1. The inspector general for the taxation is an independent officer for the statutory office who recognizes the concerns related to the law management. Generally, they are concerned regarding the management issues that are not in favour for managing the administration of good tax. The inspector general provides an independent suggestion to the government officials.
2. The following legislation governs the authority of the taxation authority general:
3. Taxation ruling TR 2016/3 portrays regarding the commissioner who is concerned about the deductions of expenses that takes place in the process of adapting, maintaining, development and acquisition of the the website to be used while performing the business activities along with the expenses that are related to the name of the domain. The ruling depicts that at the time of performing the business activities associated with the taxpayer will incur the expenditure that are linked with the websites that are used during procedures of the business.
4. Division 328 and division 40 contains the definitions associated with the act contains the definitions of Income Tax Assessment Act 1936.
5. Based on the definition of the taxation ruling under 2005/13, the deductibility of gifts are discussed in Division 30 of Income tax assessment Act 1997.
6. Section 15-45 under the Income Tax Assessment Act 1997 covers the deductions related to the loss that may arise due to misappropriation or theft that are caused by the employees and the taxpayer is the sufferer (Binning & Young, 2015).
7. Based on the definition of section 25-55 and 8-1 under the Income Tax Assessment Act 1997, deduction is allowed for the association membership. When an individual pays for the association membership but not satisfy the requirements as per section 8-1 under the Income tax assessment act 1997, then the individual or the taxpayer can claim a deduction amounting to maximum amount of $42 in an income year in which the payment is made for the association membership.
8. When payment is received owing to the compulsory destruction or acquisition or any loss that are related to the GST asset, can cause the CGT event. It shall be noted that the amount received on account of loss owing to the trading stock will be accounted as the form of capital proceeds that will arise from the asset disposal.
9. The taxpayer with $30,000 taxable income during 2016/17 will have to pay the tax at the rate of 19c till $18,200 and over $18,200 at the rate of $1.
10. As per the taxation rule, the income year is portrayed as the year in which the taxpayer earns the income. For instance, if the financial year for the taxpayer is considered as from 1st April 2016 to 31st March 2017, then this period will b e considered as his year of income. Moreover the assessment year for the year in which the income is earned will be considered as from 1st April 2017 to 31st March 2018 (Rimmer, Smith & Wende, 2014).
a. Under Section 4-1 of the income tax act 1997, an organization, entity or person will be under obligation for payment of tax based on the taxable income on the taxable income that are earned by them during the previous year. As per the regulation of Income tax assessment act (ITTA) 1997, the taxable income is calculated through deduction of allowable expenses from the taxable income. Assessable income of the taxpayer is classified as the statutory income and ordinary income. As per the section 6-5 of the ITTA 1997, the ordinary income is the the income that is earned through ordinary conception and as per the section 6-10 of the IITA 1997, the statutory income is the income that do not fall under the category of ordinary income (Fenech, Fang & Brown, 2016).
As per section 6-10 (4) and section 6-5 (2) of the ITTA 1997, the income earned through all the sources are considered as the part of income. Apart from this, if an individual, who is not the resident of Australia, if earns any income from Australia will also be under obligation to pay tax. Further, as per the taxation rule 98/17, Para 9, the residential status of the taxpayer also plays plays an important role in determination of the tax liability. As per section 995-1 of ITTA 1936, the person who lives in Australia is considered as the resident of Australia (James, 2016).
As per Taxation rulings 98/17, Para 11, for determination of the residential status of an individual residing in Australia, he must be confirmed with the residential concept. As per Para 15 of Taxation Rulings 98/17, the persons living in Australia on permanent basis are considered as the residents under the ordinary concept of resident. From the given case study, it is identified that Julia came to Australia on 7th January 2017 to reside there permanently. Therefore, under the ordinary concept of resident, she will be considered as the Australian resident under the taxation rules and the income derived by her from all the sources will be taken into account (Burnett, Taylor & Wong, 2015).
Further, as per Section 6-5 of ITAA 1997, the earning generated from the food picking occupation is based on the stay of two-weeks and shall be considered as assessable income under the ordinary income. However, the amount paid by her amounted to $500,000 for various items will not be considered under the assessment of ordinary income (Eccleston & Warren, 2015).
It is mentioned in Section 40-30 of the ITTA 1997 that the assets which are having the remaining useful life and there is an expectation of falling of value if the asset then those assets are considered as the depreciating assets. The amount of depreciation can be calculated based on the written-down value method or the straight-line method. In the given case study the written-down value method is used for the charging the depreciation. The depreciation is calculated as per Section 8-1 of the ITTA 1997 s follows:
| Statement showing Depreciation amount | ||||
| Assets | Base Value | Days held | Effective life |
Depreciation Amount |
| Office Furniture | $10,000.00 | 150 | 13.33 | $616.59 |
| Office equipment | $20,000.00 | 150 | 5 | $3,287.67 |
| Computer System | $15,000.00 | 150 | 4 | $3,082.19 |
| Shop fittingg | $45,000.00 | 150 | 15 | $2,465.75 |
| Floor covering | $15,000.00 | 150 | 5 | $2,465.75 |
| Cash register | $25,000.00 | 150 | 5 | $4,109.59 |
| Refregerator | $20,000.00 | 150 | 10 | $1,643.84 |
| Indoor plants | $25,000.00 | 150 | 13.33 | $1,541.48 |
| Sundry plant and equipment | $38,500.00 | 150 | 13.33 | $2,373.88 |
| Furniture and Fittings | $25,000.00 | 150 | 13.33 | $1,541.48 |
| Stove | $1,500.00 | 150 | 20 | $61.64 |
| Refrigerator | $1,200.00 | 150 | 13.33 | $73.99 |
| Hot water | $1,300.00 | 150 | 20 | $53.42 |
| Total | $23,317.29 |
As per section 6-5 of ITTA 1997, gross sales are part of ordinary income and shall be considered while calculating the assessable income. Based on the Section 8-1 of the ITTA 1997 expenses incurred for obtaining income are allowed as deduction. Therefore, expenses and salaries shall be allowed as normal deductions. Further, as per section 25-25 under the ITTA 1997 expenses of borrowings must be ducted up to a specific amount that are utilised for income generation (Robin & Barkoczy Woellner 2016).
Apart from the above mentioned costs, the other costs shall be treated as follows:
Considering the above treatment of income and expenses of Julia, her taxable income are stated as below:
| Julia | ||
| Statement showing Taxable income | ||
| Particulars | Reference | Amount |
| Income from fruit picking | Section 6-5 of ITAA 97 | $1,000.00 |
| Gross sales | Section 6-5 of ITAA 97 | $450,000.00 |
|
Assessable Income |
$451,000.00 | |
|
Allowable deductions |
||
| Managers slaray | Section 8-1 of ITAA 97 | $45,000.00 |
| Staff wages | Section 8-1 of ITAA 97 | $8,000.00 |
| Borrowing expenses | Section 25-25 of ITAA 97 | $2,500.00 |
| Operatind expenes | Section 8-1 of ITAA 97 | $2,000.00 |
| vehicle expenses | Section 8-1 of ITAA 97 | $2,000.00 |
| conference | Section 8-1 of ITAA 97 | $4,000.00 |
| Stock utilised | Section 8-1 of ITAA 97, Section 70-45 of ITAA 97 | $62,000.00 |
| Air fare | Section 8-1 of ITAA 97 | $933.33 |
| Accomodation | Section 8-1 of ITAA 97 | $1,400.00 |
| Car expenses | section 28-25 of ITAA 97 | $2,640.00 |
| Bad debt | Section 25-35 of the ITAA 97 | $8,000.00 |
| Total deduction | $138,473.33 | |
|
Taxable Income |
$312,526.67 |
| Statement showinng Tax Payable | |
| Particulars | Amount |
| Taxable Income | $312,526.67 |
| Medicare Levy | $6,250.53 |
| Total tax payable | $318,777.20 |
Reference
Binning, C., & Young, M. (2015). Talking to the taxman about nature conservation_Proposals for the introduction of tax incentives for the protection of high conservation value native vegetation.
Burnett, C., Taylor, C. J., & Wong, J. (2015). Qualification of Taxable Entities and Treaty Protection: National Report for Australia.
Eccleston, R., & Warren, N. (2015). The devil is in the detail: the distributional consequences of personal income tax sharing in the Australian federation.
Fenech, J. P., Fang, V., & Brown, R. (2016). How Accurately Can Convertibles be Classified as Debt or Equity for Tax Purposes? Evidence from Australia. Review of Law & Economics, 12(1), 153-164.
James, K. (2016). The Australian Taxation Office perspective on work-related travel expense deductions for academics. International Journal of Critical Accounting, 8(5-6), 345-362.
McLaren, J. (2014). A uniform land tax in Australia: what is the potential for this to be a reality post the Henry Tax Review. Austl. Tax F., 29, 43.
Rimmer, X., Smith, J., & Wende, S. (2014). The incidence of company tax in Australia. Economic Round-up, (1), 33.
Robin & Barkoczy Woellner (Stephen & Murphy, Shirley Et Al). (2016). Australian Taxation Law 2016. Oxford University Press.
Stuhmcke, A. (2016). Australian Ombudsmen: A Call to Take Care. Fed. L. Rev., 44, 531.
Taylor, G., & Richardson, G. (2013). The determinants of thinly capitalized tax avoidance structures: Evidence from Australian firms. Journal of International Accounting, Auditing and Taxation, 22(1), 12-25.
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