Taxation Law Assignment

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1. Capital event in D (receipt of 60,000) and outlaying of pool costs is more likely to be occurred since there is a contractual obligation, therefore, the cost proceeds and cost base should be identified with regards to legislation or cases.
The construction of the swimming pool has had a series of costs and the question is whether the costs of the pool can be put against the proceeds to reduce the tax liability.


However, this section also puts a discretionary element into the ATO's or the Judge's determination because the expenditure has to be necessary to the actual capital gain, which brings into question the validity of the expenses that are preparatory in nature or for other purposes rather than the actual construction. The key point that this judgment made is that the determination of this and subsequent cases is in reference to all circumstances, which includes an examination of the taxpayer's purpose or intention in incurring the expenditure. If it is necessary to apportion a loss or outgoing, the appropriate apportionment will depend on the facts of each case. The method taken must be fair and reasonable as per the case of Ronipibon Tin NL v Tongkah Compound NL v FC of T [1949] (78 CLR 47). The expenditure to be deductible if it necessarily incurred for the particular income producing purpose in question, which can include limiting to an the income for just a particular year as per the case of Fletcher v Federal Commissioner of Taxation [1991] (173 CLR 1). ...
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