Faculty of Higher Education

Individual Assignment Cover Sheet

This cover sheet must be submitted with your assignment

STUDENT NAME ANUBHAV SURI

STUDENT NUMBER PCC2761
UNIT CODE HA3042
UNIT NAME TAXATION LAW
DUE DATE 17/01/2023

DECLARATION

I certify that:

☒ This assignment is my own work.

☒ I have acknowledged and disclosed any assistance received in its preparation and cited all sources
from which data, ideas, words (whether quoted directly or paraphrased) were taken.

☒ This assignment was prepared specifically for this unit only.

☒ The reference list is truthful and accurate and in Holmes approved referencing style.

STUDENT SIGNATURE / NAME

Anubhav Suri

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Table of Contents

Answer 1:..........................................................................................................................3

Answer 2:..........................................................................................................................5

References:.......................................................................................................................7

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Answer 1:

Step A) Section 8-1 of the Income Tax Assessment Act of 1997's "Positive Limb".

The ITAA 1997's Section 8-1 permits a deduct for any and all damages and expenses
to the degree that they are spent in acquiring or creating taxable profit, with the
exception of expenses that are capital-related, private, domestic, or related to the
production of exempted revenue.

It is not required for an expense to result in taxable revenue in the same fiscal year that
it is spent. The same arguments may be extended to other sorts of costs, such as
council rates, even though Steele's decision concerned the mortgage interest deduction
of interest charges. In Steele's case, it was determined that the following situations
would result in the payment of interest from a period before the relevant assessable
income was derived:

a) The income is not accrued prematurely, is not an introduction to the actions that
generate revenue, and is not a forerunner to those activities.

b) The concern is not domestic or private (ATO, 2023, p1(1)).

c) Taking into consideration the kind of income-producing activities involved, the period
of interested living expenses prior to the calculation of relevant assessable revenue is
not so long that the required relationship among living expenses and available and
accessible revenue is lost.

TR 2004/4 - Taxation Ruling 2004/4 - Income Tax: Deductions for Interest Accrued
Prior to, or After the Cessation of Relevant Income Generating Activities (TR 2004/4)
took into consideration the ruling in Steele v FC of T (1999) 197 CLR 459 (Steele's
case).

Section 8-1 of such Income Tax Assessment Act of 1997 provides information on the
tax liability of individuals who remain in Australia (ITAA 1997). This section states that
a’ money tax liability is determined by subtracting all of their allowed deductions from
their income statement. Taxable income includes wages from work, investments, and
business activities. The expenses that might be written off must be connected to
producing the assessable income.

The affirmative leg of Section 8-1 of the ITAA 1997 ensures that all available and
accessible income is added to a taxpayer's tax liability. This includes income from jobs,
capital holdings, and business ventures. As a result, a taxpayer is certain to have to
pay taxes based on their earnings.

Step B) The positive limb further states that allowed deductions are subtracted from the
total assessable income. All expenses linked to producing the assessable revenue are
included in this, including any gifts, contributions, and work-related expenses.
Taxpayers can reduce their tax liability and, as a consequence, reduced payroll taxes in
this manner (ATO, 2023, p1(1)).

The adverse leg of Section 8-1 of such Revenue Tax Assessment Act dated 1997

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The things that are exempt from a public purse tax liability are listed in Section 8-1 of
the negative limb of the ITAA 1997. These include the money received as presents,
insurance payments, inheritance, and awards. As they are not regarded as assessable
income, these payments are not taxed.

Step C) Some deductions are also prohibited by the negative limb. These cover
personal expenses such as travel, training, and medical expenses. These expenses
are not refundable since they are unrelated to the creation of taxable income.

Calculations are made for Jasmin's total assessed income, income taxes, tax payable,
student loans (HECS), Medicare tax, and Basic rate premium (ATO, 2023, p1(1)).

Jasmin's entire tax liability is calculated as follows:

Superannuation Guarantee Charge + Passive Income + Employment Income = Total

Assessable Income, which is $106,000 + $7,000 + 10% of $106,000, or $123,600.

Jasmin's Taxable Income is calculated as follows:

Taxable Income = Total Assessable Income - Allowed Deductions ($123,600 - $8,000 =

$115,600);

Jasmin's tax obligation is computed as follows:

Taxable Income x Tax Rates = $115,600 x 32.5% equals tax liability. (Tax rate on
income over $45,000) s= $37,570

Step D) The Health Budget for Jasmine is calculated as follows:

Taxable Income x 2% of $115,600 is $2,312 for the Medicare Levy.

Because Jasmin does not have private health insurance, she is not liable for the
Medicare Levy Surcharge (ATO, 2023, p1(1)).

Jasmin's Total Assessable Income, Taxable Income, Tax Liability, Student Loan
(HECS), Medicare Levy, and Medicare Levy Surcharge were therefore calculated using
the formulas below:

The total assessable income of $123,600

Taxable income: $115,600

$37,570 in Tax Obligations

Student debts totaling $4,944 (HECS)

Medicare levy: $2,312

The Medicare Levy Surcharge is zero.

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Answer 2:

"Any payment for employment offered by virtue of any advantage, function, resource or
pleasure that the employer provides to the workers" is what is meant by the phrase
"perks and benefits." Side Benefit Tax is due at a level of 30% of both the amount of
perks and benefits calculated in accordance with Section 115WC's guidelines.

Yearly FBT assessments are made, the with FBT period starting on April 1 and
concluding on March 31. The corporate tax, which is now 47% of the amount of the
nice bonus, may change depending on the year. After March 31st, MaPS will notify you
of any notifiable advantages you obtained throughout the FBT year (Business.gov.au,
2023, p1(2)).

Assessment of The Fringe Benefit Tax

= (Base Value of Car * Statutory% * No. Of Days Employee Used Car) / 365-Value Of
Employee Objective Is To Contribute.

= (52,000 * 20% * 197 Days) / 365 - $4,000

= $ 5,613 - $ 4000

= $1,613.

Final Answer- Employers must pay the fringe benefits tax on any continuing benefits
they give to their employees' families or other dependents. Regardless of whether the
incentive is offered by a third party in accordance with an agreement with the employer,
FBT still applies.

The taxable Amount for FBT Is $1,613.

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References:

ATO, 2023, Fringe Benefits Tax, [Online], Avalaible at:

https://www.ato.gov.au/Business/Fringe-benefits-tax/?=Redirected_URL [Accessed at:
17/01/2023]

Business.gov.au, 2023, Register for Fringe Benefits tax, [Online], Available at:
https://business.gov.au/registrations/register-for-taxes/register-for-fringe-benefits-tax-fbt
[Accessed at: 17/01/2023]

ATO, 2023, Medivcare Levy Surcharge, [Online], Avalaible at:

https://www.ato.gov.au/individuals/medicare-and-private-health-insurance/medicare-
levy-surcharge/ [Accessed at: 17/01/2023]

ATO, 2023, Individual Income Tax Rates, [Online], Avalaible at:

https://www.ato.gov.au/rates/individual-income-tax-rates/ [Accessed at: 17/01/2023]

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