Attitudes Avoidance In The United Kingdom

Computation of Fringe Benefit Tax

Discuss About The Attitudes Avoidance In The United Kingdom?

Among the above mentioned law sections, section 108-20 of the ITAA 1997 shows that loss of $1000 that is incurred during the deal that took place i.e., the sale of home sound system cannot be approved to be considered as set off, this law mainly states that no losses can be considered that is incurred from the disposal of used assets. The law section 108-10 of the ITAA 1997, states that losses incurred cannot be set off that is associated with the common gains in the shape of sales of shares (Van der Velde, 2014). The offset can also be considered according to law section 108-10 of ITTA 1997. In this case Eric has gained profit from disposed assets and this cannot be considered as current year capital. Here Eric’s gain proportion amounts to $15000. Thus the main point here is, Eric cannot offset losses since he obtained profit from the disposal of assets

Issue that highlights in this case is mainly concerned with the ascertainment of FBT and this is in accordance with the “Taxation Ruling of TR 93/6”. Thus the law that is applicable here is the Taxation ruling of TR 93/6.

Law section under taxation rulings of TR 93/6 states that economic institutions make strategies for offsetting the account that is related to loan activities and these strategies undertaken are often refereed as interest offset agreement. Here the products are restructured for offsetting the interest that is owned by the clients. For this reason account holders are not liable to pay any amount for the use of income tax with respect to profit earned from the account. Now according to the taxation rulings of TR 93/6, if the bank discharges then Brian will not be liable to pay income tax that is related to refunding interest on loan. Thus it can be concluded that, Brian will not be eligible to pay income tax liability if he is restricted from paying interest by the bank (Arcand and Tranchant, 2012).

Here in this case it can be observed that Jack and Jill are the co owners of a rental property and both are liable for the provision of loss that is incurred from the rental property. Here in this case the law sections which are applicable are F.C. of T. v McDonald (1987), Taxation rulings of TR 93/32 and Section 51 of the ITAA 1997.

Co-ownership of Rental Property

Now if the application of each law section is considered then it can be observed that: The case of F.C. of T. v McDonald (1987) 18 ATR 957 application shows that the taxpayer’s wife and he officially own rental property. The two owners agreed to establish agreement that shows that the net profit that is obtained from the rental property will distributed as 25 percent to McDonald and &75 percent to Mrs McDonald. This figures are agreed according to net profit but from the loss perspective it will be only borne by Mr McDonald (Pavlisko and Sporn, 2014).

The taxation ruling of TR 93/32 shows the ground which points the division of net income or loss that is generated from leasing the property that is owned by the co owners. The law section here mainly shows the assessment of taxable position of the co-owners who are accountable for their actions. The case that is referred to Jack and Jill shows the assessment of taxable position for the rental property. Jack here is entitled for 10 percent of the property while Jill is entitled for 90 percent of the property (Sanders, 2014).

Now the taxation rulings of TR 92/32 shows that co-ownership of rental property is known as one partnership for collecting income tax and this cannot be considered as one partnership under the general law except the ownership accounts of any business practice, here the co ownership is considered as partnership as this can fulfil purpose of income tax. The loss of earning from rental property is thus managed through the ownership of property as well as from the distribution of profits and losses. This case mainly shows that co-ownership of rental property includes income tax purpose and this cannot be considered as partnership (Wishlade, 2015).

Finally the taxation ruling of TR 92/32 shows that co-owners of the rental property usually not considered partners. In this case the partnership agreement is either in the shape of writing or oral form that does not include its effect on the shared value of income or loss from the property. Therefore, Co-owners Jack and Jill will hold the property as the joint renters. Thus conclusion drawn from the above case shows that, both Jack and Jill need to distribute the loss from property equally and joint ownership does not account as partnership business (Wishlade, 2015).

IRC v Duke of Westminster [1936] AC 1 is used in the case of tax avoidance. One principle recognized in this aspect states that each individual is authorized to order his affairs for allowing the taxation which is made in fitting Act. Although this cannot be considered because this ruling was attractive to others who are looking for avoiding tax with respect to law’s complex design and these are undermined by the subsequent cases where the courts have looked on the overall effect. An example if cited then it can be observed that court in the upcoming stages is provisional and thus was adopted under the WT Ramsay v. IRC principle. This case here shows that transaction has been determined earlier and this is served not in the form of commercial use. The ideal rule was to impose tax for expanding the deal a total fact (Sceales, 2015).

Tax Avoidance and IRC v Duke of Westminster Principle

Currently, this principle within Australia states that if an individual is able to make this result protected, then the Inland Revenue will be of their scheme and it is not compulsory to pay any augmented sum of tax. Further, it is understood that this feature allows individuals and corporations for designing the financial agreements with respect to their fixed objectives of decreasing the tax liabilities that is upon their structures of laws (Bloom, 2015).

Here the issue is concerned with the estimation of income that is derived from the sale of felled timber under subsection 6 (1) of the Income Tax Assessment Act 1936. Beside this law section, McCauley v. The Federal Commissioner of Taxation ruling is also applied in this current case.

Here in this case it is found that Bill owns a land where there are several pine trees. Here Bill intended to utilize the land for grazing sheep and Bill wanted to clear his intentions with a clear view. Bill then discovered a company that agreed to pay him $1000 for every 100 meters of timber. The taxation ruling that is related here is 95/6, states that income tax generating from the performance of production and forestry. The ruling here offers the boundary which shows the takings that is derived from the sale of timber. This characteristic shows measurable income which shows that tax payers are indulged into the activities of forestry industry.  Now according to subsection 6 (1) of the Income Tax Assessment Act 1936, here the tax payers are indulged into the activities of forest thus it can be known as the prime creator (Atkinson, 2012).

The subsection 6 (1), the Income Tax Assessment Act 1936, shows major production is defined as the trees that crop up within agricultural land is required for felling forest. The case study thus shows that, Bill is regarded as the primary producer because he has involved into the processes of primary production subsection 6 (1) of the Income Tax Assessment Act 1936. The forest operation thus mainly includes felling of trees in a forest although the tax payers are not concerned about the planted trees (Bevacqua, 2015).

Bill here although the owner of land but he did not planted the trees, yet the whole amount of takings is owned by Bill from the sale of felled timber thus includes measurable earning .Thus inspite of these facts, the sales combines either full or part of  assets of a business, the trees considered are taken as measurable income of the tax payers under subsection 6 (1) of the Income Tax Assessment Act 1936.

In the mentioned case, if the tax payer pays a lump sum of $50,000 by surrendering the right to the organization for removing the required amount of timber, then the amount accepted will be considered as “Royalties”. In agreement with the section 26 (f) shows receipt of “royalties” that is received from the tax payer. Hence Bill is not allowed to carry out operations in forest. This is mainly due to the reason Bill did not planted the trees. Under McCauley v. The Federal Commissioner of Taxation it is shown that payments obtained from the grantor are under the right of doing so (OKMARK, 2014). Thus the sum received by Bill as royalty combines measurable income under section 26 (f).

Thus it can be concluded that income accepted from the cutting of timber will be considered as taxable earnings under subsection 6 (1) of the ITAA 1997.

References

Arcand, J.L. and Tranchant, J.P., 2012. Institutions, Mobilisation and Rebellion in Post-Colonial Societies.

Atkinson, C., 2012. General anti-avoidance rules: Exploring the balance between the taxpayer’s need for certainty and the government’s need to prevent tax avoidance. J. Austl. Tax’n, 14, p.1.

Bevacqua, J., 2015. ATO accountability and taxpayer fairness: An assessment of the proposal to split the Australian taxation office. UNSWLJ, 38, p.995.

Bloom, D., 2015. Tax avoidance-a view from the dark side. Melb. UL Rev., 39, p.950.

OKMARK, L., 2014. ” You Can’t Handle the Truth”… Well, the States That Is: The Legality of State-Imposed Transfer Taxes on Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency. N. ILL. UL REV. ONLINE J., 5, pp.91-91.

Pavlisko, E.N. and Sporn, T.A., 2014. Mesothelioma. In Pathology of asbestos-associated diseases (pp. 81-140). Springer Berlin Heidelberg.

Sanders, A.K. ed., 2014. The principle of national treatment in international economic law: trade, investment and intellectual property. Edward Elgar Publishing.

Sceales, R.W.F., 2015. A review of the trend in the judicial interpretation, and judicial attitudes towards tax avoidance in the United Kingdom, Australia and South Africa, with reference to the” declaratory” and” choice” theories of jurisprudence (Doctoral dissertation).

Van der Velde, J., 2014. Debt forgiveness-Is it really that scary?. Taxation in Australia, 48(11), p.643.

Wishlade, F., 2015. Recent Developments in Competition Policy and Regional Aid:: Adjusting to a’New Normal’.