Rewards received by airline companies
Answer to I
Taxation ruling of TR 1999/6 deals with the reward of flight that the airline companies provide to the loyal customers. According to this rule, the rewards received by the airline companies are not subjected to taxation as the form of income. However, in case of the fulfillment of the following conditions, these rewards can be treated as Fringe benefits Tax:
- A family relation is there between the employee and the employer; and the employee receives the reward as a part of his/her employment.
- The employees receive the flight reward under some kinds of specific arrangement.
The law of Taxation ruling TR 1999/6 states that the reward that the regular fliers receive from the airline companies needs to be taxed under the taxation law. The particular individual receives the reward as he/she has been providing services and for this reason, they are entitled to get the rewards from the airline companies. This reward will be accrued with the services and for the employers; these rewards will be treated as per the business expenses.
Based on the above discussion, it can be observed that Webjet frequent flier point received by the business analyst employed by the large business consultancy in relation to the work related travel will not be treated as per the taxable income. In addition, the taxation authority will not impose Fringe Benefits Tax (FBT) on these kinds of rewards.Answer to II
In case, an individual receives compensation from the customers as a reply of any kind of damage for the capital assets at the time of providing services to the customer, the receipts of that compensation will not be taxable under the income tax law for the recipient. In this situation, the following points need to be considered:
- The type of the asset needs to be capital assets and the recipient should actively use that asset for his/her business purposes.
- The customer should receive the sum at the time of the damage to whom the service was provided with the help of the capital asset.
- The received sum was used in order to repair the damaged part of the capital asset.
- The capital asset needs to be depreciable in nature and there has been the record of depreciation on that asset on the regular basis.
Based on the above discussion, it can be said that the particular amount that Crane Hire Company received from the customer as a part of the damage compensations shall not be subjected to taxable under income taxation for Crane Hire Company for the fulfillment of the above-mentioned conditions.Answer to III
As per the regulations of Australian Taxation Office (ATO), in case an individual receives any gift that will not be considered as a part of the income tax exemption and also, it will not be any part of non-assessable and non-exempted income. At the time of the calculation of the taxable income of the individuals, small gifts need to be excluded. However, in case, the gift is large, it is a cash gift, the gift can be easily converted into money, or the gift is cash that are provided to the employees, then the gift needs to be included at the time of computing the taxable income of the recipient. Thus, based on the above discussion, free overseas holiday package that the manager of the nightclub from the alcohol suppliers receives needs to be considered as taxable income at the time of computing the income of the nightclub manager.Answer to IV
As per the provided situation, the return to the members of the Canoe Club for the raise of additional fund in order to purchase additional canoes will not be subjected to taxation for the taxable income of the recipients. The main reason is that the received fund is not considered as income unless the members further contribute fund for the purchase of additional canoes and the collected fund must not more than the total required purchase amount.Answer to V
Compensation for capital assets
The Australian Taxation Office (ATO) has introduced the regulation of Taxation rulings of TR 1999/17 in order to deal with the benefits that the sportspersons receive for their involvement is various sports activities. This particular ruling states that the sums of benefits that the sportspersons receive needs to be taxed under income tax act in case those incomes are the part of the income from ordinary concepts. Based on the above discussion, it can be said that the amount that the Australian footballer received from the television company as the best and fairest player needs to be considered as taxable income under the ordinary concept.Answer to VI
The Australian Taxation Office (ATO) has introduced the regulation of Taxation rulings of TR 95/22 for the treatment of various allowances, reimbursement and others for the employees of construction industry. According to this taxation principle, the components of building and construction employees are provided below:
- Supervisors and project managers of the construction projects
- The labors of various building and contraction projects
- The employed project managed in the constriction cites
- Various other employees like carpenter, trainees, apprentice and others
Based on the above discussion, it can be said that the expenses that are related to a building qualification for the building apprentice need to be considered as the reimbursement and other allowances.Answer to VII
For the calculation of taxable income for an artist, the following expenditures for the short-term basis need to be allowed for the deduction:
- The short-term course fees related with arts
- The training costs for different kinds of modules and software
- The traveling cost at the time of pursuing the art courses
- The expenses for the meals
For the above discussions, it needs to be mentioned that at the time of deduction, the above-discussed expenditures will only be considered if they are linked with the short-term courses. In case, it can be seen that the expenses are made and they are not the short-term expenses, then they will not be considered as the allowable deduction under the taxation. Thus, the expenses in the provided case needs to be considered as allowable based on the presumption that all the expenses have incurred on the short-term basis.Answer to VIII
As per the regulation of Australian Taxation Office (ATO), the expenditures related to artists are subject to deduction for the long-term basis for the performing artists. According to the Australian Taxation Office (ATO), the following persons are considered as the performing artists:
- A musician can be considered as a performing artist
- An actor can be considered as a performing artist
- A singer can be considered as a performing artist
- A variety artist can be considered as a performing artist
- A dancer and performer in circus can be considered as a performing artist
In the provided situation, based on the presumption that the expenses are related with the makeup and dresses of an performing artist, the expenses will be allowed as deduction for the calculation of the taxable income of the performing artist.Answer to IX
Generally, the travel of the individuals between home and workplace is considered as private travel. However, as per certain provisions, one can claim allowable deduction on the above-mentioned traveling expenses. Office travel expenses will be considered when the whole travel is for office or the travel is partly for office and partly for private. In this situation, one can claim allowable deduction. As per the provided situation, it can be seen that the travel is solely for the purpose of work and for this reason; allowable deduction can be claimed for such expenses at the time of the calculation of taxable income.Answer to X
Expense occurred for the traveling between two workplaces can be considered for allowable deduction. However, in case of the provided situation, the expenses for the traveling between two employers will be allowed for deduction. The reason is that one cannot claim allowable deduction for the traveling between two different employers.
Gifts received by employees
It is needed to determine whether an individual is an Australian resident or foreign resident in order to determine the taxable income and situation of that individual. In case, an overseas student is enrolled in an Australian educational institution for duration of more than six months, that student will be considered as Australian resident for the purpose of taxation. As per the information of the provided situation, the Australian Taxation Office will consider Manpreet as a resident of Australia for taxation purpose as she has enrolled in a course in an Australia institution having course duration of more than six months. In addition, Manpreet also provides services to an Australian firm and got remuneration of $45000. Apart from this, several educational expenses of Manpreet are not allowable for deduction. Manpreet had to incur self-educational expenses of $18000 that is not allowable for deduction. A student has the option to claim allowable deduction on self-educational expenses in case of work associated study or the student receives scholarship that is taxable bonded. It needs to be mentioned that the educational courses need to have link with the current employment and;
- Maintain or improve the required skills and knowledge of an individual for the employment
- The result of the course will help in the increase of the employment income of the individual.
An individual will not be eligible for the claiming of allowable deduction for self-educational expenses for the types of course that have not enough link to his/her current employment even though,
- He/she may be generally associated with it; or
- He/she provides an individual for the obtaining of new employment
According to the rules under Section 8-1 of the ITAA 1997, an expenditure is deductable in case there is sufficient association between the expenses and production activities related to income; it implies that the required features of this expenditure needs to be related with the work And it should not be private or domestic in nature. As per the case of Lunney v. FC of T; Hayley v. FC of T (1958) 100 CLR 478; (1958) for the meeting of expenditure under the section of 8-1 of the ITAA 1997, the expenditure needs to have required characteristics in order to gain allowable deduction under the assessment of income.
As per the ruling in the case of Ronpibon Tin NL v. FC of T (1949), an income should have the connection between the taxable and outgoing income in order to gain the importance of assessable income. For this reason, the expenses that Manpreet incurred for the self-education will not be subjected to allowable deduction under taxation laws. This is the outcome because the taxation authority cannot allow deduction for the expenses for self-education in case the main motive of the self-expenditure is to gain new employment or to open the way for the activities regarding new income.
As per the provided situation, it can be seen that some of the major expenses of Manpreet are related with the expenses of computer and printer and expenses related with the new mobile phone that is use for the work purpose. According to the general principles, under section 8-1 of the ITAA 1997 the specific expenses are considered for allowable deduction in case enough links can be noticed between the capacity of income earning and expenses and it must be connected with the work but not with the private and domestic works.
It cannot be said that expenses are a perquisite for the generation of assessable income. For this reason, the expenses need to be incidental and relevant with the actual income activities in order to gain income. As per the results of the case named FC of T v. M I Roberts 92 ATC 4787, the federal court has allowed the mine manager for the deduction of expenditure related to MBA with the help of the application of Maddalena principles. As per the rules under section 8-1 of the ITAA 1997, the new mobile phone expenses in relevant in order to gain assessable income and for this reason, Manpreet is eligible for claiming allowable deduction.
- The receipt of amount from India is related with an income from trust and thus, it needs to be considered under subsection 6AB (1).
- It can be seen that the taxable income of Manpreet is less than $37000. Thus, there will be a decrease in 1.5% for each amount of dollar over the amount $37000. Hence, Manpreet is eligible for claiming of a low income tax offset $212.5.
- The total sum of taxable income of Manpreet is $8609. Thus, there is a scope of application of a Medical Levy of 2% in order to arrive at the taxable income.
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