Aviation companies reward their loyal customers with flight points under Taxation Ruling of TR 1999/6. Under this taxation ruling, companies in aviation sector reward their customers by providing flights points. The fact is that rewards or points that are provided by companies in aviation sector are not treated as taxable income under Taxation Ruling of TR 1999/6 (Barkoczy, 2016). Nonetheless, there can be implementation of fringe tax benefits on rewards or scenarios. Such tax benefits can be imposed under the following situation and they are listed below:
Therefore, frequent flyer rewards received by business analyst in relation to work related travel by organization would not be subjected to taxation and neither it will be treated for fringe taxation benefits.
The amount that is received as a compensation by an individual or entity are not considered for the purpose of taxation or it is not assessed as under taxation income. Under the given scenario, crane-hiring company is receiving amount for customers as compensation for damage due to supplying damaged crane (Blakelock & King, 2017). Here, compensation is paid at time of providing service and receivers of compensation are liable to charge for taxation. Some of crucial points that can be reflected here are as follows:
In the given scenario, there has been damage to customers capital assets and in this regard, crane hiring company has received the compensation value. If the above conditions are fulfilled, then the amount is not included for taxation purpose and they are not taxable income.
Cash or gift in kind received by individual does not form part of income component according to Australian Taxation Office. Such component are exempted and they form neither part of non-assessable income nor part of non-exempted income. When computing income tax on an individual, value of small gifts received does not form part of computation and hence they are excluded (Campbell et al., 2016). On other hand, some big gifts received by individual would be assessed for income tax purpose in the event when they are able to convert into cash.
Therefore, nightclub mangers of an alcohol suppliers has received free package of Free Overseas holiday. Hence, for computing nightclub manager income tax, it is essential to include the package received by him.
Canoe club for buying additional canoes raised excess funds and this extra amount was returned to their members. When calculating income tax, extra money raised for buying canoes are not included in the same. The reason this part of funds would not be included in calculating income tax is that, as they have not been raised as an alternative funds raised that members provided. Funds raised was not for acquiring purpose and it did not display separate requirement (Nossaman & Wyatt 2016).
The Taxation Rulings TR 1999/17 includes the gains or gifts received by sportsperson for performing fairly and due to their best performance on field. According to taxation rule, the amount that is received by sportsperson as gifts or any cash received by them are subject to taxation. In addition, if such receipts of gifts or cash accumulate form part of their income. Therefore, as per normal taxation concept, payment received by Australian footballer by Australian television for best and fair performance should be included in their income tax calculation (Kingston, 2015).
Taxation Ruling of TR 95/22 depicts components such as allowance, reimbursing employees and construction. Building of employees and construction include the following components according to Taxation Ruling of TR 95/22.
There has been clear definition of expenses that would occur in building qualification for building apprentice. Definition has been in context of building construction and labour as compensation.
Deductions are authorized in context of shot-time expenses of an artiste person at the time of calculating income tax.
Only if the expenses in the course of art management is incurred for short time period, then only the above discussed expenses needs to be deducted from calculating income taxation. The amount that will not be included for purpose of deductions in taxable income is the expenses that are incurred but they do not relate uniformly to purpose of taxation (Davison et al., 2013).
According to Australian taxation law, the expenses that is incurred in work dresses and make up by employer is not included for taxation purpose.as provided by artist, execution of art by artists according to Australia Taxation office are considered for the purpose of deduction. Individual performing arts as granted by Australian taxation office under the taxation rule are:
The expenses incurred in this particular scenario would be allowed for deduction purpose that will assist in shaping performing artist income tax if it is assumed that expenses are in context of work make up and dressing.
It is generally considered that individual for his or her own private reason travel between home and office. Nonetheless, for the purpose of deduction in this case, there are specific provisions that can be emphasized as expenses that are incurred for travelling. Allowable deductions are emphasized when a part of expenditure component are taken when individual travel from home to office. This is applicable when travelling is partly official and partly for official purpose. When the expenses are incurred only for official purpose, then such expenses are mot for deductible allowances. In the given case, it can be assumed that travelling by individual between home and office are mainly for official purpose and the expenditure incurred are emphasized for determining or computing income tax (Miller & Oats, 2016).
Expense incurred by individual to travel between one employer and another employer is taken for deduction purpose while computing income tax.
While travelling between one employer and another employer, expenditures are incurred. In current scenario, the travelling costs that is incurred between one employer and another are not deductible for the purpose of taxation. The reason is attributable to the fact that taxable office of Australia do not claim deductions for the expenses incurred for travelling from one employer and another to be included in income tax computation (Raghu, 2014).
For determining the income tax liability of income, the first and foremost thing that needs to be determined is the residential status of individual. Therefore, for computing income tax, it becomes essential to determine residential status whether individual is foreign resident or he is an Australian resident.
According to the Australian taxation law, if the overseas student has enrolled in Australian universities for more than time period of six months, then they should be considered for purpose of computing taxes. In the given case, it can be seen that Manpreet is an international student who have enrolled in CQU in Australia. Course, which Manpreet has enrolled into in Australian University, is for duration of more than six months and hence, he should be considered as resident of Australia and should be considered for computation of income tax (de Cogan, 2015).
International students enrolled in Australia course lasting for more than six months are subjected for calculating tax as they are regarded as resident of Australia for calculating tax. It would indicate following facts and they are as follows:
On general term, Australians are required to make declaration of their eared income at international level as well as in their own country on their Australian tax return. However, international students are considered as temporary resident of Australia as they have temporary visa. Temporary Australian resident are not required to declare their Australian income tax return, as most of their foreign income are not considered for purpose of taxation in Australia (Yin, 2017). Considering above facts, it can be said that Manpreet would be taxed at Australian resident tax rate and credit can be claimed by them against Australian tax for the part that is paid on foreign income.
Tuition fees are considered expenses that would be incurred by international students pursuing course in Australia. Therefore, it is expected on part of students to be financially prepared for bearing living costs and fees incurred on enrolment in any particular course. It is strongly recommended to such international students to obtain a tax file number when arriving in country.
Students not having this tax file number would end up paying higher rate of tax on income earned by them. It has been worthwhile for many students studying in Australia to work part time and earning extra money. Tax-free threshold would be reduced proportionally if such students were resident for less than full financial year (Harrow, 2013). It can be explained with the help of an instance that students residing in Australia for six months as their tax-free threshold would be entitled to $ 9100. Enrolment in course that is for more than six months by overseas students as Australian resident for taxation purpose.
If the taxable income is above tax-free threshold, it is required by them to lodge a tax return. In the event of tax paid by individual that is below tax-free threshold, then for receiving fund, they are required to lodge a return. Trained volunteers of Australian taxation office are involved in running program that would assist low-income people in filling their tax return. Furthermore, if course pursued by students are eligible for work related self-education expenses, then laptops or computers would be required for carrying out study. In such case, students can claim tax deductions on expenses incurred on purchasing computer or laptop and other items such as printer.
Some of eligible expenses on computer and printer that can be claimed for tax deduction include repairing cost of computer, interest on loan amount that is borrowed for financing the cost of such computer, printers and laptops. It also includes decline the computer costs or depreciation associated with such equipment (Saad, 2014).
International students would be able to qualify for tax deduction of computers and printers used for study purpose if the course enrolled into has sufficient connection with current employment. Students will not be able to claim tax deductions for laptops and computers concerning self-education if current income earning activities are not related with the courses enrolled (Cao et al., 2015).
Student are eligible for computer tax deductions if along with studying and working they are satisfying following criteria. Such criteria are listed below:
Students under the following conditions cannot claim self-education expenses and they are listed below.
Furthermore, in relation to claim of self-deduction expenses, it is certainly possible to split the claim. Splitting of claim is dependant upon the purpose for which computers are used. Expenses would be claimed at higher proportion if they are used for self-education purpose.
As depicted in case study, Manpreet for gaining experience in her chosen career worked part time as an office assistant at an accountant’s office. While working, the remuneration of Manpreet stood at $ 45000. Expenses incurred by him on carrying out education a not considered for deductible purpose (Law, 2014). As stated by Australian taxation law, that expenses relating to self-education can be claimed by individual if individual has received taxable bond scholarship and the study is carrying for being engaged in work. With current employment, there should be some beneficial interest in the course that is undertaken for purpose of self-education. Following should be involved in the course for including it in taxable income and they are listed below.
Expenses is considered for deduction purpose or deduction allowance according to section 8-1 of the Income Tax Assessment Act if there exists considerable relationship between activities that generates income and their associated expenses. Expenses that arise from some private reasons and if they are incurred domestically, they are not considered for the deduction purpose. Under section 8-1, it is ascertained that expenses would placate test if it possess the features of generating income from undertaking activities as in the case of Lunney v. FC of T; Hayley v. FC of T (1958) 100 CLR 478; (1958).
This particular view point is supported by the judgement that has been provided in case Ronpibon Tin NL v. FC of T (1949). If the taxable income are able to be produced by outgoing then they can be allowed for purpose of deducting taxable income. In the given case, expenses that are incurred for self-education should not be considered for tax deduction.
It can be observed from the provided case that some expenses have been incurred by Manpreet on purchasing printer and computer for educational purposes and additional amount for purchasing mobile phone. Mobile phone has been purchased for dealing with work related issues or matters. From the given case, if there exists sufficient relationship between earning capacity and expenses, in that case, expenses are considered for the purpose of deduction. For the deduction allowance, one of the essential character considering expenses is that they should be of domestic nature. Domestic nature expenses should lead to deduction allowance (Carlin, 2015).
Expenses incurred should be relevant or incidental for and leading to generate income. Considering this, one of case can be discussed that allowed mangers to deduct expenses. As per case of FC of T v. M I Roberts 92 ATC 4787, mine managers were allowed by court according to laid down principles in Maddalena to carry out deductions relating to MBA. Therefore, considering this, for mobile phone, Manpreet can claim allowable deduction. Following table depicts calculation concerning above question.
References:
Barkoczy, S. (2016). Foundations of Taxation Law 2016. OUP Catalogue.
Blakelock, S., & King, P. (2017). Taxation law: The advance of ATO data matching. Proctor, The, 37(6), 18.
Cao, L., Hosking, A., Kouparitsas, M., Mullaly, D., Rimmer, X., Shi, Q., … & Wende, S. (2015). Understanding the economy-wide efficiency and incidence of major Australian taxes. Treasury WP, 1.
Carlin, D. (2015). Constitutional Law-Taxation-Interstate Commerce-Congressional Stop-Gap Legislation and State Taxation of Income from Order-Taking in Interstate Commerce. DePaul Law Review, 14(1), 195.
Davison, M., Monotti, A., & Wiseman, L. (2015). Australian intellectual property law. Cambridge University Press.
de Cogan, D. (2015). A changing role for the administrative law of taxation. Social & Legal Studies, 24(2), 251-270.
Campbell, I., Boese, M., & Tham, J. C. (2016). Inhospitable workplaces? International students and paid work in food services. Australian Journal of Social Issues, 51(3), 279-298.
Miller, A., & Oats, L. (2016). Principles of international taxation. Bloomsbury Publishing
Graetz, M. J. (2016). Follow the money: essays on international taxation. Yale Law Library.
Harrow, B. (2013). Selected Cases on the Law of Taxation (Book Review).
Kahng, L. (2014). The Taxation of Intellectual Capital. Fla. L. Rev., 66, 2229.
Kingston, S. (2015). Territoriality in EU (Taxation) Law: A Sacred Principle, or Dépassé?.
Lang, M. (2014). Introduction to the law of double taxation conventions. Linde Verlag GmbH.
Law, S. B. (2014). Bulletin for International Taxation
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Morris, D. (2014). Recent developments in charity taxation in the UK: The law gives and the law takes away. Not-for-Profit Law: Theoretical and Comparative Perspectives.
Nossaman, W. L., & Wyatt Jr, J. L. (2016). The Conflict of Laws between States in Taxation of Trusts. TRUST ADMINISTRATION AND TAXATION, 3.
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ROBIN, H. (2017). AUSTRALIAN TAXATION LAW 2017. OXFORD University Press.
Saad, N. (2014). Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-Social and Behavioral Sciences, 109, 1069-1075.
Snape, J., & De Souza, J. (2016). Environmental taxation law: policy, contexts and practice. Routledge.
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