Taxation Law Principles: Payroll, GST, & FBT Analysis 2018

This assignment solution delves into the principles of taxation law, focusing on payroll calculations, superannuation guarantee obligations, and GST implications for Brian Pert's horse-racing stable, Bronny Park. It includes computations of weekly wages, PAYG withholdings, and employer superannuation contributions. The assignment also analyzes assessable receipts and eligible deductions for GST purposes, providing a detailed breakdown of GST payable and creditable acquisitions. The document addresses the treatment of training fees, prize money, and trade-in values under taxation law, referencing relevant sections of the ITAA 1997 and case law. A business activity statement is presented, summarizing the GST calculations and obligations. Desklib offers this document as a valuable resource for students studying taxation law, along with a wide range of past papers and solved assignments.

Running head: PRINCIPLES OF TAXATION LAW
Principles of Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

1PRINCIPLES OF TAXATION LAW
Table of Contents
Answer to question A:................................................................................................................2
Answer to question B:................................................................................................................2
Answer to question C:................................................................................................................3
Answer to question D:................................................................................................................5
Answer to question E:................................................................................................................6
References:.................................................................................................................................8

2PRINCIPLES OF TAXATION LAW
Answer to question A:
Computation of Payroll Information:
Schedule of Payroll Information
Employee
Name
Weekly Wages /
Salary
Weekly
PayG
Quarterly
Wages/Salary
Quarterly
PayG
Kris 120 25 1560 325
Sam 220 49 2860 637
Sarah 4000 1528 52000 19864
Lauren 1440 458 18720 5954
Marty 5600 2280 72800 29640
Paul 2200 755 28600 9815
Payroll Information
Employee Name Kris ($15/hour) Sam ($22/hour)
Week 1 120 220
Week 2 105 220
Week 3 150 330
Week 4 180 330
Week 5 0 220
Week 6 0 220
Week 7 75 330
Week 8 180 330
Week 9 150 220
Week 10 180 220
Week 11 120 330
Week 12 120 220
Week 13 120 0
Total Wages 1500 3190
Answer to question B:
Computation of employer’s statutory Superannuation Guarantee obligations
Superannuation Guarantee Obligations
Employee
Name Super Fund Name
Ordinary time
earnings
SG
rate
SG
Contributions
Kris
State Super Retirement
Fund 1500 9.50% 142.5
Sam State Super Retirement 3190 9.50% 303.05

3PRINCIPLES OF TAXATION LAW
Fund
Sarah
State Super Retirement
Fund 4000 9.50% 380
Lauren
State Super Retirement
Fund 1440 9.50% 136.8
Marty
State Super Retirement
Fund 5600 9.50% 532
Paul
State Super Retirement
Fund 2200 9.50% 209
Total Employers
Contributions 1703.35
Answer to question C:
Item
Val
ue
Supply
Type
GST Input tax
Credit ($)
GST Exclusive
Value ($)
Assessable Receipts
Training Fees
8269
8
Financial
Sales 7518 75180
Share of prize money from
customers horses
5500
0
Financial
Sales 5000 50000
Prize money from Bronny
horses
1650
0
Financial
Sales 1500 15000
Trophy from Brisbane Cup 1200
Financial
Sales 109.09 1090.91
Trade in tractor 1900
Financial
Sales 172.73 1727.27
Total Receipts
1572
98 14299.82
Expenses Eligible as
Deductions
Horse Feed 8800
Input Tax
Sales 800 8000
Veterinary Fees 7700
Input Tax
Sales 700 7000
Ferrier 5500
Input Tax
Sales 5500
Accommodation for Staff 2475
Input Tax
Sales 225 2250
Airfares for staff 5346
Input Tax
Sales 486 4860
Bookkeeping services 2640
Input Tax
Sales 240 2400
First Aid courses for staff
members 990
Input Tax
Sales 90 900
Cost of Goods Sold 4500 Imported 409 4091

4PRINCIPLES OF TAXATION LAW
Goods
Freight 250
Imported
Goods 23 227
Business loan 750
Input Tax
Sales 750
Total Allowable Deductions
3895
1 2972.818182
Net Income from business
1183
47
Total GST Payable 11327.00
According to the “section 995-1 of the ITAA 1997” business includes the occupation,
trade, service or vocation is treated as business receipts but does not includes the occupation
as the employee. Gains that originates from carrying on the business will be treated as
ordinary income (Grange, Jover-Ledesma and Maydew, 2014). If a business is registered for
GST, then the goods or services that it sells in Australia are usually considered taxable unless
they are registered for GST-free input tax. As evident the training fees that is received would
be considered as business gains under the ordinary concepts of “section 6-5 of the ITAA
1997”.
The share of prize money from the customer’s horses constitute business receipts
which is a taxable sale that is made in the course of operating the business activities. As held
in “Moore v Griffiths (1972)” mere winnings from prize is not regarded as earnings (James
2014). However, it would be treated as income if there is a sufficient association with the
taxpayer’s income creating activities. Similarly in “Kelly v FCT (1985)” the taxpayer here
received the award for being the fairest player (Kenny 2013). The sum will be treated as
earnings since the award was relevant and related to his work. Prize winning from Bronny
Park horses and trophy won in Brisbane Cup that is won by the Bronny Park owned horses
would be included for assessment. The receipts from the trade in tractor is also included for
assessment since it is a taxable sale made during the course of the taxpayer’s business.

5PRINCIPLES OF TAXATION LAW
As per “section 8-1 of the ITAA 1997” an individual is permitted to obtain deduction
from their taxable earnings for any loss or expenses that arose in making chargeable earnings
(Krever 2013). The horse feed and the veterinary fees will be allowed for deduction since the
expenses were incurred as part of derivation of business income. Brian furthermore reports
expenses on farrier and accommodation for staff race during race meetings (Morgan,
Mortimer and Pinto 2013). As per “section 8-1 of the ITAA 1997” these expenses are tax
deductible since it occurred while producing the business income.
Brian reported airfares on the staff to attend the race meetings however one of the
staff did not attended the race meetings and $1100 of air fares were not used. Therefore, the
unused airfares for staff has been deducted from the airfares expenses with the remaining
amount is included for deduction (Sadiq and Coleman 2013). Bronny further imported
saddles and goods from Europe which were inclusive of GST. Therefore, GST of 10% has
been charged for the import made.
Answer to question D:
A taxpayer is allowed to claim GST credits for any amount of GST that is included in the
price that is paid for things that is acquired for business use (Sadiq et al. 2014). A taxpayer
can claim the GST credits if the below stated conditions are met;
a. The taxpayer intends to use the purchase entirely or partially for the business purpose
and the purchase does not associate to creating input taxed supplies.
b. The purchase price is inclusive of GST
c. The taxpayer is responsible to provide the payment for the item that is purchased.
d. The taxpayer has the tax invoice from their supplier.
According to the “section 11-5 of the ITAA 1997” the creditable refers to things that
the taxpayers acquire solely or partially for the creditable purpose and the supply of goods is

6PRINCIPLES OF TAXATION LAW
the taxable supply for the creditable purpose (Woellner 2013). Items such as horse feed,
veterinary fees, new tractor, bookkeeping fees, saddles and leather goods from Europe will be
treated as the creditable acquisition. These items were acquired entirely for the creditable
purpose.
Answer to question E:
Business Activity Statement:

7PRINCIPLES OF TAXATION LAW

8PRINCIPLES OF TAXATION LAW
References:
Grange, J., Jover-Ledesma, G., and Maydew, G. 2014 principles of business taxation.
James, S. 2014. The economics of taxation.
Kenny, P. 2013. Australian tax. Chatswood, N.S.W.: LexisNexis Butterworths.
Krever, R. 2013. Australian taxation law cases. 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.
Sadiq, K., and Coleman, C. 2013. Principles of taxation law. Sydney, N.S.W.: Lawbook
Co./Thomson Reuters.
Sadiq, K., Coleman, C., Hanegbi, R., Jogarajan, S., Krever, R., Obst, W., & Ting, A. 2014
Principles of taxation law 2014.
Woellner, R. 2013. Australian taxation law select 2013. North Ryde, N.S.W.: CCH Australia.