LAWS20060 Taxation Law of Australia - Question and Answers Assignment Help

(a) Taxation Ruling TR 2018/4 contains the standards used by the Commissioner of Taxation to assess to effective useful life of depreciable assets in terms of sections 40-100 of the Income Tax Assessment Act 1997 (hereinafter “ITAA97”). TR contains two tables: Table A is an industry specific table and contains guidance for assets employed in particular industry such as agriculture, forestry and fishing; whereas Table B contains guidance for assets of general nature.

(b) Division 13 of the ITAA97 lists available tax offsets and Division 67 lists refundable tax offsets such as private health insurance offset for individuals allowed under section 61.205.

(c) For tax year 2018/19 the highest marginal tax rate is 45% that is applicable on amount of income exceeding $180,000.

(d) Capital gains from the disposal of a ‘dwelling’ that is resident taxpayer’s main residence during the tax year is exempt from capital gains tax under the Subdivision 118-B of the ITAA97 provided the following conditions are fulfilled:

1. Taxpayer is a resident individual;
2. Throughout the ownership period the property sold was the main residence of the taxpayer; and
3. Property was not acquired as the beneficiary or trustee of the estate of the deceased.

(e) CGT event B1 is defined under section 104.15 of the ITAA97. It aims to tax proceeds from the transfer of usufruct of a CGT asset, i.e., the right of use and enjoyment passes to another person whilst the title of the CGT asset remains with the owner and may transfer on or before the agreement’s conclusion. The difference between the capital proceeds received under agreement and the initial cost of the asset are taxed.

(f) Section 4-10 subsection (3) lists down the formula for the computation of tax liability on an individual’s taxable income for the year as follows:

Income tax = ( taxable income x rate ) – tax offsets

First taxable income is computed according to rules given in the statute, the relevant rate is applied as per Income Tax Rates Act 1986, and finally tax offsets are worked out to reduce the tax liability for that tax year in accordance with the rules given in the statute.

(g) In the case law FC of T v Day (2008), a public officer claimed legal expenses incurred by him in defending disciplinary charges brought against him on three different counts by the employer – the Australian Customs Service (Customs), under the Public Service Act 1922. It was held by the majority of high court that:

• Charges relate in particularly to defending the proceedings brought by the employer, hence covered under the broad ambit of deductions of general nature allowed under section 8.1 of ITAA97. However, the expenses must be productive of income earned by the individual.
• The legal expenses incurred by the employee arose due to his connection with the employment with the Customs service and therefore were not the loss of private nature.