Nobody downloaded yet

Law of Business Taxation - Essay Example

Comments (0) Cite this document
The ITTOIA 2005 and ITEPA 2003 Laws are usually amended as the public and law-makers determine better ways to cope with problematic situations. This is the case for ITEPA 2003 or Income Tax (Earnings and Pensions) Act 2003 amended for clearer provisions of incomes and allowable deductions…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96% of users find it useful
Law of Business Taxation
Read TextPreview

Extract of sample "Law of Business Taxation"

Download file to see previous pages It was suggested that about 25% of the deduction for such expenditure is increased. Specifically, it provides that contract work outside of “any person otherwise than in the course of a trade, profession or vocation the profits of which are chargeable to tax under Case I or II of Schedule D,” (paragraph 4(6)(b) of Schedule 12. It disallows deduction for activity of trade, profession or vocation undertaken in any part of the United Kingdom. The Income Tax (Trading and Other Income) Act 2005 or ITTOIA 2005 imposes charges to income tax under trading income, property income, savings and investment income, and certain miscellaneous income. It also dealt with exemptions from the charges, provisions about rent-a-room relief and foster-care-relief, special rules for foreign income, special rules for partnership, and certain calculation rules and general provisions. The limited guidance provided by the previous legislation makes interpretation problematic such as in determining whether a particular activity constitutes trading. Under ITTOIA, trading was defined as “any venture in the nature of a trade” (ITA 2007 s. 989) that leans on the substance of what is being carried on and how it is being carried on. The understanding of the activity by the individual conducting it may be derailed. James (2011) suggested that it “does not necessarily need to have all the attributes associated with a trade I order to be chargeable,” (16). Previously, under the ITEPA 2003, Schedule D Case 1 provides that profits derived from trade were taxable. Profits from a vocation or profession were taxable under Schedule D Case II. ITTOIA 2005 removed this distinction and trading income has encompassed incomes from vocation, trade, or profession under ITTOIA 2005 section 5 (James, 2011). Other contentions are statutory trades such as farming, market gardening, and occupation of land managed on a commercial basis for the purpose of gaining profits. For the case of woodlands, occupation may not be taxable but once an actual trade, an example of which is the selling of timber, occurred, then, a taxable activity is committed (James, 2011). Numerous tests called the “badges of trade” also help determine trading activities, but already, confusion have proven costly through litigations. One specific example is the American Leaf Blending Co. SDN BHD v Director-General of Inland Revenue (1979) (AC676). Lord Diplock opined that: …in the case of a company incorporated for the purpose of making profits for its shareholders any gainful use of which it puts any of its assets prima facie amounts to the carrying on of a business… Assets held as investment due to their nature as income-producing, or have the potential for capital appreciation, or possible profit for its sale cannot be considered a trading profit. An asset acquired by loan with the potential to bear an income but only as a motive to offset interest from income gained is also considered of irrelevance. An investment of a property later appropriated as trading stock will have the sale as trading. Such was the case of Wisdom v Chamberlain (1969) 45 (TC 103). In this case, actor Norman Wisdom bought silver bullion as a hedge against devaluation. He then sold it at lower cost but bought more bullion which when sold gave Wisdom a profit. The second transaction was considered a trading because it was bought for short-term profit (James, 2011). ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from
(Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 Words)
Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 Words.
“Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Law of Business Taxation

Business taxation

...? Business Taxation Capital and revenue expenditure divide has been a major topic of discussion among business people, tax advisors, and judges for quite a long time. There is no simple test that can help decide on the issue in all the circumstances. At times, various judicial judgments lead to conflicting conclusions, too. The paper attempts to understand how complex or simple it is to segregate between revenue and capital expenditures in the given business circumstances and whether applying annual capital allowance (AIA) to the various classes of assets under the head ‘plant and machinery’ needs a great deal of understanding of the various statutes, legislation and...
8 Pages(2000 words)Essay

Taxation law

...University. (1998). Journal of Australian taxation. North Ryde, N.S.W: CCH Australia [and] Monash University, Faculty of Business and Economics, Dept. of Business Law and Taxation. (2013). Income. [online] Retrieved from: [Accessed: 25 Sep 2013]. Mason, T. J. (2010). Income tax law: Principles and applications. Frenchs Forest, N.S.W: Pearson Australia. (2013). LEC - Subject Pages - Taxation - Useful Links. [online] Retrieved from: [Accessed: 25 Sep 2013]...
8 Pages(2000 words)Essay

Taxation Law

...:// Rockliffs Solicitors & Barristers, Tax Audits: One in Ten Businesses will be Audited, accessed October 25, 2005: The Commissioner of Taxation, (n.d.), accessed October 25, 2005: It is a responsibility of the Tax Office of any country, by law, to make the process of collection of revenues run smoothly and ensure that all the taxpayers disclose full information related to the tax administration so as to be in full-compliance with the tax law. The Australian Tax Office (ATO) is responsible to carry out...
20 Pages(5000 words)Essay

Business Taxation

...of the enhanced taxes in the exchequer's receipts were responsible for the rates of NICs for employees, employers and self-employed. The rate of the NICs rose by 1% point to a rate of 11% on cumulative earnings between basic threshold and the upper earning limit. The NIC in this case was levied an increased 1% percentage point to a 12.8% earning rate above the elementary threshold. The NIC was increased by 1% to appoint of 8% on collective earnings between the lower profits limit and the upper profits limit. The income tax personal allowance was therefore to be frozen at this stage from 2002-2003. The report of the Royal Commission on the Taxation of Profits and Incomes (1955) The measures rose to 8.6 million by...
10 Pages(2500 words)Essay

Principles of Taxation Law

...of trusts the rules for the carry forward of business losses are complex in nature and the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 governs the provisions relating to the carry forward and set off of business losses by the business trusts. Under Section 265-5 "If there is a change in ownership or control of a trust or an abnormal trading in its units, it: * may be prevented from deducting its tax losses of earlier income years; and * may have to work out in a special way its net income and tax loss for the income year; and * may be prevented from deducting certain amounts in respect of debts incurred in the income year or...
7 Pages(1750 words)Case Study

Business Taxation

...a group of companies perform variety of activities so that it can achieve the tax treatment as if a single entity is performing all those activities. The second type of relief is the double taxation relief. However, before understanding this type of relief, it is needed to understand what exactly double taxation is. Double taxation is defined as a situation in which a company may need to pay two or more taxes for the same asset, financial transaction or its income. Generally the situation of double taxation arises due to the overlapping of tax laws and jurisdiction between different countries when there is a company or individual residing in one country...
2 Pages(500 words)Essay

Business Taxation calculate and make arrangements for the payments. 3) The means by which a tax payer pays taxes should be convenient for him and the timing should be appropriate, keeping in mind the needs of the tax payers 4) The payer should have the ability to pay the taxes, tax payers should not be burdened with such an amount that they are unable to pay the taxes and hence face punishment and fine for doing so. (Source: The canons of taxes have provided the guidelines for any government to follow and develop a fair and a convenient tax regime and tax collection and implement it with the point of view of being convenient to the tax payers. Bibliography Cope, J....
2 Pages(500 words)Essay

Assignment taxation law

...Taxation Law Taxation Law Tax law refers to laws that govern the collection of taxes by the central government to enable it perform its objectives (Cordes, 2005). Taxation includes all forms of income generating activities such as property ownership, licenses and duties. In most countries, taxation law body covers the procedure of tax compliant by citizens at four levels of the government agencies either payable directly or indirectly. Things such as property including land or real estates making the initial business costs fall under direct taxation. Indirect taxes include levies on products sold to customers and any services meant for consumption. Applying taxation law in the case of Concrete and Transport Ltd, analysis... of the...
2 Pages(500 words)Assignment

Taxation Law not under his control and, therefore, not an employee. Integration of an individual into any business should be considered when determining if one is an employee. This factor requires analysis of just how much of the employers business can be affected by the acts of the employee. If the success or failure of the business is either wholly or partly dependent on his performance, then he qualifies as an employee. Sometimes, the performance of the individual is insignificant on the reputation and success of the operations of the business. Sebastian only took a handful of jobs from Giga Systems Limited and could, therefore, not be depended on to ensures that...
8 Pages(2000 words)Essay

Business Taxation

...BUSINESS TAXATION Molly Tax computation For the tax year 15 Trading profit for the year £52,400 Add interest income (10%*1100) £110 Gross taxable revenue £52,510 Less car allowance (14,000/20,000) *10, 400 £7,280 Less personal allowance £10,000 Gross taxable amount £35,230 Tax ratetaxable income tax 20% £31,865 £6,373 40% £3,365 £1,346 Gross tax liability £7,719 Less relief on pension contribution ((20%*2,880) £576 Net tax payable £7,143 Florence Tax computation For the tax year 2014/15 Basic salary £26,400 Add interest income (10%*1200) £120 Gross receipts £26,520 Less personal allowance £10,000 Gross taxable revenue £16,520 Tax...
5 Pages(1250 words)Essay
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.

Let us find you another Essay on topic Law of Business Taxation for FREE!

Contact Us