Income Taxation Essay Example
Under section 6-5 of Income Tax Assessment Act 1997 (ITAA), assessable income includes revenue from according to the conventional concepts, which also goes by the ordinary title income. The Hardwood Forest Pty Ltd is a company that has a property worth 1 million dollars, and it is also equal to the amount of cost spend on the land for investment. The $ 2M expansion funds gained by Hardwood Forest from amalgamating with Green Investments Pty Ltd does not suggest the money as assessable income. The money does not fit as it is in ordinary revenues, for example, the sale of goods, manufacturing, and the services provided or the property income as per average earnings which include the passive income, interest, and royalties among others (Woellner et al., p. 871).
10,000 dollars received as a lump sum by a beneficiary as a gift under a Will of a deceased person does not fall under assessable income; it gets received for general revenue support. Non-assessable assets get provided for the particular purpose; the Will serves a specific purpose; they are given to help the business in general. The will expresses the way properties get inherited. According to Schroeder et al. (p. 186-187), inheritance does not get readily taxed; there it is not directly regarded on the side of ordinary revenue. Schroeder et al. (p. 187) suggest that inheritance contributes to the capital of some ventures, and it stands as the primary rationale for possible taxation, and that is when it should get assumed on the side of ordinary income.
Income such as 2,000 dollars received yearly for five year period by a beneficiary as a gift under a Will of a deceased person do not fall under the assessable funds; the funds do not get received as a business process. Such funds are unplanned; it is impractical to project returns from gifts among others since they influenced by forces out of the reach of the proprietors.
A prize of $100,000 received by a contestant on a television show, popularly known as “Sale of the Decade” is not assessable. There is no precise relationship between the “sale of decade” and the 100, 000; there were many interrelated factors taken into account for the awards. The 100,000 dollar prize gets considered a bonus because he or she does not get granted for a particular reason. The winner can use it whenever they want. As mentioned earlier, the non-assessable incomes are those that address the specific purposes, and the prize has its particular purpose.
The prize consisting of a Smart Ultra HD LED TV worth $1,000 received by a customer of a DVD hires shop business. The prize gets awarded to the client by a movie company for he or she gets judged in competition as having drawn the best poster advertising an upcoming movie release is a cost to the film company; therefore the company does not realize any form of income. Therefore there is no presence of either assessable nor none assessable income (Woellner et al., p. 493).
For a prize consisting of a Smart Ultra HD LED TV worth $1,000 received by the sole proprietor of a DVD hire shop business, it incorrect to say it falls under assessable income; the reason is that the reward does not directly get determined by the proprietor of the venture but rather the evaluators. Usually, business persons are more concerned with salaries and investments among others, and these are assessable incomes. If proprietors were responsible for setting up conditions for winning the prizes, determining the side that wins the 1,000 dollar prize fall would not be easy.
T prize being awarded to the Shop proprietor by a movie company for being judged in a competition that portrays it as having the best in-shop display of an upcoming movie release makes the 1,000 dollars a non-assessable, it does not directly relate to what the company is supposed to the primary goals of the enterprise. Prizes cannot affect the business directly, simply because they are by-products of realizing company’s goals.
A prize consisting of the benefit of a non-transferable and non-cash redeemable holiday to the Gold Coast awarded to a self-employed abalone fisherman who sells abalone to a seafood company. The prize bonus got granted on the fisherman meeting allotted target sales quota for abalone sold by him to the seafood company is termed as none-assessable. The reason for such is that the prize is not cashable, in spite of direct connection between the holiday to the Gold Coast and the target number of sales. Such prizes are what Obst et al. (p. 148-149) refer to windfall gains. They are products that do not get to worked for, and they are dependent on probabilities when they are impossible to cash, they are not assessable.
Compensation payments of $1,000 a week paid under the Return to Work Act 2014 (SA) that get received by an injured employee who has suffered a work injury that results in incapacity for work are assessable. Some funds get rewarded for the services offered when injuries persist and are well comprehended when viewed as a change regarding compensation. The person has to work to earn the 1,000 dollars, making it agreeable with the income from personal services.
A lump sum compensation payment of $5,000 received under a home contents insurance policy to compensate for household goods that got destroyed in a fire. Is not assessable income, only because the money is awarded to fill the gaps of losses and not gains. The money does get earned by an employee or the proprietor, thus making it not ordinary income as section 6-5 of the Income Tax Agreement Act (ITAA) suggests (Australian Superannuation Legislation, p. 1991; Woellner et al., p. 127).
A lump sum compensation payment received by a distribution company under a contract that cancels an agency agreement five years before its expiration date, resulting in the company relinquishing a substantial part of its business income; the lump sum is an assessable income, given that services rendered were the reason the distribution company got compensated. Suppose the company had no implied services; there would not be any form of compensation with regards to the agency agreement.
Australian Superannuation Legislation 2011. Sydney, NSW: CCH Australia, 2011. Internet resource.
Obst, Wesley J, Rob Graham, and Graham Christie. Financial Management for Agribusiness. Jodhpur: Scientific Publishers, 2010. Print.
Schroeder, Susan K, and Lynne Chester. Challenging the Orthodoxy: Reflections on Frank Stilwell’s Contribution to Political Economy. Berlin, Heidelberg: Springer Berlin Heidelberg, 2014. Internet resource.
Woellner, R H, Stephen Barkoczy, Shirley Murphy, Chris Evans, and Dale Pinto. Australian Taxation Law. , 2016. Print.
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