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    Income Tax Law Assignment Help

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    Income Tax Law Assignment Help


     Question 1

    Answer to Q a) 
    The TR 2018/4 replaces the TR 2017/ 2 from July 2018. The said ruling helps the commissioner of taxation to understand and determine the effective life for the depreciable assets under section 40-100 of the ITTA of the income tax assessment act 1997. The effective life of the assets is required to be ascertain for both of the assessing office and the tax return preparer to calculate the depreciation period, rate and life of the asset.
     
    Answer to Q b) 
    Answer: 
    Section 13.1 of the Income tax assessment Act 1997 discusses about the tax offsets. Tax offsets are the special rebates that re provided by the taxation law to give relief to the low income earners or other section of the tax payer. There are many tax offsets are applicable to the different units such as like subdivision 61IV for the child care , 100(2) for their trust income,  82-10 for the employment termination payment and many more.
     
    Answer to Q c) 
    For the assessment year the maximum tax rate is applicable to the resident and individual taxpayer of the tax year 2018 /19 id 45%. But the tax rate is the marginal tax rate and only applies to the income is more than $180001 in the current financial year. In addition to that there are other applicable tax rates if the income is lower than $180001.
     
    Answer to Q d) 
    For the Australian resident there is CGT or Capital gain tax Exemption for main residence. According to the ITTA 1997 the main resident is generally exempted from capital gain tax but to get the exemption the taxpayer must be dwelling on it as there is no such exception is applicable for the vacant block which is held for vacant or investment purpose.
    Furthermore the dwelling will be considered only if the tax payer satisfies the following conditions:
    The family of the assesse lives in it
    The personal belonging are in it
    It is the normal communication address of the assesse where the mail is being delivered.
    It is in the address of the Electoral roll
    Services such as in general use are connected. Is that the electric or water supplies and others.
     
    Answer to Q e) 
    The section 140-15 CGT event B1 attracted in the following events.
    If the assesse signs any agreement where the right to the use and enjoyment of a CGT asset is transferred to any other entity or
    Transferring the right or title of the asset before signing the contract.
     
    Answer to Q f) 
    In the section 4-10 (3) of the Income tax Assessment Act 1997, the computation of the tax payable is calculated.
    The Formula is shown here under.
    Income tax = (taxable Income * rate) – Offsets
    The formula contains the total of the taxable income for the year, which is multiplied by the income tax rate applicable for the taxation year, and after multiplying the deductible tax offsets are deducted.
     
    Answer to Q g) 
    In the given case of the FC of T V Day 2018 ATC 20-0634 holds about the allowance of the legal expenses that are borrowed by the tax payer. the federal commissioner of tax does not allows the commissioner of the income tax on the basis of the fact that the legal cost are not allowed as it does not form part of earning income. In the case ruling the judge of the High court allows the deduction under section 8-1(1) (a).  Hence, by this case it is ascertained the cost, which are not directly related to the income generation process, will be allowed as deduction if the expansion is related to the normal business function.
     
    Answer to Q h) 
    With the help of the average tax rate the tax payable is calculated. Whereas the marginal tax rates are applied to the different segment of the income as it measures the impact of the taxes on the incentive to earn, save, invest or spend.
    The marginal tax rate is applied for the different slab of incomes to lower the burden of the taxes to the low income earners whereas in the average tax rate is applied for speedy calculation of the tax payable.
     
    Answer to Q i) 
    The consumption tax is tax that I paid for the consumption purpose. A consumption tax may be address as the tax that is paid on the purchase of goods and service. The consumption is the indirect taxes that may be collected by the government in the form of sales tax, customs, excise, GST and others. Alternatively the consumption tax can also be refer to a taxing system as a whole in which people are taxed on the basis of the consumption. The consumption tax is the form of the indirect taxes.
     
     
    Question 2:
     
    Answer to Q a) 
    According to the section 8-1 of the Income Tax Assessment Act 1997 the taxpayer will get deduction on the interest on the borrowed capital irrespective of the mortgaged asset. Further the TAXATION RULING TR 93/7 also supports so. In addition to that as the loan is utilised to pay the wages this will also considered to be a business expenses hence deductible.
     
    Answer to Q b)
    In the given case as the assesse Julie has used the mobile phone for both work and personal purpose therefore a percentage of use is required to be ascertained. Further, the allowable deduction will be the portion of the total bill that is used for the work purpose only. The personal expenses will not be deducted. 
     
    Answer to Q c)
    In the given case the assesse has incurred the cost $1200 for the babysitter to take care of the baby when she is on work. This is not directly relatable to the work function hence such expense is not allowed under Section 61-480, Section 61-470, Section 61-360 and others.
     
    Answer to Q d)
    There is no such particular provision of the Income tax Assessment Act that describes the treatment of loss of stock by theft. Further the taxation ruling is also silent of the fact. But as per the paragraph  830-50(1)(a) on the basis of the available loss exposer the amount of loss of stock will be deducted from the income for the current year as this will be considered as the basic operational loss in the business. If the deducted amount is recovered in the future then at that time this will be considered as income or vice versa.
     
    Answer to Q e)
    In the given case the assesse can claim deduction on for the expenses for participating in the election including a candidates cost. As per the Income tax Assessment Act, ITAA 1997 the maximum deduction for participating in the local government election cannot exceed $1000 even if the expenditure in incurred in several years. Therefore the deduction of 1000 will be available and the rest will not be deducted from the income. Further the spending on the big election party will not be considered as an allowance.
     
    Question 3:
     
    Answer to Q a)
    In the given case as the Leaser has granted the lease for a period not exceeding 5 years therefore the CGT F1 cannot be connected furthermore in the given case CGT F2 will be applied. The condition is that the applier of the CGT must be the owner of the underlying land or if grant as sublease.
    The capital proceeds if CGT event F2 happens are greatest of:
    The market value of the freehold or head lease
    The market value if the land is granted, renewed  or extended
    Any premium from the grant
    Therefore in the given case the premium receipts of $5000 will be considered as CGT.
    In the CGT event F2 the CGT Discount Does not apply.
     
    Answer to Q b)
    In the given case, the john has purchase the 100 acre land ten years before in Adelaide. On 11 January 2018, he granted a lease of the land to Farm limited. In the given case the CGT event F2 applies and the then grant receipts cost of $800000 will be considered to the CGT as this the premium receipts of the assets. 
    In the given case the lease tenure is not given in the question therefore this will not be treated as CGT event F1. In the CGT event F2 the 50% discount will not be applied on the cost of the assets will be deducted from the CGT receipts on the Indexation Basis.
     
    Answer to Q c)
    In the given case there are two types of income is generated. 1. The rental income which is generated in the period of overseas travelling of Jamie and Olivia. Secondly the CGT income that arise in the time of sale. In the given case the CGT will be treated as CGT event F1 category where the assesse may have to choose either the 50% discounting method or the Indexation method. The higher of this must be selected to lower the tax burden. If the 50% discount option is selected then in that case the CGT will be $150000.
     
    Answer to Q d)
    The question cannot be answered as the question is wrong. The shares were purchased on 1 august 2018 and sold on 30 June 2018. How the sales date be earlier to purchase date.
     
    Question 4:
     
    Answer to Q a)
    According to section 295.270 subdivision 295-E other income and income that is received from perming any of the activities as a special profession such a author of a literary, or artistic work and others will be treat as other income in accordance of the ITTA 1997.
     
    Answer to Q b)
    Traveling allowance is a payment that is made to bear the expense of an employee for food, accommodation and others. In the given case as the allowance is provided for the work purpose therefore it will be regarded as perquisites but the amount this has been retained by the employee will be regarded as allowance hence it will form part of taxable income.
     
    Answer to Q c)
    As per the tax determination 2016/14 not all gifts from the client is tax deductible. The deduction of the client’s gifts are allowed those are not meant for personal reason. In the given case as the gift of IPhone looks like for personal reason and forming domestic character it will be taxable. If the gift received by the client is by the normal course or for business purpose then the gift will not be included in the taxable income.
     
    Answer to Q d)
    As per section 292-95 of the ITTA 97provies an exclusion from the non-concessional contribution cap for certain super contribution made from injuries. This refers to the insurance premium payments. The claim can only be allowed if the following condition are mate:
    Eligible form of injury payment
    Timing of the contribution
    Medical certification.
     
    Answer to Q e)
    In the given case the question is about the CGT event. As per section 104.5 of the ITTA 1997, an event is considered to be a CGT at the time of disposal (Section 104-10). In the given case the value of the asset is increased, but remain unsold will not be considered as CGT event.
     
    Question 5:
    In the given case the assesse Nisus arrives from Nepal in Australia on December 30, 2018. He enrolled in the masters of accounting program as CQU Sydney campus. The intention of visiting Australia is to study. Furthermore, he has managed to get a job in the bookshop to meet his expenses. On 30june 2019 the assesse return to Nepal for family commitments with no intention to return. For ascertaining the tax consequences, the residential status of the assesse will be calculated. There are two different kinds of resident in Australian for the taxation purpose.
    Australian resident for tax purpose without being an Australian citizen or permanent resident.
    Or, have acquired visa to enter Australian but are not an Australian resident for tax.
    As in the given case to determine, the residential status of Nisu residency test is required to be conducted. Four different tests are discussed here under.
    Domicile Test:
    In the domicile test the regular residence of the assesse is determined. In the permanent resident of the assesse is calculated. In the given case the assesse does not have any permanent residence in Australia. The permanent address of the assesse.
    Resides test:
    Resides test may be referred as the primary test of tax residency is calculated. If the assesse reside in Australia will be considered as an Australian Resident for tax purpose and no further residency test will be required.
    183 days test:
    This test is applicable to the individual arriving in Australia. In the given case the assesse will be taken as resident only if the assesse is personally present in Australia.
    The common wealth superannuation test:
    This test applies to Australian government employees working in Australian post. In the given case the 183 days test applies. The resident live in Australia: