Taxation Theory, Practice & Law: GST and CGT Analysis Report

This report analyzes two case studies related to Australian taxation law. The first case examines the GST implications for a property development company, City Sky Co., focusing on input tax credit entitlements related to legal services provided by Maurice Blackburn. The second case explores the calculation of Capital Gains Tax (CGT) for an individual, Emma, highlighting issues related to indexation and the treatment of land and asset sales. The report discusses relevant legislation, including the GST Act and the Income Tax Assessment Act 1997, and provides practical advice on complying with tax obligations, including maintaining proper records and understanding the time limits for claiming tax returns. The analysis covers the importance of registering for GST, the calculation of GST on legal services, and the impact of indexation on CGT calculations. The report also addresses the deductibility of expenses and the importance of seeking professional legal advice to ensure compliance and minimize tax liabilities. It offers an overview of the CGT, its regulations and the pitfalls of non-compliance, including penalties. It provides a detailed analysis of the GST and CGT and offers insights into how to approach them.

Running Head: TAXATION THEORY PRACTICE AND LAW
Taxation Theory Practice and Law
Name of the Student
Name of the University
Date

TAXATION THEORY PRACTICE AND LAW
Table of Contents
Explanation of Question 1:..............................................................................................................3
Explanation of Question 2:..............................................................................................................7
Reference list.................................................................................................................................10

TAXATION THEORY PRACTICE AND LAW
Explanation of Question 1:
The GST practices of a company named City Sky has been considered in this case. The case
study depicts the factors related to GST obligations and the practices of calculating the GST for
the company.
Inspection of the case:
The company City Sky has planned towards building up a fifteen-floored building for sale. They
have appointed a professional lawyer named Maurice Blackburn for handling the legal dealings
of this project. As a charge of providing the legal service to the company, he has paid an amount
of $33000. Maurice Blackburn will provide legal guidance to the company and will help in the
approval of the project. City Sky mainly handles property management and solutions for
brokerage. The company build, resell, acquire properties and known as the innovative property
dealer in Brisbane city.
Apart from that, the company fulfills the requirements of both the small property owner and the
large property owner. The dealings related with a property require adequate legal services that
have been discussed in this case along with the legal issues related to it. These project portraits
the adoption of right measuring tools for calculating the GST. The utilization of these methods
will help the company to calculate the GST amount related to the project cost (Altmann, 2015).
The legal service cost of the project is 30000 dollars that means $33000*100/110. The GST
amount is $3000, which means 10% on the service amount of $30000.
The calculation after adding the GST amount, legal service cost of $30000 ($33000*100/110) +
GST amount of $3000 ($30000*10%).
It is important to follow all the rules regarding GST, as it is helpful in acquiring the ITC or Input
Tax Credit for the company. The companies need to register themselves under the GST act,
which will help them to get the GST number and the facilities regarding GST while selling
anything (Benowitz, 2017). Along with the payment of Goods and Services Tax, the company

TAXATION THEORY PRACTICE AND LAW
should pay the input credit tax in case of the acceptance of goods and services by the company.
As per the rules of Federal Authorities, the company should pay taxes after obtaining anything
from the clients or customers. There are certain conditions that are required to claim the ITC
(Input Tax Credit).
1. The statement voucher of goods and services:
As per the tax rules, every tax payment receipt is important because it provides proper validation
of transactions. It keeps the transactions assured for future purpose and helps to maintain the
record of every transaction including buying and selling. The company that provides goods and
services should keep their tax invoices secured for their upcoming days (Briglia and Butler,
2018). The tax rules can be implemented in both the case of wholesale and retail transaction.
Apart from that, the tax receipt provides details such as the transaction place, time and
transaction amount. The transaction invoice is necessary, as it works as a legal document and the
only proof of such transaction. Therefore, the statement receipt of each transaction is important
for future purpose.
2. The time limit for claiming tax return:
There is a deadline for claiming the tax returns of each transaction. The tax receipt of a
transaction has been used to claim the return. As the time span of claiming the tax return is
limited, hence sometimes it is difficult to get those returns (Bruce, 2017). In other cases, the time
limit that has been provided by the authority is enough to get the tax return and the overall
process is simple. The total procedure of getting tax return is not difficult but people think that it
is tough to get the return easily.
There are two important factors that taken into consideration in completion of the process. The
first factor is the fixed period of it and the second one is the authenticity of the tax receipt.
Hence, the Australian Tax Department has formed rules regarding the time span and the other
factors related to the tax return (Cannon and Kendig, 2018). Correspondingly, the client in this
case would fail to get the tax returns if the deadline of tax claim is crossed. Sometime the tax

TAXATION THEORY PRACTICE AND LAW
assistants are not able to help their client, as they are busy with their works. The government
should inspect the matter as the time limit of claiming tax benefit is the common problem of
most taxpayers in the Australian scenario.
3. The acquisition of tax invoice:
The tax receipt of every transaction plays a major role in the process of tax payment and it has
been considered as an important document for future references. In this case study, Maurice
Blackburn has providing legal service to the company named City Sky. He is a professional
lawyer and handling the legal judiciary of the project established by City Sky. The company
should focus more on receiving the tax vouchers as it helps to get the tax returns and useful for
upcoming days. Most of the clients are forced to pay the tax again as they does not preserve the
tax receipt (Dal Pont, 2015). Similarly, the companies need to record the tax receipt of every
transaction, as it is helpful to get the tax return.
Apart from getting the tax returns, the maintenance of tax invoice helps to measure the upcoming
tax amount and tax disbursements. The act of ITTA 1997 describes that the tax receipt is
important to get the tax benefits. However, the tax department of Australia maintains every tax
payment, but the tax invoice is considered as a proof for completion of each tax payment.
4. The registration of any person or a company:
Both the person and the company should be registered under GST act while dealing with goods
and services. The registration is important in both the cases of buying and selling as each
transaction includes certain amount of tax (Deb, 2018). Similarly, the concerned lawyer and the
company in this case should follow the legislation. City Sky and its lawyer both are registered
under this act. The lawyer has earned an amount of $30000 per year for providing legal service
to the company named City Sky. As per the rules of GST, if the annual income of any person is
more than $75000 then the person needs to be registered under this act. The lawyer in this case
has followed the statue of GST and this will help the company to gain the input tax credit on the
amount of GST.

TAXATION THEORY PRACTICE AND LAW
Conclusion:
At last, it can be said that, the company named City Sky has gained ITC or input tax credit from
the GST incurred. It was possible due to the registration of both the parties and they have
followed the statues of GST. Therefore, the case portraits that proper obligations help to achieve
the input tax credit on GST amount. In this case study, both the party has followed the statues of
GST act and this assists them to complete the sales procedure successfully.

TAXATION THEORY PRACTICE AND LAW
Explanation of Question 2:
Indexation has been considered as an important factor while calculating the CGT or Capital
Gains Tax (Deeter-Schmelz, 2015). The concerned person of this case is Emma, who has
suffered to measure the CGT due to the ignorance of indexation. The main purpose of the study
is to discuss about the various scenario of CGT and the methods of removing the issues related to
it. In the present case, the CGT calculation of fiscal year 2015 has taken into consideration to
analyze the problem of Emma. The concerned person in this case got a discount of 50 percent in
the procedure of CGT. Due to the Indexation of CGT, the decision related to it varies from the
CGT itself.
According to section 104-10 of Assessment Act 1997, it is important to distinguish the gap
between the asset cost and the disposable asset for calculating the capital gains and losses of it.
As per the rules of ITAA, the capital losses and gains in the long run and short run can be
dispatched from each other (Spiro, 2018). The assesse of this case (Emma) should pay the capital
gains tax in the same fiscal year of the dealing. As per the rules of ITAA, assets procured before
or in the year 1985 have been considered in the cost structure of January 1985.
Land:
In the present case, the incurred property possesses some illegal expenses that break the rules of
ITTA of 1997. The total expenses including the litigation and council expenses are 5000 and
22000 respectively that are not permissible according to the law. These expenses costs are
further adjusted with the rental income of each period of a year. A periodic amount of $32000
has deducted from the yearly income. As per the law, the sales related expenses should be
deducted from the overall sales income. The sales related incomes are auction charges,
processing fees and brokerage amount etc. Apart from those expenses, the index cost of each sale
need to be deducted from the total sales amount (Marshall, 2018). This legal process helps the
company to pay the accurate taxable amount.

TAXATION THEORY PRACTICE AND LAW
Land:
In the present case, the landowner has sold the land at $1000000. Hence, the dealing of the land
influences the long-term capital while transferring to other parties. The long term process of land
selling can be affected by capital losses. Most of the time, this process has been applied in the
case of land selling that can affect the customers (Tran-Nam, 2019). The statues constructed by
ATO should be considered to remove the problems in such cases. The legal advisors can
eliminate the problem of this case so, such cases need proper guidance of the legal experts.
Emma, the concerned person of this case, has faced an issue regarding the sale of an asset beside
the first problem.
The client of this case has brought a piano in the year of 2000 at $80000, which she sold in
$30000. The client must follow the laws as it is important to follow the legal procedure while
selling an asset. Maintain the legal process while dealing with the asset will help the client to
overcome the sales process easily. Therefore, the client needs to involve the tax authorities while
dealing with the property and the asset as it will help her to get discount on the taxable amount.
In the present case, Emma has not involved the government in her dealing and also not clarified
about the capital gains and losses to the concerned authority. Hence, she faced problems due to
not involving the tax authorities in her sales procedures.
Conclusion:
After analyzing the present case, it can be said that the client named Emma has faced problems
while dealing the property for selling purpose. She did not followed the rules of ITAA, as a
result she faced problems while calculating the CGT and the tax payment system has also
affected. Emma should follow the legislations of Assessment Act to eliminate the problems
regarding capital losses and gains. Many clauses of ITTA 1997 can be used to determine the
issues regarding purchasing and selling assets. It is also helpful in detecting the problems of
gains and losses of the capital. One of the clauses explains that, if the situation faced by the client
is been described to the tax authorities then she can get the discount on tax payment. Apart from
getting the discount, it also helps to get accurate capital gain according the asset deal. The

TAXATION THEORY PRACTICE AND LAW
Australian Tax Office provides these benefits for the citizens. These rules and regulations are
proved as beneficial for the clients.

TAXATION THEORY PRACTICE AND LAW
Reference list
Altmann, E., 2015. Policy implications for governing Australia’s apartment communities:
Tenants, committees of management and strata managers. Housing in 21st Century Australia:
People, Practices and Policies, pp.121-136.
Benowitz, J.W., 2017. Tax Cuts and Jobs Act Reverses Short Lived Grecian Magnesite Mining
Holding: Will the US Depart from Global Norms in Tax Treaty Interpretation. Loy. U. Chi. Int'l
L. Rev., 15, p.171.
Briglia, P. and Butler, D., 2018. New CGT withholding regime: Impact on SMSFs. Taxation in
Australia, 53(3), p.146.
Bruce, M., 2017. Multinational Anti-Avoidance Law (MAAL) and Pt IVA—a critical analysis of
the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 (Cth) and
Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017 (Cth) and
comparison with general anti-avoidance provisions. Australian Tax Law Bulletin, July, pp.2018-
70.
Cannon, L. and Kendig, H., 2018. ‘Millennials’: Perceived generational opportunities and
intergenerational conflict in Australia. Australasian Journal on Ageing, 37(4), pp.E127-E132.
Dal Pont, G., 2015. Ethical conflicts and the tax practitioner. Revenue Law Journal, 24(1),
p.6744.
Deb, R., 2018. Tax Reforms and GST: A Systematic Literature Review. Journal of Commerce
and Accounting Research, 7(1), p.40.
Deeter-Schmelz, D.R., 2015. Personal Selling and Sales Management Abstracts. Journal of
Personal Selling & Sales Management, 35(4), pp.346-357.
Marshall, W.E., 2018. Understanding international road safety disparities: Why is Australia so
much safer than the United States?. Accident Analysis & Prevention, 111, pp.251-265.
Spiro, P.S., 2018. Tax policy and the underground economy. In Size, causes and consequences of
the underground economy (pp. 179-201).
Tran-Nam, B., 2019. The Goods and Services Tax (GST): The public value of a contested
reform. Successful Public Policy, p.235.