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Table of Content

• Answer 1
  • Matter
  • Relevant law of this question
  • Application of the Law of this issue
  • Conclusion
• Answer 2
  • Matter
  • Relevant Law used for this purpose
  • Application of the Law of the question
  • Conclusion
• Answer 3
  • Matter
  • Relevant Law of this issue
  • Application of the Law
  • Conclusion
• References

Answer 1

Matter

Hilary as he is very famous mountain climber. At around $10000 was offered by the daily terror newspaper. Hilary take a very risk with a few short primitive time, that is without an assistance of a ghost writer, she writes a story which is worth it .Hilary basically assigns her right, title and interest in the copyright for $10000. When the story was being published and she got paid. Mainly Hillary wrote a story and she sold the manuscript of that also to Mitchell library for at around $5000. She received over $2000 for the several photographs.

Relevant law of this question

As per question and all requirements section 4 of the income tax assessment act,1937. Income expect from salary ,expecting bonus, travelling allowance, pension , gratuities or any other sum , received as an employee or in the capacity of an employee is known as personal exertion. . Personal Exertion also includes the income from business either earned as a sole owner or in partnership, along with income from the property. Also includes any profit by selling of any asset of assesses or other. But an income which is made by interest unless it is from principal business and rent are not included in this personal exertion. So the salary and profits earned by business are included in this. As per the case of Stone vs. The Commission of Taxation, the verdict of the court was that the prize money received by athletes have to be included in the income from personal exertion .There was also a similar perception was held by the court where the case of News Limited vs. South Sydney District Rugby (League) Football Club LTD was also on this same issue and the court held same verdict in this case too (Langley, 1972).

Application of the Law of this issue

As per the Section 6 law, the sole incomes which are earned as salary or business income can be referred as income from personal exertion. In application to many relevant cases, even if the income is made through sports and others in which the individual has professional interest would be defined as income from personal exertion. The payment made with the specific relationship between the employer and the employee is the salary which is income from personal exertion. In this case, The Daily Terror Newspaper offered Hillary to write her expedition story. This can be referred as job offer but this is only valid until the completion of her story. After that there will be no relation between the employer and employee from the work view. This type of annual tax text for practitioners provides a complete analysis of relevant case law, legislation and rulings, and mainly a conceptual framework had been taken into account within which to assess current tax concerns. It covers superannuation, income tax the service tax and goods and also fringe benefits tax etc. Therefore it’s sure that it can be stated that the money earned by Hilary but it is not the income as salary, it is just a one-time payment. In the other side Hilary is writing her own story for the first time without any of her assistant and the story is published and she got paid so it is not a business income as business is a continuous affair. But even if she wrote it for her own interest, the income cannot be stated as personal exertion. On the other hand the income through the sale of the manuscript or the expedition photographs is not an income as salary or profit made from continuous business activities so this income cannot be counted as income from personal exertion (Freeborn, 2010).

Conclusion

As per question and all circumstances we can say that income tax assessment (act, 1936), all the payments what Hilary got that not income for personal exertion, while if she wrote her own story by her own without any assistant that rick may worth it and also maybe that story which she written by her own self it for personal satisfaction.

Answer 2

Matter

Here in this part client is a parent. Client lent at around $40000 for her son for providing housing loan. Here it has taken into the account as this loan is short term housing loan. The agreement is that the son will reply $50000 at the end of five year. But there was not any formal agreement and security when the loan was lent. Thereafter the mother had informed her son that the interest is not needed to pay. But after 2 years the son repaid the whole loan amount along with an additional interest at the rate of 5% through one check. Now it is needed to decide the effect on assessable income of the parent.

Relevant Law used for this purpose

In the Income Tax Assessment, sixth division specifies the different kind of incomes which can be included and excluded from assessable income. There are some certain incomes which are not ordinary income but that is from the part of assessable income are known as statutory income (ICAA 1997). This unit basically considers the Income Tax Assessment Acts of the year of 1936 and also 1997 and gives importance to the primary law statutory and principle which underlie the basic idea of quantifiable income. This unit also can provide the main and ultimate analysis of the statutory provision – Fringe and Capital Gain tax of the country. It can generally provide a thoughtful analysis of the jurisdictional issues of land and residence and source of income which are primary and basic to all Australia’s international stipulation. While this unit mainly does not specifically analyze ‘the Goods and Services act 2000’ also the impact of GST is considered in relation to areas of taxation law that are addressed in this unit. The Section 6.15 states that the income which is not ordinary income or statutory income is non-assessable income. Hilary was involved in the student to student peer counseling club .on her off time she volunteers for Noah homes in spring valley, CA where she assist with intellectual and development disabilities. The court has to decide that the income of the Family members was taxable or not on the basis of whether there have been a partnership between them. Now if this income is a taxable one then it would arose that is a business relationship between the family members apart from family relationship. Thus in this condition there will be a huge transaction or at least a bargained transaction or some dealings to prove it as an assessable income.

Application of the Law of the question

The mother was definitely earned income within Australia but that income is not from salary, house property, business income, profit from sale or other source. But the income was from lending money to her son which should not be taxable as it is under ordinary income .Receiving interest on the amount of lending money to someone is not included as statutory income thus it is not taxable. In prospect to this case, the relationship between the family members are to be a business relationship to recognize their in between transaction as an assessable income. In case if no business relationship is between the mother and her son because in the real world no lender will have to lend their money without interest or any formal agreement. So in this case there is none of the requirements of assessable income have met so the additional income earned by the mother have no impact on her assessable income.

Conclusion

About the question 2 as per requirement we discuss earlier as per the applied law, the interest and additional money received over the money what they lent by the mother have no affection on her assessable income. It would be declared as non-assessable income but vacant.

Answer 3

Matter

Scott as a professional, he is an accountant and who purchased a vacant wedge or slab of land in Brisbane on 1 Octobe1980. On 1st September 1986, sott belt a house on the ground. The value of that land was around $90000 cost of and the cost of construction was done on the current tax year, Scott or sold the property at auction for $800000. Scott’s net capital gain or loss has to be calculated. Further in this case, the property had been sold to Scott’s daughter or if instead of Scott, a company would have been owner needs to be assessed.

Relevant Law of this issue

As per rule of Australian Taxation Office the capital gains tax is levied on the net capital gain or loss by any occupant of Australia. As per rule the difference between the selling price of an asset and the actual price of that asset is referred to the capital gain or loss. Now on the difference between the selling price of asset and actual price of that will determine the capital gain or maybe loss. The tax structures for the assets held for less than 12 months and the capital gain or loss made by that asset and the assets held more than 12 months and their capital gain or loss, is totally different. For this case the second scenario is applicable and for this the Capital Gross Tax has to be calculated on the capital gain or loss made by Scott. If the purchase was made after September, 1999, Capital Gains Taxation provision an individual will get 50.43% discount and super funds will get 35.33% discount. This CGT discount indexation is applicable only when the tax payer is a super fund (Guide to new legislation. 1993)

Application of the Law

In that case, Scott has the property for more than 12 months and he also bought it in 1999 so he will directly receive 50.43% discount or indexation. Now it can be decided on basis of profitability made through the different procedures. Now if he goes for Indexation process,

Capital Gain = Selling Price- Indexed Cost

Now, Selling Price = $800,000

Basic Indexed Cost = ($90,000+$60,000) x (CPI for September, 1999/CPI for October, 1980)
                        = $150,000 x (68.7/43.2)
                        = $238,542

Capital gain for this particular = $800,000 – $238,542
Total = $561,458

If the 50.43% discount CGT is applied,

Capital Gain = (Selling Price – Actual Price) x 50%
                        = $650,000 x 50%
                        = $325,000

Now Scott surely choose 50.43% CGT discount method over indexation method as it is profitable.

If he sold property to his young daughter it would cost approx $200,000 then the sale value is taken as the market value also. In that case he will make the profit of $325,000. As he is still present so the option of absorbing by the company is not applicable as much.

Conclusion

According the whole theorem which is given by the references data base Capital Gains Taxation, Indexation or selling to a company or daughter, the most capital gain would be made through the 50.43% CGT discount, so Scott will definitely choose this.

• After that the Scott’s net capital gains for the current tax year is $ 325 000 and also decided tax payable then indexation method.
• If Scott’s have sold his property to her daughter with a cost of $ 200000 he would have to conferrable as market value prize. the net capital gain is then $ 3225 000
• If the owner of the property have accompany then the option close to net amount of 50% CGT discount structure so in that case the net capital will $ 561 458

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