Scribd
Upload
39 views22 pages

20 05 30 - BULAW5916 - Revision

This document provides an overview of the topics and content covered in the BULAW5916 Course revision final assessment. The 3-hour, 40-minute open book exam will consist of 6 questions worth 20 marks each, with students required to answer 5 questions. Topics covered in the assessment include income tax law, GST, FBT, companies and shareholders, partnerships, trusts, and tax administration. The document provides guidance on exam technique, emphasizing the importance of preparation, time management, and understanding the questions.

Uploaded by

Purnima Sidhant Babbar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
39 views22 pages

20 05 30 - BULAW5916 - Revision

This document provides an overview of the topics and content covered in the BULAW5916 Course revision final assessment. The 3-hour, 40-minute open book exam will consist of 6 questions worth 20 marks each, with students required to answer 5 questions. Topics covered in the assessment include income tax law, GST, FBT, companies and shareholders, partnerships, trusts, and tax administration. The document provides guidance on exam technique, emphasizing the importance of preparation, time management, and understanding the questions.

Uploaded by

Purnima Sidhant Babbar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 22

Faculty of Business

BULAW5916

Course revision

1
Final assessment

• 3 hours & 40 mins

• Total marks- 100 (then converted to a score out of 50)

• Open book

• Structure- 6 x 20 marks. Answer 5

• Support your responses where relevant with references to cases &


statutory sections
Introduction

• Main legislation

• Medicare levy

• Medicare levy surcharge

• S4-10

• S4-15

• Individual tax rates


Residence & source

• What sources of income are assessable to Australian


residents & foreign residents

• S6(1) ITAA36

• Taxation Ruling 98/17

• Source rules
Assessable income (1 of 2)

Receipts received by persons

•Factors suggesting income/ capital


Income Capital
Earned Gift
Regularly received Windfall gain
Compensation for giving up
capital

•S15-2- Includes as assessable income the value of all allowances,


gratuities, compensation, benefits provided in relation to employment of
or services rendered by TP
•If amount is FB> s23L
Assessable income (2 of 2)

Business income

Is there a business?
• Factors suggesting yes
• Commerciality
• Regularity
• Activities carried on in business like way
Business income
• Sale of land cases
• California Copper- Profit assessable. Trading transaction
• Myer
1. Even extraordinary transactions can be income provided
profit making intention & commercial transaction
2. Amount received in substitution for income is income
• Whitfords Beach- The operations of Whitfords Beach were
transformed & the sale was assessable
• Westfield- Purpose of profit making must exist in relation to
the particular operation which gives rise to profit

• S15-15- Includes in assessable income a profit that arises from


carrying out profit making undertaking/plan but doesn’t apply where
profit assessable under s6-5, or where CGT would apply
CGT
• S102-5- NCG = (CG – CL) – carry forward CL

• CGT events A1, C1, C2, D1, F1

• Specific exemptions (e.g. Pre-85 asset exemption)

• Rules relating to calculating capital proceeds (e.g. Market value substitution


rule)

• Modifications to cost base

• Collectables & personal use assets

• Indexing and discounting


Deductions (1 of 2)

• S8-1
• Tests used to establish nexus
• Timing issues
• Pre- business starting
• After business has ended
• Capital expenses
• Once & for all test
• Enduring benefit test
• Business entity test
Deductions (2 of 2)

• Private and domestic


• Clothing
• Childcare
• Home office
• Travel
• Self-education

• Where deduction denied by income tax legislation

• Specific provisions relating to deductions


Capital allowances

• S40-25
• S40-30- “Depreciating asset”
• Diminishing value method: Base value x (days held/365)
x (200%/asset’s effective life)
• Prime cost method: Asset’s cost x (days held/365) x
(100%/ asset’s effective life)
• Adjustable value
• Termination value
• Taxable purpose
• Balancing adjustments
Trading stock (1 of 3)

• S70-10- Definition of trading stock


• Amounts received from sale of trading stock = Assessable under s6-5
• Expenditure incurred in purchasing trading stock = Generally deductible
in year it becomes trading stock on hand
• Whether there is dispositive power
• S70-35-
• Closing stock> opening stock = TP must include in assessable
income the excess of the value of its trading stock on hand at the
end of the year over the value of its trading stock on hand at the
start of the year
• Opening stock> closing stock = TP is entitled to deduct the
excess of the value of its trading stock on hand at the start of the
year over the value of its trading stock on hand at the end of year
Trading stock (2 of 3)

• S70-45- Choice of-


• “Cost”
• “Market selling value”
• “Replacement value”

• S70-50- You can elect to value an item of your trading


stock below all the values in s70-45 if-
(a) This is warranted because of obsolescence/ any
other special circumstances relating to that item and
(b) The value you elect is reasonable
Trading stock (3 of 3)

• S70-90- Where a TP disposes of trading stock outside


the ordinary course of business, their assessable income
includes the market value of the item on the day of
disposal (the entity acquiring the item is taken to have
acquired it at the same value)

• S70-110- Where a TP stops holding an item as trading


stock, but still owns it, the TP is treated as if just before
the stock stopped being trading stock, they had sold it to
someone else for its cost & immediately bought it back
for the same amount
GST

• Registered business making input taxed supplies doesn’t charge


GST on supply and doesn’t claim input tax credits

• Registered business making GST-free supplies doesn’t charge GST


on supply but does claim input tax credits

• Taxable supplies

• Registered entities are entitled to input tax credits for GST charged
on creditable acquisitions & creditable importations

• Value of taxable supply = Price x 10/11


FBT

• s23L ITAA36 deems FBs to be non-assessable non-exempt income


to employees
• S136 FBTAA-
• Benefit
• Provided during the year
• By an employer/associate/arranger
• To an employee/associate
• In respect of employment
• Exclusions
• Exempt FBs
• Categories of fringe benefit
Companies & shareholders

• Co. tax rate


• S44
• S6(1) definition of dividend
• Deemed dividends
• Dividend imputation system
• Maximum franking credit for a distribution
• Amount of frankable distribution x (1/applicable gross up rate)
• Applicable gross up rate = (100% - co. tax rate of that co.)/ co. tax
rate for that co.
• Franking account – Debit & credit entries
• Franking deficit tax
• Implications for shareholders
• Benchmark rule
Partnerships

• General law partnerships vs tax law partnerships


• Net income of a partnership
• Partnership losses
• Partner’s salaries
• Partnership interest payments
• Dividends received by the partnership
• CGT
• Work in progress payments
Trust & beneficiaries

• Fixed vs discretionary trusts


• Trust losses
• S97
• S95(1)
• “Presently entitled”
• S98
• s99A
• Minor beneficiaries
• Non-resident beneficiaries
Tax administration

• Business Activity Statements


• Definition of assessment
• Deemed assessments
• Amendments of assessments
• Methods of collection
• Collection of tax from third parties
• Penalties
• Objections to assessment
• Appeal/review of Commissioner’s decision
Some words on technique…

• Poor preparation
• Missed issues, sections and cases
• Lack of knowledge and understanding
• Poor planning of time
• No discussion of law & application to the question
• Golden rules
• Determine time allowed for each question
• Don’t go beyond this time
• Understand the question

You might also like