StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Australian Taxation Law - Assignment Example

Cite this document
Summary
From the paper "Australian Taxation Law" it is clear that involving analogous circumstances provided different interpretations of the law as the decisions differed in the judgment concerning the importance founded on the proximity of the ancillary dwelling house to the main house…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.1% of users find it useful
Australian Taxation Law
Read Text Preview

Extract of sample "Australian Taxation Law"

? [Manager] 28 May AUSTRALIAN TAXATION LAW The fringe benefits tax liability of Chatswood Pty Ltd for the year ended 31 March 2011, shall be based on the ‘Higher gross-up formula (type 1), which means that the higher gross-up formula was introduced to avoid allowing employers the benefit of GST credits for goods and services purchased for the private use of employees. The higher gross-up rate effectively recovers the GST credit you can obtain in providing a fringe benefit. The following formula is used to calculate the higher gross-up rate:’1. Type 1 FBT rate + GST rate aggregate fringe x ______________________________ benefits amount (1 – FBT rate) ? (1+GST rate) ? FBT rate Hence, the following benefits of Paul shall be as follows: Car fringe Benefit $22,500 Entertainment Fringe Benefit $ 2,000 Loan Fringe Benefit $ 8,000 ---------------- Employer’s type 1 aggregate fringe benefits $32,500 amount 46.5% + 10% ------------------------------------------- $32,500 x (1 – 46.5%) ? (1+ 10%) ? 46.5% rate $32,500 ? 2.0647 = $67,102.75 Total Fringe Liability This is the total value of the fringe benefits tax liability of Chatswood Pty Ltd. for the year ended 31 March 2011. For purposes of computation, ‘the FBT year is the 12 months beginning 1 April and ending 31 March. Currently, the FBT rate is 46.5%. A GST of 10% is applied on most goods and services that are supplied in Australia and on goods imported into Australia’2. ‘If an employee receives certain fringe benefits with a total taxable value of more than $1,000 in an FBT year (1 April to 31 March), employer must report the grossed-up taxable value of the benefits on their payment summary for the corresponding income year (1 July to 30 June). This is called the reportable fringe benefits amount’3. Therefore, the Fringe Benefits Tax (FBT) that should be paid by the employer Chatswood Pty Ltd., at the end of the year is $67,102.75. The car fringe benefit, the loan fringe benefit and the entertainment fringe benefit which were granted to Paul by his employer are all entitled to Goods and Services Tax (GST) credit that is available to Chatswood Pty Ltd. However, the $1,000 salary of Paul is not considered as a fringe benefit since there is an imposed tax on the salary which is being paid by the employee. As defined under the Finance Act of 2005: “Fringe Benefits” means any consideration for employment provided by way of: (a)   “any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to his employees (including former employee or employees) (b)   any free or concessional ticket provided by the employer for private journeys of his employees or their family members;  and (c)    any contribution by the employer to an approved superannuation fund for employees”.4 The total value of all fringe benefits given to a particular employee by his or her employer in an FBT year is known as their individual fringe benefits amount. 2. Peter’s is liable to pay a capital gains tax (CGT) for the sale of the gift shop for the year 2010/2011 based on the following computation: Gross Sale Proceeds from the gift shop: $840,000 Less: Incidental Cost of Disposal : $(60,000) Net Sale Proceeds: $780,000 Less Cost of Asset: $(450,000) Capital Gain: $330,000 Therefore, Peter shall be liable to pay a CGT on his gain amounting to $330,000. ‘Capital gains tax is a tax on the profits which may be made from the sale of capital assets. Only individuals are liable to pay CGT, corporations are not liable to CGT. A liability to pay CGT arises only when a chargeable person makes a chargeable disposal of a chargeable assets’5. Some of chargeable assets include lands and buildings, paintings, jewelry, plant and machinery. However, no CGT shall be imposed on the sale of his main residence as he is entitled to ‘Private Residence Relief’. To qualify for the exemption based on the ‘Private Residence Relief’, there are requisites to be met: 1. ‘The dwelling house has been the only or main residence of the taxpayer throughout the period of ownership; 2. He or she has not been absent, other than for an allowed period of absence or has been living in job-related accommodation during the period of ownership; 3. The garden or grounds including the buildings on them are not greater than the permitted area, and; 4. No part of the home has been used exclusively for business purposes during the period of ownership’6. If all these conditions are met, no Capital Gains Tax will be imposed on the income upon the disposal of the family residence. Here, all requisites were complied by Paul, which entitles him to claim an exemption under the ‘Private Residence Relief’. Several jurisprudence has applied the principle of ‘Private Residence Relief’ such as in the case of Batey v Wakefield 7, where the Supreme Court ruled that it was established that a dwelling house can consist of more than one building and can include an ancillary building which is itself a dwelling house. However, the consequent cases involving Williams v Merrylees 8 and Markey v Sanders 9, involving analogous circumstances provided different interpretations of the law as the decisions differed in the judgement concerning the importance founded on the proximity of the ancillary dwelling house to the main house. The decision laid down in the case of Lewis v Rook 10 has finally put to rest the conflicting issues, as LJ Balcombe sided with Vinelott J’s view in William v Merrylees: ‘What one is looking for is an entity which can be sensibly described as being a dwelling house though split up into different buildings performing different functions.’11 Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Australian taxation law Assignment Example | Topics and Well Written Essays - 2000 words”, n.d.)
Retrieved from https://studentshare.org/family-consumer-science/1423233-australian-taxation-law
(Australian Taxation Law Assignment Example | Topics and Well Written Essays - 2000 Words)
https://studentshare.org/family-consumer-science/1423233-australian-taxation-law.
“Australian Taxation Law Assignment Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/family-consumer-science/1423233-australian-taxation-law.
  • Cited: 0 times

CHECK THESE SAMPLES OF Australian Taxation Law

Fundamentals of Property Law

“Under the existing law of real property, the mere possession of land did not prove ownership conclusively.... This research will begin with the statement that the registration of Lowe as a proprietor free from encumbrances is impossible.... nbsp; First of all, the property is not without encumbrances because of the whole issue with the mortgage having been discharged illegally....
7 Pages (1750 words) Assignment

Taxation Law: Set of Legislations

According to the Australian Taxation Law, the valued income tax influences the amount of tax that would be levied on any income earner.... An essay "taxation law: Set of Legislations" outlines that most of the countries fund their operations from revenues collected through taxation.... nbsp; The following discourse is on australian taxation laws.... Ordinary incomes are defined by the common law as sources of income either from salary, interest or rent....
8 Pages (2000 words) Essay

SE Machinery Pty Ltd (SEM)

The Australian Taxation Law under Act No.... hellip; In such a transaction wherein actual cash was received and SEM chose to recognize the cash inflow as capital, the tax law provides that this be considered as ordinary income.... In such a transaction wherein actual cash was received and SEM chose to recognize the cash inflow as capital, the tax law provides that this be considered as ordinary income.... , states that australian residents' ordinary income are assessed whether derived from within Australia When the customer contributed $500,000 as capital contribution to SEM in May 2011, it appeared in the books as part of the Equity or Capital Account and reported as part of the gross profit by yearend which ended June 2012....
8 Pages (2000 words) Term Paper

The Analysis of Taxation v Dixon and Scott v Federal Commissioner for Taxation Cases

taxation law TUTOR MODULE DATE Abstract This paper explains why the payment to the taxpayer in FCT v Dixon (1952) 86 CLR 540 was assessable income but the payment in Scott v FCT (1966) 117 CLR 514 was not.... hellip; Furthermore, it provides cases and other sources of law or information that may apply while taking the given situation in consideration.... Keywords: Assessable income, tax position PART A The 2 cases concerned in the current situation are Federal Commissioner for taxation v Dixon and Scott v Federal Commissioner for taxation....
7 Pages (1750 words) Essay

Issues Regarding International Taxation

Explain the reason and the rationale of this concept requiring to be addressed for australian taxation purposes.... This essay "Issues Regarding International taxation" claims that in Australia, companies, and individuals can be taxable persons.... 3) Advise what taxation consideration needs to be given if the purchase from the Iberican operations by an Australian company were not for arms' length prices.... That is what we call double taxation....
6 Pages (1500 words) Essay

Principles of Taxation Laws

This means that her income from outside Australia is not taxable under Australian Taxation Law.... A letter from Medicare is not sufficient” (australian taxation Office)....  This essay discusses principles of taxation laws.... For example, however, for taxation purposes, Australia's taxation laws ignore citizenship unlike that of the United States.... Hence, Catherine's incomes derived or sourced in Australia are taxed according to Australia's taxation laws....
10 Pages (2500 words) Essay

What are the Opportunities for the Establishment of Small Businesses in Australia

hellip; The current position of small firms in the australian market can be characterized as satisfactory; however, the challenges that these firms face could cause delays to the realization of their plans and set limits to their potentials for further growth.... The following measures should be developed by australian policymakers.... It has been proved that small businesses have a key role in the australian market; despite their value for the development of national economy small businesses in Australia are not given the necessary support – at least compared to medium and large firms operating across the country....
8 Pages (2000 words) Case Study

The Payment to the Taxpayer in FCT versus Dixon

This work called "taxation law" describes why the payment to the taxpayer in FCT v Dixon (1952) 86 CLR 540 was assessable income but the payment in Scott v FCT (1966) 117 CLR 514 was not.... The author outlines cases and other sources of law or information that may apply while taking the given situation into consideration.... hellip; The 2 cases concerned in the current situation are Federal Commissioner for taxation v Dixon and Scott v Federal Commissioner for taxation....
7 Pages (1750 words) Report
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us