LAWS20060 Taxation Law of Australia Employees Management

Answer to question I

As per the TR 19996/6 of the Australian taxation ruling, if any person is benefitted through the rewards or points under frequent flier standard program, the amount of benefit will be qualified for deduction and will not be included under the assessable income of the recipient. However, to get the qualification for deductions, the following conditions must be satisfied –

• The shall be provided exclusively for goods or services
• Only the natural persons are entitled to the membership

On the contrary, the amount of benefit can be included under the fringe benefit tax if –

• The employee got the reward under special arrangement rather than getting it as general entitlement
• There exists a family relationship among the employer and employee and the point was allocated owing to that relationship

In the given circumstance, the employees were rewarded with the points only for their association with Webjet as employees and therefore, the reward points shall be qualified for deduction and the expenses will be allowable expense for the employer.

Answer to question II

If the service provider receives any compensation for the damage of his asset while the asset was under use by the service recipient, the compensation amount will not be taxed under the hands of the service provider. Some specific conditions are there those are required to fulfil to be eligible for deduction –

• The asset for which the compensation is received must be damaged while it was in use under the service[1]
• The compensation amount shall exclusively used for restructuring the damaged part
• The asset shall be depreciable asset for which the depreciation shall be measured and recorded in the books of accounts[2].
• The asset that was provided for service shall be capital asset and service provider must use the asset only for the purposes of businesses.

Therefore, the compensation amount that was received on account of damage of the asset by Crane Hire Company shall be allowed for deduction assuming that above mentioned all conditions are satisfied.

Answer to question III

Under the Para 71 – 78 of TR 1999/10, if any person receives any gifts on account of his employment associated activities, then the amount of gift shall be included under his total taxable income for the purpose of taxation. However, it the gift is received on account on personal relations or personal reason and in no way it is related with the employment activities, the gift amount will be qualified for deduction under the taxable income[3]. Moreover, the transformation of the gift into cash or kind will not alter its original nature that is taxable or deductible. Thus, the offer of oversees package for holiday received by manager of night club from the alcohol supplier will be included under the taxable income as the offer received on account of work related activities.

Answer to question IV

If any money is raised from the member for any specific purpose and eventually it was found that the raised money were more than the requirement and owing to that the money is again returned to the member from whom it was raised, then that amount will not be included under the assessable income of the person who raised the money[4]. The amount will not be taxable for the person as it was never been his income rather it will be considered as the error in the requirement budget. Thus, the amount rose which were eventually found to be more than requirement will not be taxed in the hands of recipient.

Answer to question V

If any sportsman receives any award in form of cash or kind owing to his association to any sport the amount will be considered as taxable income in the hands of the sportsman. In the given situation, the Sportsman from Australia received the award money for being the best and fairest player in the AFL. Therefore, under TR 1999/17, that deals with this provision, the amount in the hands of the sportsman will be considered as taxable[5].

Answer to question VI

Any expenditure incurred by the employer for the purpose of reconstruction of his trainees, employees or apprentices shall be allowed as deduction provided the amount was spend for the reconstruction of the employees. The Taxation Ruling 95/22 that deals with the reimbursement allowance and treatment states that the following persons will be considered for the purpose of employee’s construction –

• Supervisor or the project administrator who are engaged in the construction site
• Manual labour employed for the purpose of construction of the building
• The apprentice, carpenters and the trainees
• Project administrator or the overseer engaged for the construction of any building

Thus, amount spend for the purpose of building the qualification of the employees or trainees shall be qualified for deduction

Answer to question VII

While the assessable income measures some particular costs that are spend with the end goal of undertaking any short-run course identified with art, the sum will be allowed as the deductible expenses. However, the deduction allowances are there with the accompanying conditions –

• Any costs required to be brought about on meals
• Course charge paid for undertaking the course
• Training cost brought about for different modules and programming
• Cost spend for going to and returning from the organization [6]

Further, the previously mentioned cost will be permitted if and just if the costs brought about for the course only. In addition, if out of the aggregate costs just a part is spend for the course, that part just will be considered for finding. Without adequate data, it is expected that the costs brought about for the course was spend exclusively for the course and therefore will be an allowable expense[7].

Answer to question VIII

As per the ruling of the ATO, the expenditure for the performing asset shall be allowed for deduction. However, the deduction will be allowed if the expenses related to the person are considered as the performing artist. To get the deductions, ATO mentioned the following persons as performing asset –

• Person performing in circus is a performing asset
• Person performing dance is a performing asset
• Musician performing music is a performing asset
• Actor who acts is a performing asset
• A singer who sings is a performing artist

With the insufficient data, it is presumed that the expenses were related to the make-up and dresses expenses of the performing asset and will qualify for deduction.

Answer to question IX

The amount spend for travelling can be taken into consideration for deduction if the expenses is done exclusively to travel for official purposes, though according to the Australian Tax Office the measure of costs brought about for heading off to the workplace and returning from the workplace is not permitted as deduction. Further, if out of the aggregate costs just a part is spend for the workplace reason travel, that part just will be considered for deduction[8]. Without adequate data, it will be expected that the costs are incurred for the official travel purpose only and will be qualified for deduction.

Answer to question X

Generally, the travelling expenses are not allowed for deduction and for getting deduction on travelling expense the amount shall be spend for official travel purposes only. Further, deduction for travelling to 2 workplaces will be allowed only if both the work places are of the same employer. As in the given case, both the workplaces are of the same employer, the amount will not qualify for deduction.

Answer 2

The assessable situation of an individual is resolved on the foundation of the idea of the citizenship of a person that is whether the concerned individual is outside inhabitant or Australian. For tax assessment reason, an oversees student, selected in any Australian establishment's course, of over a half year term, is considered to be a citizen of the nation. In this specific circumstance, with respect to the mentioned fact, Manpreet will be considered as an Australian resident. Manpreet had part time work as as the office assistant in an Australian organization, with a pay of $45,000 every month. The costs related to his self-education, which are of worth $18,000 can't be took into consideration for deduction, as findings must be guaranteed in this specific circumstance, if the concerned individual gets a bonded scholarship which is assessable. In the given situation, the case of Manpreet will be considered for deduction if –

• Maintain the level of knowledge or enhance the level of knowledge and the skills for the requirement of present job
• Will enhance or are expected to enhance the income of the person from present job[9].

If the self-education expenses in no way is associated with the present job, the expenses on the self-education course will not be allowed as deduction even if –

• It is generally associated with it
• It may enable to get any new opportunity for the job

The cost ought to not exclusively be considered as a pre-necessity for era of assessable pay, they ought to likewise have significance to the exercises bringing about era of salary. Manpreet has caused costs on PC, printer and another telephone, which is identified with her work reason . This can be considered under segment 8-1 of the ITAA 1997, where an adequate nexus is available between the pay producing limit and the costs, with the end goal that it has the qualities of work basically. Alluding to segment 8-1 of the ITAA 1997 the costs on new telephone is important t increase assessable salary which suggests Manpreet is permitted to assert conclusions. The FC of T v. M I Roberts 92 ATC 4787 demonstrates that by the standards of Maddalena, the government court offered remittance to deduct MBA related use to a mine supervisor.

Ronpibon Tin NL v. FC of T (1949) stated this, where it is expressed that there ought to be a relation amongst assessable and the outgoing income with the end goal that active is imperative to pick up an open salary. Deduction for self-education expenses are not permitted if the course helps in opening up new roads for work or wage creating movement. This infers the costs of Manpreet should not be considered for deduction.

As expressed in Lunney v. FC of T; Hayley v. FC of T (1958) 100 CLR 478; (1958), to meet the criteria as per sectin 8-1 of the ITAA 1997, the cost shall be obligatorily have the normal for an active one, which is brought about to increase available pay[10]. As held in the section of 8-1 of the ITAA 1997 for the cost to be deductible, there ought to be satisfactory connection between the exercises that create earnings and the costs, with the end goal that its element is not domestic in nature and is identified with the work.

Assessable income of Manpreet

References

Ato.Gov.Au/ (2017) Ato.gov.au https://www.ato.gov.au/

Barkoczy, Stephen, et al. Foundations Student Tax Pack 3 2016. Oxford University Press Australia & New Zealand, 2016.

Braithwaite, Valerie, ed. Taxing democracy: Understanding tax avoidance and evasion. Routledge, 2017.

Chartered Accountants Australia & New Zealand (2017) CAANZ https://www.charteredaccountantsanz.com/

CPA Australia (2017) Cpaaustralia.com.au https://www.cpaaustralia.com.au/

Davis, Angela K., et al. "Do socially responsible firms pay more taxes?." The Accounting Review 91.1 (2015): 47-68.

Feld, Alan. "Federal Taxation of State Tax Credits." (2016).

Karin Simon, Sara McDonald, Accident Investigation - Databases - Library Guides At Cquniversity (2017) Libguides.library.cqu.edu.au https://libguides.library.cqu.edu.au/content.php?pid=166733&sid=2668174

The Tax Institute (2017) Taxinstitute.com.au https://www.taxinstitute.com.au/

Woellner, R. H., et al. Australian Taxation Law Select: Legislation and Commentary 2016. Oxford University Press, 2016.

[1] Chartered Accountants Australia & New Zealand (2017) CAANZ https://www.charteredaccountantsanz.com/

[2] The Tax Institute (2017) Taxinstitute.com.au https://www.taxinstitute.com.au/

[3] Barkoczy, Stephen, et al. Foundations Student Tax Pack 3 2016. Oxford University Press Australia & New Zealand, 2016.

[4] CPA Australia (2017) Cpaaustralia.com.au https://www.cpaaustralia.com.au/

[5] Karin Simon, Sara McDonald, Accident Investigation - Databases - Library Guides At Cquniversity (2017) Libguides.library.cqu.edu.au https://libguides.library.cqu.edu.au/content.php?pid=166733&sid=2668174

[6] Woellner, R. H., et al. Australian Taxation Law Select: Legislation and Commentary 2016. Oxford University Press, 2016.

[7] Davis, Angela K., et al. "Do socially responsible firms pay more taxes?." The Accounting Review 91.1 (2015): 47-68.

[8] Feld, Alan. "Federal Taxation of State Tax Credits." (2016).

[9] Braithwaite, Valerie, ed. Taxing democracy: Understanding tax avoidance and evasion. Routledge, 2017.

[10] Ato.Gov.Au/ (2017) Ato.gov.au https://www.ato.gov.au/