Laws20060

Running head: LAWS20060 1

LAWS20060 – Term 2, 2017

Assessment 1 – Individual Assignment

Student Name:

Institutional Affiliation:

Date:

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Question 1-Advice to Webjet frequent flyer

It would be of great essence for the Webjet frequent flyer to fully understand that in

accordance to FBTAA (Fringe Benefits Tax Assessment Act) 1986, the benefits that are received

by employees because of taking part within a frequent flyer program do not basically constitute

fringe benefits. In addition, the benefits that a taxpayer receives, whether an employee or

otherwise, because of taking part within a frequent flyer program may be considered to constitute

assessable income within that taxpayer’s hands in respect to ITAA (Income Tax Assessment Act)

1936. Besides, the benefits that the employees receive may constitute assessable income in

respect to ITAA paragraph 26(e)

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For purposes of establishing assessable income, the benefits that a taxpayer receives that

have a monetary value, besides the non-cash business benefits that are covered under ITAA,

Section 21A, have to be value within a fair market value as at the time during which the benefit

is derive. Within majority of the cases, the ATO (Australian Taxation Office) considers as the

fair market value to be the lowest cash price, which the taxpayer would typically have paid for

the purchase of such a benefit from an arm’s length supplier. Either in the case whereby both

employer-paid, as well as, private transactions have led to the employee’s entitlement to the

benefit, the benefit value will have to be apportioned. For instance, within a frequent flyer

program, the benefit value has to be reduced by an apportionment on the basis of the points the

taxpayer paid as a result of private transactions divided the number of points needed to obtain the

benefit.

1

Braithwaite, Valerie, and Monika Reinhart. "The Taxpayers' Charter: Does the Australian Tax

Office comply and who benefits?." (2000).

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Question 2 -Advice to crane hire company

Compensation received for loss of an asset mostly takes the receipt form in respect to the

loss or destruction of the asset. Such asset disposal results in a CGT (Capital Gains Tax) event

taking place in respect to that asset, whereby the compensation receipt is included within the

consideration for such event. When establishing the taxable loss or fain realized, the regular CGT

rules apply. This includes the 50% discount in cases whereby the asset had been possessed for

more than a year, as well as, the CGT concessions for small business, where applicable.

In cases whereby the asset has been damaged permanently, such as within the case under

review, the received compensation payment reduces the asset’s cost base. Compensation of this

nature is treated as the recoupment of the costs that are incurred in replacing the asset and are not

included within the asset’s cost base in respect to paragraph 110-45(3).

Question 3 -Advice to the nightclub manager

In the event one is moving overseas , for study, work or holiday, it is highly likely that

for income tax purposes, one will be considered as an Australian non-resident in the course of his

or her overseas stay. Therefore, it is essential to comprehend the manner in which one’s

residency status is set to be determined, as well as, the non-residency tax implications. For the

Australians travelling abroad, the IT 2650 (ATO Taxation ruling) stipulates the various factors

that have to be put into consideration, which include: intended length of stay abroad; the

continuity of presence within the foreign country; the intention of either returning to Australia or

travelling to another nation among others. Nonetheless, an individual who leaves the country,

with the plan of jetting back in not more than two years, such as in this manager’s cases, is

normally treated as an Australian resident for tax purposes.

Question 4- Advice to canoe club

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Some NFP (Not-For-Profit) clubs, societies, as well as, associations are treated as taxable

organizations and hence are not exempted from income tax. Examples of such NFPs are such as

social clubs, professional associations, political parties and many others. If a NFP organization

falls under the taxable category, it may be compelled to file tax returns in addition to paying

income tax. In the case under review, the canoe club can be considered to be a social club hence

it can be treated as a taxable NFP. Nonetheless, in the event its taxable income happens to be not

more that $416 per year, it will not have to file a tax return in the event an Australian resident

(unless otherwise requested to do so)

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The others NFPs that fall under the taxable category and have an income of more than

$416 per annum, are expected to file their returns. However, in the case of the ‘canoe club’ the

refunds made to the members will not be taxable and will not be part of club’s yearly taxable

income. All the aforementioned conclusions will not remain the same in the event it turns out

that the canoe club is a NFP that is exempted from tax.

Question 5

The payment received by the Australian footballer for turning out as the best, as well as,

the fairest within the AFL will be considered as part of the player’s assessable income. Basically,

assessable income for players include all the income earned in salaries and wages, rental from

property, endorsements in goods or cash, all competition winnings, capital gains upon sale of

assets, interests accrued on savings and many other sources. Typically, the taxable income is

obtained by deducting the allowable expenditure from the assessable income. Upon establishing

2

Tran-Nam, Binh, and Chris Evans. "Tax policy simplification: An evaluation of the proposal

for a standard deduction for work related expenses." (2012).

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the taxable income, the respective tax scales are applied for the purposes of determining the

affected player’s tax liability. In some cases, the tax liability may be adjusted for the purposes of

including any rebate that may be due

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.

An income rebate of as low as $445 is applicable in the cases whereby the taxable income

is not more than $35,000. An extra 1.5% is added as the Medicare Levy. In the event the income

is less than $20.452, no levy is payable. In the event the income is more than $80,000, and the

player has no private cover, a 1% Medicare levy surcharge is applied. In case the taxable income

is more than $130,000, the surcharge shoots to 1.5%.

Question VI

The expenses related to a building qualification that are incurred by the building

apprentice can be considered to fall under the work-related self-education expenses. One claims

such expenses in the event they happen to have a concrete connection to the present work

activities. Self-education can involve attending a formal course or even a seminar. For the

course to be considered as adequately connected to the present work activities, it should maintain

or make better the various skills one needs within the present employment and contribute to an

increase in income from the present employment. It is outright that the case of the apprentice

fulfils al the aforementioned factors.

Nonetheless, upon fulfilling the aforementioned conditions, the apprentice should

understand that generally one can claim study-related items of the likes of course fees, student

union fees, textbooks, student union fees, among others. It is of great essence to keep records of

3

Beloff, Michael, Tim Kerr, Marie Demetriou, and Rupert Beloff. Sports law. Bloomsbury

Publishing, 2012.

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the said self-education expenses. The aforementioned records can be written evidence or receipts

of one’s expenses, inclusive of receipts for the depreciating assets that one has purchased such as

laptops. One can also keep dairy entries for the expenses include on telephone, internet access,

equipment for the self-education purposes over a one month period

Question VII

Putting into consideration that the client is to incur expenses while taking a short course

that may result to advancement in his or her career, it can also be considered to fall under the

work-related self-education expenses. In that regard, One can claim such expenses as they

happen to have a concrete connection to the present work activities. Self-education can involve

attending a formal course or even a seminar. For such a course can be considered as adequately

connected to the present work activities, as it will definitely make better the various skills one

needs within the present employment and contribute to an increase in income from the present

employment. It is outright that the case of under review fulfils al the aforementioned factors

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.

Nonetheless, upon fulfilling the aforementioned conditions, the art management

employee should understand that generally one can claim study-related items of the likes of

course fees, student union fees, textbooks, student union fees, among others. It is of great

essence to keep records of the said self-education expenses. The aforementioned records can be

written evidence or receipts of one’s expenses, inclusive of receipts for the depreciating assets

that one has purchased such as laptops. One can also keep dairy entries for the expenses

4

Braithwaite, Valerie, and Monika Reinhart. "The Taxpayers' Charter: Does the Australian Tax

Office comply and who benefits?." (2000).

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including of expenses on telephone, internet access, equipment for the self-education purposes

over a one month period for purposes of making use of the dairy as the written evidence.

Question VIII

One can launch a deduction claim for costs incurred in the purchase or even cleaning of

occupation-specific clothing, unique, distinctive uniforms, as well as, protective clothing. To

make the deduction, may have to produce written evidence, which indicates that the purchase

was made, as well as, written evidence of the cleaning costs. In the event once received an

allowance from the employer for uniforms or even dry-cleaning, one should make certain that

the allowance amount is shown within the tax returns.

One can claim for uniform or work dresses, inclusive of or work makeup whether they

are compulsory or simply non-compulsory, which are unique , as well as, distinctive to the

organization. Clothing is considered as unique in the event is not only designed but also made

simply for the employer. Clothing is distinctive in the event it has a permanent logo of the

employers, and such clothing cannot be available within the general public. In that perceptive,

one is not expected to claim the cost incurred in the purchase or laundry of a plain uniform.

Question IX

Concerning expenses related to travel from home to office and vice versa, they are in

most cases considered as private travel. Nonetheless, one can claim deductions within certain

circumstances, in addition to some travel from one workplace to another. In the event one travels

both privately and partly for work, a claim can only be launched for the costs incurred while

carrying out the employment duties.

Claims are allowed in the case whereby one incurs const while travelling directly

between two distinct work stations, for instance, in the case whereby one has a second job.

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Claims are also permitted for travelling from the workstation to another workplace, for instance,

the premises of a client, while still on duty or in the event one travels from home to another

work station fore work purposes, and afterwards to one’s normal workplace or home directly.

However, the just mentioned condition is not applicable in cases whereby the alternative

workplace has turned out to be a regular workplace.

One is also entitled to a claim in the event he or she has to carry heavy tools or even

equipment and the employer requires to be used in the work and they could not be left with the

workplace, for instance, while carrying out job duties that require the use of an extension ladder.

be Either way, one cannot claim for compensation for travelling in his or her car between the

workplace and home due to the fact that one does work-related tasks, for instance picking up

mail on the way to home or work

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Question X

As earlier mentioned, there are the specified scenarios whereby one can claim travel

costs in respect to the ATO. Claims are allowed in the case whereby one incurs const while

travelling directly between two distinct work stations, for instance, in the case whereby one has a

second job. Claims are also permitted for travelling from the workstation to another workplace,

for instance, the premises of a client, while still on duty or in the event one travels from home to

another work station fore work purposes, and afterwards to one’s normal workplace or home

directly. However, the just mentioned condition is not applicable in cases whereby the alternative

5

Tran-Nam, Binh, and Chris Evans. "Tax policy simplification: An evaluation of the proposal

for a standard deduction for work related expenses." (2012).

LAWS20060 9

workplace has turned out to be a regular workplace. In that regard, it is outright that one cannot

claim the costs incurred in travelling from one employer to the other.

QUESTION 2

In Australia, the income tax rates basically depend on the year that the income was

earned, as well as, the residency status of the earner. Putting into consideration that Manpreet’s is

an international student who has come to CQU, Sydney for studies, she will actually be treated as

a non-resident for taxation purposes. The non-residents are usually taxed more as compared to

the residents and are not eligible for a tax-free threshold. Nonetheless, the part year residents are

in some cases eligible for what is terms as the part-year tax-free threshold

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. In the event one is a

foreign resident who works within Australia, one has to declare on his or her tax return all

income earned within Australia, inclusive of rental income, employment income, capital gains on

the acquired Australian assets, as well as, Australian pensions together with annuities, expect in

the cases whereby exemption is available in accordance to the Australian tax law.

In addition, non-residents are not required to pay for the Medicare levy as they are not

event entitled to the Medicare health benefits. Besides, they are not expected to declare the

Australian-sourced dividends, interests or royalties that are derived while one is a foreign

resident, as long as the Australian financial institution which pays the non resident has already

withheld tax

7

.

6

Pinto, D. (2011). Taxation of financial transactions. In Australian Taxation Law (pp. 1239-

1326). CCH Australia Limited.

7

Krever, Richard. "Taming complexity in Australian income tax." (2003).

LAWS20060

10

In respect to the aforementioned facts, in the Manpreet’s case, the only taxable income is

the $45,000 earned while working as an office assistant. The other sources of income such as the

$20,00 send by her parents, the $10,000 from an Indian trust account are not subject to tax as

they were not earned within the Australian borders.

The tax rates for non-residents in the 206-17 financial year were as tabulated below

Taxable Income

Tax on this income

0 – $87,000

32.5c for each $1

$87,001 – $180,000

$28,275 plus 37c for each $1 over $87,000

$180,001 and over

$62,685 plus 45c for each $1 over $180,000

Putting into consideration that Manpreet’s taxable income is $45,000, it falls under the

category of 0-$87,00 which is taxed at the rate of 32.5c for every $1. Therefore, the total rax that

she will required to pay will be

$1= 32.5c

$45,000 = ?

(45,000*32.5) /100= $14625

Therefore, based on the calculations featured above, Manpreet will have to pay a tax of around

$14625.

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References

Beloff, Michael, Tim Kerr, Marie Demetriou, and Rupert Beloff. Sports law. Bloomsbury

Publishing, 2012.

Braithwaite, Valerie, and Monika Reinhart. "The Taxpayers' Charter: Does the Australian Tax

Office comply and who benefits?." (2000).

Krever, Richard. "Taming complexity in Australian income tax." (2003).

Pinto, D. (2011). Taxation of financial transactions. In Australian Taxation Law (pp. 1239-1326).

CCH Australia Limited.

Tran-Nam, Binh, and Chris Evans. "Tax policy simplification: An evaluation of the proposal for

a standard deduction for work related expenses." (2012).

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