Semester 1, 2022: Taxation Law and Practice Assignment

This report addresses several taxation issues presented in a client case study, analyzing relevant Australian tax laws and their application. It covers topics such as the taxability of government grants, gifts, car usage, capital gains from property sales, inherited property, and interest income from savings accounts. The analysis includes references to specific sections of the Income Tax Assessment Act of 1996 and 1997, providing conclusions on each issue's tax implications for the client. The report determines whether certain incomes are taxable or exempt, considering factors like the nature of the income, the circumstances of the recipient, and specific legal provisions. The report provides a well-structured analysis of the client's tax situation and the relevant provisions of the Income Tax Assessment Act.

Subject: Re: Research (New Client)
Dear Harvey
In relation to your email Friday, 3 April 2022 I’ve identified to following issues.
Issue Relevant Law Application of the law to the client Conclusion
1. Whether
payments
acquired by
Dr Litt by
the way of
government
federal
programs
are
taxable?
The income tax assessment act of 1996, is the one
that specifies provisions regarding the income
acquired by the way of government grants and
income.
Here the concept is applicable to
the scenario of Dr. Litt reason
being he is getting the money by
the government in the form of
salary in return of the training
program he is conducting for the
nurses.
Accordingly, the income
received from the federal
government is amount to tax
deductions as it is considered as
the normal general income of the
individual.
2. whether the
payment given by
Mr Litt to Ms
Donna will
constitute an
assessable income?
Division 30 of the Income Tax Assessment Act
of 1997, is the one which states provisions
regarding the income acquired by the way of gifts
and other contributions. The income acquired by
the gifts generally are not subjected to the tax
deductions.
The money received by Ms.
Donna is considered as a friendly
gesture which resulted out of love
gesture. Thus the money acquired
by her will not be treated as her
regular income rather it will be
As governed by the said
divisions Ms Donna is also not
subjected to the payment of taxes
on the income which he acquired
from Mr Litt.

treated as the gift.
3. whether there
lies any tax
obligation on the
part of Rachel and
Mr Litt with
respect to the car?
As per division 28 of the Income Tax Assessment
Act of 1997, When an employee uses a car
exclusively in the performance of official duties,
all of the amount spent on fuel, car maintenance
and driver’s salary is fully tax-exempt. This
happens irrespective of who owns the car, i.e. the
employer or employee.
Here as well the car acquired by
Rachel was for the use of carrying
out the official duties hence the
said provision stands applicable
on the situation of Rachel.
Accordingly, the Rachel is not
not subjected to pay any taxes on
the car and its related expenses.
4. Whether the
income acquired
by the way of
selling the house
taxable?
Section 25 A of the Income Tax Assessment Act
of 1996, specifies that the said provision does not
apply with respect to the sale of property that has
been acquired after the date of 20 September
1985. Whereby, because of which the income
acquired by the way of home are generally
exempted from the ambit of capital gain tax. The
Australian residents are exempted from capital
gain tax if they justify certain criteria such as the
individual has owned the house for whole time.
The other being the house has not been used for
the purpose of generating income by by the way
of carrying any business or has rented it. The last
is that the total area of the house should not be
The mentioned provision stands
applicable to the situation of the
client reason being they have
acquired the gains by the way of
selling the house. Also, Dr Litt
cannot be exempted to pay the
taxes on these grounds.
DR. Litt cannot be exempted
from the payment of taxes
because of various reasons. First
the provisions does not apply on
the house which are purchases
after the stated date. Also the Litt
fails in fulfilling the given
criteria as he rented the house for
three years and has also not lived
there for the continuous period
of time. Hence he is entitled to
pay the taxes on the amount of 2
million.

less than 2 hectares. If all these requirements are
fulfilled then one is not required to pay the capital
gain tax at the time of selling the house.
5. whether Mrs Litt
is subjected to pay
any taxes on the
inherited property?
Section 101 A of the Income Tax Act of the
country, specifies provision regarding the income
acquired by the deceased estate. If a beneficiary
is entitled to money earned by the deceased
estate, they may have tax liabilities. In Australia,
there are no inheritance or estate taxes. However,
one may be liable for taxes on the assets that they
inherit. If he sells an asset inherited from a
deceased estate, he may be subject to capital
gains tax. Any dividends or rental income from
shares or property they inherited are taxed as
usual.
Similarly, for the given scenario
as well the property acquired by
Mrs. Litt from her aunt as a part of
the inheritance is treated as per the
capital gain.
Therefore, it can be concluded
that the property acquired is
subjected to charges of taxes.
6. whether Mrs Litt
will have any tax
liabilities arising
from this in
Australia?
Interest earned on a savings account is taxed
under the heading Income from other sources.
Furthermore, Section 80TTA allows a deduction
of up to Rs 10,000 on interest income, so interest
earned above Rs 10,000 is taxable.
The stated provision will stand
applicable on the situation of Mrs.
Litt as she was acquiring interest
out of the saving account.
Thus, Mrs. Litt cannot be
exempted from the payment of
taxes on the income acquired by
the way of interest on saving
account.

REFERENCES
Allen, C. (2020). Taxation of Live Stock in Australia: A Critical Review of Tax Law and Policy. Australian Tax Review, 49(3), 209-233.
Christians, A., & van Apeldoorn, L. (2018). Taxing income where value is created. Fla. Tax Rev., 22, 1.
Cascio, E. U., & Lewis, E. G. (2019). Distributing the Green (Cards): Permanent residency and personal income taxes after the Immigration
Reform and Control Act of 1986. Journal of Public Economics, 172, 135-150.
Sincerely,
.
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Hyde & Lye Advisory
Adelaide | Sydney | Melbourne