Methods of calculating Tax liability

1. Subtraction Method – a firm calculates its base that have been subject to the value added tax
2. Credit Method – a business credits against the tax it has collected on its sales the tax that it has
paid on its purchases.
Jurisdictional Reach of the Tax
Destination principle – personal consumption is taxed in the country of destination, which is assumed to
be the country of consumption

Alexander vs. The Commisioners of Customs and Excise

Alexander’s contention: tax on the supply to a taxable person of any goods or services for the purpose of
a business carried on or to be carried on by him.
2 questions involved:
- WON the items were supplies for purposes of mr. alexander’s profession as a barrister
- WON at the time they were supplied such profession was then to be carried by him
Test to be applied:
WON the items were obtained by Mr. Alexander for the purpose of enabling him to carry on his intended
profession
Ruling:
A supply may be obtained for more than one purpose or reason. The purpose of the business must
be the main purpose, but not necessarily the only purpose of abtaining the supply.