In the given case, the main issue deals with the calculation of capital losses and gains from sale of assets as per the rules and regulations defined “under section 108-20 of the ITAA 1997”
The given analysis has been done as per Australian Taxation rules and regulations. In accordance to “section 108-20 of the ITAA 1997”, loss of $1,000 for the home sound system cannot be considered as set off, because losses cannot be considered on disposal of any kind of personal assets for any considered parties (Fry 2017). In the given case, Eric obtained a considerable amount of profit $15000 from the sale of ordinary assets. This offset can be considered as per “Section 108-10 of ITAA 1997”.
Conclusion
From the above analysis, it can be concluded that Eric has gained profit from the sale of ordinary assets, therefore, he cannot offset the loss from the given collectables. This is also inevitable from the analysis and calculation as shown in the following table.
The main issue highlighted in this case us with regards ascertainment of FBT as per ““Taxation Ruling of TR 93/6”.
“Taxation Ruling of TR 93/6”
The application of the given case can be evaluated with the help of computation of FBT
The above table reflects that the taxable value of the loan fringe benefit is around 27900 for the amount of loan 1000000. As per “taxation rulings of TR 93/6 states that financial organizations often makes plans for offsetting the loan account that is referred as interest offset agreement”. Due to this reason, the concerned clients are not at all liable to pay income tax from the profits earned from their account. From the above tax ruling, it can be deduced that if the concerned bank disagrees to refund interest on loan to Brian, then he will not liable to pay any amount of income tax (Kenny 2013)
Conclusion
It can be concluded that Brian will not liable to pay any kind of income tax if the bank do not refund his interest on loan.
The given case deals with the issue regarding allocation of loss amount derived from the rental property which is under joint ownership of Jack and Jill.
As per the “Taxation rulings of TR 93/32”, co-ownership in any kind of rental property can be considered as an ordinary partnership. This is also for the purpose of paying appropriate income tax (Saad 2014). This is applicable for any kind of individual parties. In the given case study, Jack and Jill has a rental property, under their co-ownership which is also mainly for taxable purposes and cannot be considered as partnership under general law. However, since they are co-owners for the given property, then they are bound to share the profit and losses which are arisen from their given rental property.
With reference to the case, “F.C. of T. v McDonald (1987)”, the tax payer and his wife jointly owned two state units. The rate of percentage of profit and losses was pre-determined by both the parties. Similarly, in this case, since it is not pre-determined, therefore, the losses will be divided equally.
Conclusion
It can be concluded that the losses between Jack and Jill will be divided equally and joint ownership business do not account for partnership business.
The given case “IRC v Duke of Westminster [1936] AC 1” is considered as one of the prime examples of occurrence of tax avoidance. This case depicts one principle that each tax payer is allowed to order all his/her affairs. However, this ruling cannot be considered that useful in case of complex tax structures under the law.
“WT Ramsay v. IRC principle” can be considered as more restrictive in comparison to the previous case discuss above. This principle reflects that if an individual is successful in the given result, then he is not bound to pay any increased amount of tax and it also allows individuals as well as corporates to restructure all their agreements in order to meet their respective objectives of lowering down the taxable amount.
The given case study deals with the “assessment of income from the sale of felled timber is deduced under subsection 6 (1) of the Income Tax Assessment Act 1936”
In the given case study, Bill is the owner of a piece of land which consists of seven pine trees. He primarily aimed for grazing of sheep and wanted to clear it. He finds a lodging company who is willing to pay him $100 for every 100 meters of land. As per “taxation ruling related to 95/6” gives a proper view regarding the tax consequences for income generated from the activities of primary production. The ruling states that there is a limit to the receipts derived from the sale of timber (James 2016). In the given case, Bill is the owner of land, but he did not plant trees in the given land. However, the whole amount that constitutes from the sale of timber is his assessable income. Therefore, it can be inferred that the considered trees are taken as assessable income of the tax payers “under subsection 6 (1) of the Income Tax Assessment Act 1936”. On the contrary, if Bill pays an amount of $50,000, then the receipts can be considered as Royalties, as per section 26 (f). The total amount earned by Bill as royalty is his assessable income.
Conclusion
From the above analysis, it can be inferred that income from cutting timber from trees can be considered as taxable income for Bill as per “subsection 6 (1) of the ITAA 1997”.
References
Brennan, G., 2016. The church on tax reform?. St Mark’s Review, (235), p.1.
Campbell, S., 2015. A mater of trusts: CGT issues when creating and dealing with UPEs. Taxation in Australia, 50(6), p.332.
Choi, S.K., 2016. The Determinants and Trends in Public-Private Wage and Fringe Benefit Differential.
Daley, J. and Wood, D., 2015. Fiscal challenges for Australia. Grattan Institute.
Fry, M., 2017. Australian taxation of offshore hubs: an examination of the law on the ability of Australia to tax economic activity in offshore hubs and the position of the Australian Taxation Office. The APPEA Journal, 57(1), pp.49-63.
Gabbay, D.M. and Smets, P. eds., 2013. Quantified Representation of Uncertainty and Imprecision (Vol. 1). Springer Science & Business Media.
Hogg, C. and Bush, A., 2012. Genotyping in primary ciliary dyskinesia: ready for prime time, or a fringe benefit?. Thorax, 67(5), pp.377-378.
Hussein, A., 2015. The use of triangulation in social sciences research: Can qualitative and quantitative methods be combined?. Journal of Comparative Social Work, 4(1).
James, K., 2016. The Australian Taxation Office perspective on work-related travel expense deductions for academics. International Journal of Critical Accounting, 8(5-6), pp.345-362.
Jorgensen, R., 2017. Division 7A structuring: The contortionist revisited. Tax Specialist, 20(3), p.118.
Karlsson, S. and Kullingsjö, L.H., 2013, November. GPS measurement of Swedish car movements for assessment of possible electrification. InElectric Vehicle Symposium and Exhibition (EVS27), 2013 World (pp. 1-14). IEEE.
Kenny, P. 2013. Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths.
Krever, R. 2013. Australian taxation law cases 2013. Pyrmont, N.S.W.: Thomson Reuters.
Lin, C.Y.Y., Edvinsson, L., Chen, J. and Beding, T., 2013. National intellectual capital and the financial crisis in Australia, Canada, Japan, New Zealand, and the United States. Springer Science & Business Media.
Milton, 2013. The taxpayers’ guide 2013 & 2014. Qld.: Wrightbooks.
Nguyen, P. and Rahman, N., 2015. Which governance characteristics affect the incidence of divestitures in Australia?. Australian Journal of Management, 40(2), pp.351-374.
Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-Social and Behavioral Sciences, 109, pp.1069-1075.
Woellner, R. 2013. Australian taxation law select 2013. North Ryde, N.S.W.: CCH Australia.
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