Answer to question 1:
The Australian taxation office defines that an individual might receive amounts that are not subjected to tax. Therefore, the amount from gift are not included as the part of the taxable income. According to Australian taxation office a gift that is a mere gift does not possess the character of income. As evident in the current situation of Susan received a redeemable gift voucher of $300 with Jetstar for any flights.
As held in “Scott v Federal Commissioner of Taxation (1966)” a solicitor receiving a 10,000-pound gift from the wife of long standing client out of deceased’s estate will not be held as income. An individual receiving an unsolicited gift does become the part of income for the recipient simply because goodwill was inspired by the generosity. Similarly, in the case of Susan the receipt of redeemable voucher constitutes a mere gift and cannot be assessed as income.
Answer to question 2:
Answer to Question 3:
An individual is required to include in their tax return the entire amount of rent or any other form of rental income derived from the rental property when an individual rent out their property. As evident in the current situation of Donuts of Melbourne, with the expansion of business Donuts of Melbourne rented out a shop to Donuts of Sydney and derived rental income of $50,000. “Section 6-5 of the ITAA 1997” defines that periodic receipts would be considered assessable. As held in the case of “Dixon v Federal Commissioner of Taxation (1952)” the periodic receipts would be considered assessable under the income as ordinary concepts. Similarly, in the case of Donuts of Melbourne the receipt of rent constitute ordinary income under section 6-5 of the ITAA 1997 and would be considered as for assessment.
On other hand it is noticed that loan agreement was suited to DM since they had already decided to move to new premises and required immediate cash to pay the upfront amount of new lease agreement. Later it was noticed that DM assigned the right of interest on loan to another party namely Hope Pty Ltd and in exchange received $2,800,000. The receipt of 2,800,000 by Hope Pty Ltd would be considered an assessable income.
Citing the reference of “California Cooper Syndicate v Harris (1904)” the gain on the sale of lease will be considered assessable since the transaction entered into by the taxpayer was to resale the lease and generate profit from it. Similarly, in case of DM the receipt of 2,800,000 by Hope Pty Ltd would be considered assessable because it constituted buying and selling of lease.
Answer to question 4:
Answer to question 5:
The current situation is based on determining whether the receipt of $3,000,000 would be considered as the ordinary income for the taxpayer. The current case takes account of the issue of business income and whether or not the subdivision of land by taxpayer and selling of land would be held as ordinary income or a capital in nature. The taxpayer initially wanted to sell the land to shopping centre developer however the shopping centre developer later declined to acquire the land. The taxpayer later subdivided and developed the land for sale.
As held in the case of “Whitfords Beach Pty Ltd v Federal Commissioner of Taxation (1982)” the federal commissioner assess the taxpayer based on the profits derived from the sale of various lots of land. The commissioner stated that the profit would be considered assessable under either “section 25 (1) of the ITAA 1936” as income from carrying the activities of land development or under “section 26 (a)” as the profits derived from carrying of a profit deriving scheme. Therefore, in the current case the taxpayer would be considered assessable under “section 25 (1) of the ITAA 1936” for carrying on the business of land development. The profits derived would be assessed under “section 26(a)” as ordinary income for carrying of a profit deriving scheme.
Answer to question 7:
The current situation of River Pty Ltd will be considered as the primary producer based on the fact that River Pty Ltd was engaged in the activities of selling rock to Rocks Pty Ltd. An assertion can be bought forward by stating that amount received by River Pty Ltd from the sale of rock would be included in the assessable income. With respect to “subsection 6(1) of the ITAA 1936” rocks constituted a part of business assets that were sold by River Pty Ltd. The income derived by River Pty Ltd is an ordinary income from personal exertion and would be included for assessment in his taxable income.
Answer to question 8:
I: $300,000 receipt by Mary
As evident in the current case of Mary she received a lump sum payment for the loss of employment due to false allegations. In case of the loss of employment, a compensation receipts payment however is classified as income since it constitutes a substitute for the lost income. As held in the case of “Federal Commissioner of Taxation v Allied Mills Industries Pty Ltd (1989)” the nature of the compensation receipts will be dependent for what purpose the amount is received for. Compensations are generally considered as capital item except on the circumstances where a substitute principle replaces what is lost. Therefore, in the current situation of Mary the compensation payment would be considered as income since the amount received by her represents a substitute for what was the lost income.
II: The $75,000 receipt by Coffey
In compliance with “section 6-5 of the ITAA 1997” the receipt of compensation payment by Coffee Pty Ltd would be considered as income under ordinary concepts and would held taxable. Referring to the case of “F C of T (NSW) v Meeks (1915)” the receipt of amount relating to termination of trade agreement made while executing the business would be regarded as income. Evidently, Coffee Pty Ltd discovered an alternative distributor and this considerably does not lead to any considerable influence on the profitability of the firm. The contract does not effect the fixed income framework and the receipt of compensation is considered as revenue and would held for assessment.
Answer to question 9:
“Section 995-1 of the Taxation Ruling 97/11” defines business to take into the considerations any trade or business. The ruling provides business generally carries the purpose of commercial intent. In the case of Lucy, the selling of liquor constitutes business activities that is carried on by Lucy for the purpose of making profit.
“Section 6-5 of the ITAA 1997” defines the receipt of income that are directly related to any business or profession and would result in tax consequences as well. In the current situation of Lucy, the receipt of redeemable mean vouchers carries a market value of $200 and would be considered for taxation.
Answer to question 10:
As held in the case of “Federal Coke Co Pty Ltd v Federal Commissioner of Taxation (1977)” the commissioner applied the section 6-5 of the ITAA 1997 and held the amount as assessable income. The commissioner of taxation disagreed with the treatment of the Federal’s of the payments and included the same into the assessable income. The commissioner stated that income formed the part of the assessable income of the company for the associated years of income. The judge held that the receipts of the two instalment does not alter the character of in the hands of Federal and would therefore be regarded as the part of income.
Reference List:
Barkoczy, Stephen, Foundations Of Taxation Law 2014
Brokelind, Ce?cile, Principles Of Law: Function, Status And Impact In EU Tax Law (IBFD, 2014)
Coleman, Cynthia and Kerrie Sadiq, Principles Of Taxation Law 2013
Grange, Janet, Geralyn A Jover-Ledesma and Gary L Maydew, 2014 Principles Of Business Taxation
James, Malcolm, Taxation Of Small Businesses 2014/15
Jover-Ledesma, Geralyn, Principles Of Business Taxation 2015 (Cch Incorporated, 2014)
Kenny, Paul, Australian Tax 2013 (LexisNexis Butterworths, 2013)
Krever, Richard E, Australian Taxation Law Cases 2013 (Thomson Reuters, 2013)
Morgan, Annette, Colleen Mortimer and Dale Pinto, A Practical Introduction To Australian Taxation Law (CCH Australia, 2013)
Sadiq, Kerrie et al, Principles Of Taxation Law 2014
Woellner, R. H, Australian Taxation Law 2012 (CCH Australia, 2013)
Woellner, R. H et al, Australian Taxation Law 2014
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download