Taxation Report: Financial Analysis, University Course

This report delves into the intricacies of taxation, providing a comprehensive analysis of key concepts and applications. It begins by outlining the principles of assessable earnings and deductible expenses, referencing relevant sections of the Income Tax Assessment Act 1997. The report then examines specific scenarios, such as the deductibility of machinery expenses and the treatment of re-assessment costs. A significant portion of the report focuses on a case study involving a banking corporation, Big Bank, and its application of GST, including input tax credit for advertising expenditures. The analysis considers the relevant tax directives and their practical implications. Finally, the report addresses the process of offsetting foreign taxation, providing step-by-step calculations and examples to illustrate the procedures. The report incorporates tables to present financial data and calculations, and it concludes with a list of cited references.

Running head: TAXATION
Taxation
University Name
Student Name
Authors’ Note

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Answer to Task 1:
Taxation directive stated under the ruling section 4-15 of Income Tax Assessment Act 1997
mentions assessable earnings is approximated by suitable deduction of acceptable
expenditure from the rateable earnings. Intrinsically, individuals giving out for paying tax are
liable to claim deductions from the computable takings (James et al. 2015). In accordance to
the ruling declared under 8-1 (1) of ITAA of 1997 explicates that a specific individual can
solicit deduction under the following mentioned purposes:
-For generation of computable earnings (McKerchar et al. 2013)
-For undertaking business activities that can sequentially generate assessable earnings
The segment for general deductions mentioned under the section 8.1 of Income Tax
Assessment Act declared during 1997 also mentions that it is not possible to carry out
deductions of incurred losses or else outgoings given the following cases:
- The losses or else outgoings of capital are of capital in characteristics
- The losses or else the outgoings are of private otherwise domestic in characteristics
- The loss is incurred in association to acquiring or producing the exempted amount of
income
- Specific provisions of the Act restricts from deduction of the same (Graetz and
Warren Jr 2014)
Detailed appraisal of the taxation regulation aids in acquiring comprehensive knowledge with
reference to the aspects mentioned below:
- Firms expending for transferring machinery can be measured for deduction only when
the machinery is utilized for generation of earning that can be assessed as mentioned
under the taxation guideline of 8-1 of ITAA (Miller and Oats 2016). Legal evidence

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produced in the case “Granite Supply Association Ltd vKitton of 190” aids in
substantiating the fact that expenses of business entities on changing the position of
plants and machineries of firms cannot be taken into account for deduction as the
expenses incurred therein are capital in trait. Additionally, the upshots of the legal
case “Smith v Westinghouse Brake Company of 1888” also helps in authentication of
the matter of deduction stated in the legal case Granite Supply Association Ltd
vKitton of 190 (Barkoczy 2017)
- Taxation decree spelt under 8-1 of regulation ITAA 1997 asserts that costs incurred
by firms for re-assessment of resources cannot be regarded as deductible
disbursement.
- Taxation diktat stated under sub-segment of 8(1) talk about types of disbursements
undertaken for official proceeds. The proceeds that sequentially can defy insolvency
of the firm can thereby be considered for deduction.
- Taxation diktat mentioned under 8-1, business expenses under by legal representative
for generation of business income can be accepted as an amount for deduction in the
assessment of tax (Pearson 2017)
Answer to Task 2:
The present case clearly states that the banking corporation Big Bank carries out its functions
in more than 50 different branches and innumerable number of call centres. The company has
its headquarters situated in a 10 storied building. Detailed evaluation of taxation ruling helps
in gaining deep insight as regards input credit of goods as well as service tax. The ruling
states that the input credit GST is necessarily allowed only in case if the acquisition is carried
out by the business concern and the apt article is connected to this particular sort of business
matter are suitably preserved. In view of the rulings of GST 1999, it can be emphasized that
the banking corporation that functions for generation of superior income level have the

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potential to get input credit (Pearce and Pinto 2015). Mainly, this helps the banking
corporation Big Bank to disburse the requisite amount for GST that orient around the
purchase of company’s resources.
Issue that can be detected from the given case:
Analytical evaluation of the given business case on Big Bank helps divulges the fact that the
company is catalogued for application of GST. Case study asserts that the banking
corporation spend an amount of $1650000 that is an amount including the GST amount on
specific expenditure on company’s advertisement program. Analysis of the case also helps in
comprehending the fact that banking corporation Big Bank also offers to assure whether the
expenditure amount can be officially recognized as input credit as because the spending
amount includes GST (Parker 2015).
Tax Directive that can be taken into consideration:
Detailed analysis of the taxation diktat clearly mentioned in the GST (2nd segment) affirmed
during 1999 assists in understanding that business functionalities can be allowed to take input
tax credit of particularly GST on different categories of expenditures (Morgan et al. 2013).
These are necessarily spent by banking corporation all through the normal business course.
However, in this case it is to be said that expenditure is in effect inclusive of goods and
service tax.
Particular application of the taxation diktat:
The provided case study talks about the dedicated financial services delivered by the banking
corporation Big Bank. The case study also illustrates about the background of the operations
of the firm and the existing along with the new services that the company provides. As per
the illustration of case study focusing on the operations of the firm, the Big Bank initiated the

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process of delivering insurance schemes, home content in their marketplace together with
loans and deposit provision to diverse service to the clientele. Management of the banking
corporation Big Bank also dished out an amount for presenting the advertisements aimed at
promoting the financial service of home. Nonetheless, out of this, around 2% of the whole
revenue of the banking corporation is generated. Of its own accord, the amount that remains
left is equal to the amount $1100000. Necessarily this amount is assigned for advertising that
aimed at sanctioning diverse financial services as well as specialised financial products of
Big Bank and this takes account of goods and service tax (GST).
Consequently, it can be interpreted that the banking corporation Big Bank has expended
nearly $1100000 for generation of awareness regarding offerings of the bank among the
targeted clientele for acquisition of the tax input credit. On the contrary, the overall amount
that equals $550000 cannot be sanctioned to gain tax input credit. This is so because
approximately 2% of the entire expenditure of the bank does not enhance generation of firm’s
earnings (Milton 2013).
Table 1: Reflecting Input Tax Credit
(Source: As is created by the author)

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Answer to Task 3:
Taxation guideline otherwise the pronouncement asserted under the rule sub-segment 717 A
helps in understanding specific regulations related to process of offsetting/balancing the tax
on earnings (Krever 2013). Particularly, the process of calculation step by step is hereby
presented herein below:
Table 2: Reflecting the Income Tax Paid
(Source: As is presented by the author)

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Table 3: Reflecting Income Tax Paid
(Source: As is created by the author)
Table 4: Reflecting Income Tax Paid
(Source: As is created by the author)
In essence, procedure of balancing otherwise making up for foreign taxation can be properly
specified by proper elimination/ deduction of tax payment by all the payers on particular
earnings under primary option from tax owed from the second option (Milton 2013). As a
result, the overall frame can be figured out to be $(11794.18-6821.68)=$(4972.50). Even so,
the process of balancing particularly foreign taxation can be considered to be excessive of the
entire taxable amount. Therefore, as a consequence, the specific limit for balancing the
foreign tax essentially is at $4400.

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Answer to Task 4:

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References
Barkoczy, S., 2017. Core Tax Legislation and Study Guide. OUP Catalogue.
Graetz, M.J. and Warren Jr, A.C., 2014. Unlocking Business Tax Reform. Tax Notes, 145,
pp.707-712.
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.
Krever, R. 2013. Australian taxation law cases 2013. Pyrmont, N.S.W.: Thomson Reuters.
McKerchar, M., Bloomquist, K. and Pope, J., 2013. Indicators of tax morale: an exploratory
study. eJournal of Tax Research, 11(1), p.5.
Miller, A. and Oats, L., 2016. Principles of international taxation. Bloomsbury Publishing.
Milton, 2013. The taxpayers' guide 2013 & 2014. Qld.: Wrightbooks.
Morgan, A., Mortimer, C. and Pinto, D. 2013. A practical introduction to Australian taxation
law. North Ryde [N.S.W.]: CCH Australia.
Parker, M., 2015. Division 7A and winding up structures. Taxation in Australia, 50(6), p.312.
Pearce, P., and Pinto, D. 2015. An evaluation of the case for a congestion tax in
Australia. The Tax Specialist, 18(4), 146-153.
Pearson, G. 2017. Further challenges for Australian consumer law. In Consumer Law and
Socioeconomic Development (pp. 287-305). Springer, Cham.