Taxation Law (Australia) With Calculation Of Indexation
PART - 1
QUESTION – A
Under subsection 6-5(1) of the ITAA 1997 an amount is assessable income if it is income according to ordinary concepts (ordinary income).
In a simple sense Taxable income is: Assessable income
(-) deductions
Assessable income includes 2 segments ordinary income & statutory income, excluding exempted income.
Statement of Issues
1. Whether Andrew’s income of $ 50 from assessing family & friends tax returns is assessable as taxable income under the income tax act?
2. Whether Andrew’s income of $ 1,000,000 derived from illegal channels (stealing from W.E.T’s overseas clients) is considered as income and assessable under the income tax act?
3. Whether Andrew is liable to pay tax on the general bonus amounting to $ 5000 received in July 2006, also on the personal bonus of $ 3000 received in December 2006, which other employees were not entitled to.
4. The next issue is whether the raise in Andrew’s annual income amounting to $ 7500 (pay rise effective from 1st January 2007) resulting from a promotion is considered as assessable income under the taxable income’s act?
5. Whether the remuneration or fee of $ 50,000 offered by S.E.A. to Andrew for signing a 5 year contract is considered as taxable income and is assessable under the taxation act?
6. The final issue is whether the winning proceeds of the annual marathon amounting to $ 10,000 is assessable as income under the taxation act?
Issue 1
Law& Application: Taking into consideration that Andrew was charging a fee for filing tax returns for his friends and family is an illegal act as it was against W.E.T’s policy which stated that no employee was to engage in doing family’s returns. None the less it is a taxable income for Andrew as it will be considered as ordinary...
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