In the case it has to bedetermined thatif the three payments that Hillary received are the income of personal exertion. It is also to be determined that if Hillary had written a story for own happiness and then she decided to sell it then will it sum up to the income from her personal exertion.
According to the section 6-1 of the Income Tax Assessment Act 1997, the term income has been derived from the personal exertion that is relevant to any kind income that consists of commission, bonus, wages, salary, earnings, fees, allowance, superannuation, retiring gratitude, pensions and gratitude that a person receives while working as an employee or other services that has been provided to him. Any kind of amount that a person receives as the bounty or the subsidy for carrying the business and the amount that is the part oftaxpayer’s assessable income in relation to the section 393-10 of the above mentioned act has also been included in the meaning. It also comprises of profit that the taxpayer received by carrying the business alone or with any partner. Management this kind of income do not include rent, dividend and non-share dividend along with interest until such kind of interest is the main business that the taxpayer carries (Barkoczy 2016)
According to the case Brent v Federal Commissioner of Taxation (1971) ATC 4195, it has been stated by the court that the amount that has been received for narrating the stories about the life of a person to the newspaper that was needed to be exclusively published will be a taxable income.
According to the section 6-5 of the Income Tax Assessment Act 1997, it has been said that if a person is receiving the money by giving an interview to the media with respect to their story of life to any media channel then that income will be accountable for the purpose of taxation (Becker 2015).
According to taxation ruling 97/11 an income that has been derived from the hobby has been not taken into consideration as income (Evans 2016). A hobby is the kind of activity that a person carries without any intention of profit making.
According to the case named Housden (Inspector of Taxes) v Marshall (1958), it has been stated by the court that the payment that a person receives by giving his newspaper cuttings and photographs about his experience of life then that Income is considered to be the income from the personal exertion.
It has been seen that all the three income that Hillary received are the income from the personal exertion because the income from the personal exertion consist of any kind of income that a person receives in the kind of office for the services that has been rendered by him (Werlauff 2016). Thus, Hillary received the amount of $10,000 that will be taken into consideration and the income that has been derived from the personal exemption because she has provided her services to the daily newspaper named Terror newspaper and because of that she has received this amount.
Moreover, by the case named Housden (inspector of Taxes) v Marshall,an explanation can be given that the sale of the photographs and the manuscript to the Michelle library will also be taken into consideration as the income that has been derived from the personal exemption by Hillary because she has sold her property that belongs to her.
An income will not be considered as the income that has been derived from the personal exemption only when Hillary has written this story for her own happiness because this will be considered as an income from the hobby rather than any business activity and it will not be considered an income and it has been given in the taxation ruling 97/11.
From the above mentioned discussion a conclusion has been derived that all the three income that has been derived by Hillary will be considered as the income that has been derived from the personal exertion but from the second part of the explanation we can see that the income that has been derived by Hillary will not be taken into consideration as the income from the personal exertion.
|
Fringe benefit calculation under section STATUTORY METHOD |
||
|
PARTICULARS |
AMOUNT |
AMOUNT |
|
Base value (Car) |
50000 |
|
|
Applicable Statutory Rate |
20% |
|
|
Private use days |
183 |
|
|
Fringe Benefit Tax year days |
365 |
|
|
Gross value of Car FBT |
5041.09 |
|
|
Employee made Contribution |
1000 |
|
|
Total FBT value |
4041.09 |
According to the provisions of the section 6.5 of the Year income tax assessment Act 1997 it has been said that a person assessable income contains any kind of income that has been taken by the ordinary idea that is also known as the ordinary income.
An income will not be considered as the word of art but it requires an appropriate application of the rules for it to be considered as the income and it has been stated in the case named Scott v commissioner of taxation (1935). In the above mentioned case it has also been stated by the court that the incomes’nature must be analyzed in the complaints that are relevant to the situation and it has been taken by taxpayer (Saad 2014). The receipt must have been considered by the taxpayer as the gain in the order that must be considered as income. Moreover, it has been made clear by the court in the case named Bective v Federal commissioner of taxation that any kind of gain would not arise unless that item has been derived beneficially by the taxpayer.
A person can actually make a profit by considering the receipt as an income and it has been stated in the case named Hochstrasser v Mayes (1960).
In the above mentioned case there are some facts, that the parents have given their son an amount of $40,000 in the kind of the short-term housing loan. There was no contract with regards to that loan given by the parents. Moreover it was said that there was no requirement of the son to pay any kind of interest. However there was a term of the loan that stated after five years the son will be required to pay his parents with the amount of $50,000 in the lieu of $40,000.
The values of the above mentioned case Hochstrasser v Mayes, it was said that an individual can give to the receipt in the situation that has been given and it has been made clear that the parents have received the profit of the interest of 5% per annum that will be given by their son for 2 years over the amount of$40,000. The taxpayer must treat the received amount as the profit for it to be treated as the income and it has been stated in the case Scott V commissioner of taxation. In this situation the mother decided that she does not need any kind of interest from her son. However according to the terms that has been given in the loan that the sun will be paying them with extra $10,000 after 5 years in the lieu of $40,000 (Endres 2015). Therefore it states that the intention of the parents was to make profit. Thus, in that situation that has been provided above states that the intention will be considered as the ordinary income and it has been given under the provisions of the section 6.5 of the income tax assessment Act 1997. Therefore, the interest will be considered as the assessable income that the parents have received.
It can be concluded that the interest amount that the parents have received will be considered as the assessable income.
There are certain steps that must be considered to calculate the capital gain tax. Initially an event of capital gain must be identified that has been mentioned under the necessities of the section 102.20. Then there must be an asset of CGT. Then the event timing must be considered and it has been given under the necessities of the section 116 of the income taxation-law assessment Act 1997. The calculation of the CGT is done by using capital income reduced cost base, cost based and the cost based modification (Devos 2015). In the section 104.5 the event of capital gain A1 deals with the disposal of the asset of CGT. In the section 108.5 a CGT S8 is any form of the property or the legal right that is not considered to be a property. With regards to any asset that was bought prior to the date of 21st of September 1999, the party carries the right to have indexed cost base or the overall discount of 50% according to the section 115. 15.
However the provisions of the general discount that has been given under the division cannot be applied on the companies and it is mentioned in the section 115.10.
The section 116.20 states that the capital income is that money that is received with regards to the property’s market value or the capital event and the person is entitled to receive it. The necessities of 116.30 states that general rule has been given in the section 100 in 16.20 can be changed and the capital income will be thought as the properties market value if there is no money received or no transaction is conducted. The arm’s length states the connection with parties that is related closely like the family.
|
Particulars |
AMOUNT |
AMOUNT |
|
800000 |
800000 |
|
|
Net Capita Proceed |
||
|
Cost Base |
||
|
Purchase cost |
90000 |
|
|
Construction cost |
60000 |
|
|
Total CB |
150000 |
|
|
Total CG |
650000 |
|
|
Discount s 114.1 (50%) |
325000 |
|
|
Net CG |
325000 |
In the situation (ii) it has been stated that the transaction is at the arm’s length and the income will be treated as the property’s market value as mentioned in the section 116.30 as the relationship of the father and the daughter is at the arm’s length. Therefore, $200000 would be considered as the sale income but the income would be the property’s market value. Market value deemed at $800000
|
Net Capital Gain Calculation |
|||
|
Particulars |
AMOUNT |
AMOUNT |
|
|
800000 |
800000 |
||
|
Net Capita Proceed |
|||
|
Cost Base |
|||
|
Purchase cost |
90000 |
||
|
Construction cost |
60000 |
||
|
Total CB |
150000 |
||
|
Total CG |
650000 |
||
|
Discount s 114.1 (50%) |
325000 |
||
|
Net CG |
325000 |
The situation (iii) explains that the discount of 50% cannot be applied because the company’s owner the provisions of the general discount cannot be applied on the companies as per the section 115.10.
|
Net Capital Gain Calculation |
|||
|
Particulars |
AMOUNT |
AMOUNT |
|
|
800000 |
800000 |
||
|
Net Capita Proceed |
|||
|
Cost Base |
|||
|
Purchase cost |
90000 |
||
|
Construction cost |
60000 |
||
|
Total CB |
150000 |
||
|
Total CG |
650000 |
||
|
Net CG |
650000 |
References
Barkoczy, S., 2016. Foundations of taxation law 2016. OUP Catalogue.
Becker, J., Reimer, E. and Rust, A., 2015. Klaus Vogel on Double Taxation Conventions. Kluwer Law International.
Devos, K. and Zackrisson, Management., 2015. Tax compliance and the public disclosure of tax information: An Australia/Norway comparison. eJournal of Tax Research, 13(1), p.108.
Endres, D. and Spengel, C. eds., 2015. International company taxation and tax planning. Alphen aanDen Rijn: Kluwer Law International.
Evans, C., Lignier, P. and Tran-Nam, B., 2016. The tax compliance costs of large corporations: An empirical inquiry and comparative analysis.
Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-Social and Behavioral Sciences, 109, pp.1069-1075.
Werlauff, E., 2016. Taxation of Foreign Foundations in Light of EU Law. European Company Law, 13(1), pp.7-13.
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