income
Tax Assessment Act 19973.
Law used:
a. Section 8-1 of the Income Tax Assessment Act 1997
Application:
Here the scenario shows that spending have link with the fixed asset, thus in
evaluating the deduction it is important to find whether expenses that is incurred while
revaluating revenue production capacity holds or incurred while protecting the asset. Now
while protecting the assets provides benefit then it will be considered as acceptable deduction
under section 8-1 of the Income Tax Assessment Act 1997. Present state that cost incurred in
3 O'Connell, A., Martin, F. and Chia, J., 2013. Law, policy and politics in Australia's recent not-for-profit sector reforms. Austl. Tax F., 28,
p.289.

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revaluating the asset to effect insurance cover will be allowed as acceptable deductions under
section 8-1 .
Conclusion Drawn:
Conclusion drawn from here shows that cost that leads to insurance cover is treated as
acceptable deductions because this cost will recur and thus allowed as acceptable deductions
under section 8-1 of the ITAA 1997.
Answer of part 3:
Issue arised:
Here this case shows whether the legal expenses company incurred in against the
petition for winding up would be considered as for deductions under section 8-1 of the ITAA
1997.
Law used:
a. Section 8-1 of the Income Tax Assessment Act 1997
b. FC of T v Snowden and Wilson Pty Ltd (1958) 99 CLR 431)
Application:
Law section under 8-1 of the Income Tax Assessment Act 1997, shows that cost that
is incurred while winding up business generally considered as business operations and thus it
is not accepted as acceptable deductions4.
The taxation ruling of ID 2004/367 represents that officially authorized cost will be
measured for deductions if the cost is incurred while carrying out the business operation.
4 Snape, J. and De Souza, J., 2016. Environmental taxation law: policy, contexts and practice. Routledge.

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Case of FC of T v Snowden and Wilson Pty Ltd (1958) shows that costs that are
unusual then it is mandatory that taxpayer should start taking legal actions because no
situation can prevent the cost to be eligible as deductible expenditure5.
The incidence of legal expenditure for inconsistent in winding up the petition will not
be authorized as deductions because they represents the features of capital in nature and these
expenditure are related to business operations.
Conclusion Drawn:
Conclusion here is the cost that is incurred in opposing the petition of winding up will
be treated as not accepatable deductions under section 8-1 of the ITAA 1997.
Answer of part 4:
Issue Arised:
Issue here shows that whether or not the legal expenditure that is incurred due to
services of legal representative in regard to several business operations of the clients will be
allowed as acceptable deductions under section 8-1 of the ITAA 19976
Law used:
a. Section 8-1 of the Income Tax Assessment Act 1997
Application:
5 Bryan, M., Vann, V. and Thomas, S.B., 2017. Equity and trusts in Australia. Cambridge University Press.
6 Virgo, G., 2015. Principles of the Law of Restitution. Oxford University Press, USA.

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Law under section 8-1 of the Income Tax Assessment Act 1997 shows when a legal
expense is incurred in business operations to generate revenue it will be treated as acceptable
deductions7. Though, some exceptions is present in this respect of legal expenses, which
shows that expenses incurred recognized as capital, domestic and private in character if the
same is principally incurred in producing the exempt and non-chargeable non-exempt
proceeds.
Conclusion Drawn:
Thus legal expenditure incurred in respect to the business operations to produce the
taxable income should be treated as accepatable deductions in reference to section 8-1 of the
ITAA 1997.
Answer to Question 2:
Issue arised:
Issue that arised here is the situation of Big Bank which is considered for evaluating
the input tax credit with in respect to the advertising expenditure that is incurred with under
law section GSTR Act 1999.
Law used:
a. GST Act 1999
b. Paragraphs 11-5 and 15-5
c. Subsection 15-25
d. Goods and Service taxation ruling of GSTR 2006/3
e. Ronpibon Tin NL v. FC of T
7 Davies, P.S. and Virgo, G., 2013. Equity & Trusts: Text, Cases, and Materials. Text, Cases and Materials.

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Application:
Goods and Service tax law of GSTR 2006/3 shows the methods that can be imposed
to evaluate the input tax credit in accordance with administration for change that is followed
by financial suppliers under the new system of tax GST Act 19998.
Current situation of Big Bank shows that, Big Bank Ltd has incurred an expense of
$1,650,000 as GST was added to advertisement expense in the prior year. Thus Big Bank Ltd
follow law under the section GSTR 2006/3 which is followed by the company because the
company recognized eligible for input tax credit. According to the law if an entity is
registered or required to obtain registration, GST shall be payable for creation of taxable
supplies. The framework under GST law shows that an entity or an individual is required 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 GST9. This
incorporates compulsion in which the method of distribution adopted must sensible in
situation of the particular enterprise. Under the paragraph 11-5 and 15-5 to be eligible for
acquisition, creditable acquisition must be creditable in different parts.
One more requirements of paragraphs 11-5 and 15-5 (a) for an acquisition to meet
the criteria as creditable , the acquisition must be completely for creditable purpose10. In case
8 James, S., Sawyer, A. and Wallschutzky, I., 2015. Tax simplification: A review of initiatives in Australia, New Zealand and the United
Kingdom. eJournal of Tax Research, 13(1), p.280.
9 Treasury, A. and Baxter, H., Accounting evidence. interpretation, 89, p.95.
10 "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 acquisition is partly for creditable use then it is essential to determine the degree of the
creditable use. Now the subsection 15-25 shows that import shall be viewed as creditable if
it is for creditable use. Now section 11-15 or 15-10 an acquisition eligible to be creditable if
an entity makes the supplies for the purpose of claiming input tax credit. It is worth
mentioning the advertising expense incurred by Big Bank Ltd was for the use of creditable
acquisition. In respect of the GSTR ruling of 2006/3 Big Bank Ltd has gone past the
economic acquisition threshold boundary and the invoice that is issued to Big Bank Ltd will
be allowed for input tax credit for the GST supplies made11.
Conclusion:
Conclusion shows that Big Bank Ltd will be eligible to claim input tax credit in
regard to the GSTR 2006/13 for the sum that is incurred due to advertising expenses for the
use of the creditable acquisition.
11 May, Stephen. "Applying the GST to imported digital products and services: Problems and solutions." Tax Specialist 19.3 (2016): 110.

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Answer to question 3:

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Answer to question 4:

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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
Bryan, M., Vann, V. and Thomas, S.B., 2017. Equity and trusts in Australia. Cambridge
University Press.
Davies, P.S. and Virgo, G., 2013. Equity & Trusts: Text, Cases, and Materials. Text, Cases
and Materials.
James, S., Sawyer, A. and Wallschutzky, I., 2015. Tax simplification: A review of initiatives
in Australia, New Zealand and the United Kingdom. eJournal of Tax Research, 13(1), p.280.
May, Stephen. "Applying the GST to imported digital products and services: Problems and
solutions." Tax Specialist 19.3 (2016): 110.
O'Connell, A., Martin, F. and Chia, J., 2013. Law, policy and politics in Australia's recent
not-for-profit sector reforms. Austl. Tax F., 28, p.289.
Snape, J. and De Souza, J., 2016. Environmental taxation law: policy, contexts and practice.
Routledge.
Tan, K.K. and Goh, L., 2013. Revenue and tax law. Singapore Academy of Law Annual
Review of Singapore Cases, (Annual Review 2013), p.490.
Taylor, G. and Richardson, G., 2012. International corporate tax avoidance practices:
evidence from Australian firms. The International Journal of Accounting, 47(4), pp.469-496.
Treasury, A. and Baxter, H., Accounting evidence. interpretation, 89, p.95.
Virgo, G., 2015. Principles of the Law of Restitution. Oxford University Press, USA.

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