StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Australian Taxation Law - Assignment Example

Cite this document
Summary
In the following paper “Australian Taxation Law” the author discusses the expenses incurred in the manufacturing of the tennis racquet which is a part of the deductible allowance as it is an expense incurred in generating an assessable income-S8-1…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.2% of users find it useful
Australian Taxation Law
Read Text Preview

Extract of sample "Australian Taxation Law"

Finance and Accounting Quiz C Taxable income Taxable income is the total assessable income less deductions Taxable income = Assessable income - deductions Assessable income = Ordinary income + Statutory income Paper 1 Phillip’s total taxable income Phillip’s income $ $ Rent 55,000 5,000 60,000 Tennis racquet sales 500,000 Closing stock 100,000 Less Opening stock (56,000) 44,000 Total assessable income 604,000 Allowable deductions $ $ Repairs Air conditioner 2,000 Loan interest 5,000 Roof 2,000 Light fitting 500 9,500 Expenses Frames 150,000 Strings 100,000 Donations 10,000 Labor 75,000 Factory rent 30,000 Advertising 15,000 Wages 80,000 460,000 Total allowable deductions 469,500 Total taxable income for Philip Total assessable income 604,000 Total allowable deductions (469,500) Total taxable income $ 134,500 Phillip’s total assessable income (division 6) comprises of the rent he receives from his rental property, plus the earnings received from sales made at the tennis racquet business. The $5,000 received after the trading period qualify as income for the period ended 30 June 2010. This is in accordance with accruals accounting method; income is recognized when it is earned. All this is in accordance and requirements of section 6-5. The trading stock for Philip’s business has to be evaluated according to the general rule of accounting for stock-S70-35(1). The difference between the opening and closing stock is added to assessable income because the closing stock exceeds opening stock-S70-35(2). The allowable deductions (division 8) include the $2,000 which was an expense from the replacement of the air conditioner-S25-10. The amount is minimized to the cost that Phillip incurred since he resold the air conditioning system which generated back income-S6-5. W Thomas & co v FCT? bought a building and did not know that the building had damage when thy bought it – the courts held that the ATO will treat expenditure that remedies defects, damage or deterioration to property as capital if the defect, damage or deterioration existed at the time of acquisition of the property, and did not arise from the operations of the person who incurs the expenditure. Note – the mere fact that the purchaser did not know that initial repairs were needed at the time of purchase is irrelevant. His interest accrued on a loan that was used in renovating the rental houses resulting to generation of assessable income-S25-25(1). The $500 he used for replacing the light bulb is also a deductable income since it falls under repairs and replacement-S25-10. Fine paid by Phillip to the local does not qualify as a deduction as per the S26-5 stating that penalties are not deductable amounts. The expenses incurred in manufacturing of the tennis racquet also, are a part of the deductable allowance as it is an expense incurred in generating an assessable income-S8-1. Under Division 30, donations are deductible allowances as long as they are voluntary and, no collateral claimed. This can be related to the charity donation. However, the gifts he presented to family and the 5 racquets he took for personal use do not qualify as deductable allowance-S26-54. Paper 2 Joan’s total taxable income Joan’s income $ $ Salary 375,000 Home ware magazine 24,000 13,500 537,500 Agreement 230,000 Payment for damages through accident 360,000 590,000 Total assessable income 1,127,500 Allowable deductions $ $ Pain and suffering 10,000 University Union fees 650 Text books 750 Photocopying and writing aid 350 Travel 450 2,200 Total allowable deductions 12,200 Joan’s total taxable income Assessable income 1,127,500 Allowable deductions 12,200 Total taxable income 1,115,300 Joan’s total taxable income amounts to $1,000,300. This is her total assessable income less allowable deductions according to taxation law. Her assessable income as per division 6 is total salary earned which is $375,000 instead of $500,000 as she resigned in March leaving her with on nine months for the year ended 30 June 2010. Earnings she received from supplying the Home ware magazine. This is the total $24,000 for the first 200 customers who subscribed for the period ending 30 June 2010. The other $13,500 is half of what the 225 customers subscribed for which extends into half of the next trading year. Arthur Murry Pty Ltd Case? You do not have to bring income into account until the service is provided (provision of future goods and services) e.g. magazine subscription only account for half if halfway through providing the subscription. Part of Joan’s income also includes compensation received from an agreement that saw her not work for a week which translates to loss of wages (section 6-5). The full amount is included in assessable income as the loss was incurred in the year ended 30 June 2010, (Merrill Lynch International (Australia) Ltd & Ors v FC of T.). The payments made to Joan as compensation except for medical expenses qualify as assessable income under division 6. Joan’s allowable deductions include self education expenses-S8-1. However, not all expenses are deductable. These include HECS as stated in-S26-20, and the first $250 of the self education expenses; this has been deducted from the Union fees leaving only $650 as deductable income. All the other expenses for self education are deductable except the expense of travel from work to home as it does not relate to self education. It also does not qualify for work travel expenses in-S25-100. Finn? Architect allowed deductions for a 1 year trip to study architecture – Note that TP kept notes, photographs, sketches and reports AND TPs employer encouraged and contributed to the cost of the trip. Work Cited: Woellner, R., Barkoczy, S., Murphy, S. & Evans C. Australian Taxation Law. 2009-19th edition. CCH Australia Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Taxation Law Accounting Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1441027-taxation-law
(Taxation Law Accounting Essay Example | Topics and Well Written Essays - 1000 Words)
https://studentshare.org/finance-accounting/1441027-taxation-law.
“Taxation Law Accounting Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/finance-accounting/1441027-taxation-law.
  • Cited: 0 times

CHECK THESE SAMPLES OF Australian Taxation Law

Taxation Law: Set of Legislations

According to the Australian Taxation Law, the valued income tax influences the amount of tax that would be levied on any income earner.... An essay "taxation law: Set of Legislations" outlines that most of the countries fund their operations from revenues collected through taxation.... nbsp; The following discourse is on australian taxation laws.... Ordinary incomes are defined by the common law as sources of income either from salary, interest or rent....
8 Pages (2000 words) Essay

SE Machinery Pty Ltd (SEM)

The Australian Taxation Law under Act No.... hellip; In such a transaction wherein actual cash was received and SEM chose to recognize the cash inflow as capital, the tax law provides that this be considered as ordinary income.... In such a transaction wherein actual cash was received and SEM chose to recognize the cash inflow as capital, the tax law provides that this be considered as ordinary income.... , states that australian residents' ordinary income are assessed whether derived from within Australia When the customer contributed $500,000 as capital contribution to SEM in May 2011, it appeared in the books as part of the Equity or Capital Account and reported as part of the gross profit by yearend which ended June 2012....
8 Pages (2000 words) Term Paper

The Analysis of Taxation v Dixon and Scott v Federal Commissioner for Taxation Cases

taxation law TUTOR MODULE DATE Abstract This paper explains why the payment to the taxpayer in FCT v Dixon (1952) 86 CLR 540 was assessable income but the payment in Scott v FCT (1966) 117 CLR 514 was not.... hellip; Furthermore, it provides cases and other sources of law or information that may apply while taking the given situation in consideration.... Keywords: Assessable income, tax position PART A The 2 cases concerned in the current situation are Federal Commissioner for taxation v Dixon and Scott v Federal Commissioner for taxation....
7 Pages (1750 words) Essay

Issues Regarding International Taxation

Explain the reason and the rationale of this concept requiring to be addressed for australian taxation purposes.... This essay "Issues Regarding International taxation" claims that in Australia, companies, and individuals can be taxable persons.... 3) Advise what taxation consideration needs to be given if the purchase from the Iberican operations by an Australian company were not for arms' length prices.... That is what we call double taxation....
6 Pages (1500 words) Essay

The Taxation Office

australian taxation Office also has predefined set of rules for accessing and gathering information that sometimes becomes an essential factor in detecting fraud and eradicating tax evasions.... hellip; In this paper, the rights and powers of australian taxation Office has been compared with that of two countries, i-e; United States and Germany the similarities and differences between them has been analysed. The main function of Australian Tax Office (ATO) is to administer legislation imposing taxes and excise (other than customs duty)....
21 Pages (5250 words) Essay

Principles of Taxation Laws

This means that her income from outside Australia is not taxable under Australian Taxation Law.... A letter from Medicare is not sufficient” (australian taxation Office)....  This essay discusses principles of taxation laws.... For example, however, for taxation purposes, Australia's taxation laws ignore citizenship unlike that of the United States.... Hence, Catherine's incomes derived or sourced in Australia are taxed according to Australia's taxation laws....
10 Pages (2500 words) Essay

What are the Opportunities for the Establishment of Small Businesses in Australia

hellip; The current position of small firms in the australian market can be characterized as satisfactory; however, the challenges that these firms face could cause delays to the realization of their plans and set limits to their potentials for further growth.... The following measures should be developed by australian policymakers.... It has been proved that small businesses have a key role in the australian market; despite their value for the development of national economy small businesses in Australia are not given the necessary support – at least compared to medium and large firms operating across the country....
8 Pages (2000 words) Case Study

The Payment to the Taxpayer in FCT versus Dixon

This work called "taxation law" describes why the payment to the taxpayer in FCT v Dixon (1952) 86 CLR 540 was assessable income but the payment in Scott v FCT (1966) 117 CLR 514 was not.... The author outlines cases and other sources of law or information that may apply while taking the given situation into consideration.... hellip; The 2 cases concerned in the current situation are Federal Commissioner for taxation v Dixon and Scott v Federal Commissioner for taxation....
7 Pages (1750 words) Report
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us