American Commercial College Australian Taxation Law Work Case Study

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Australian taxation law workall solution must be correct and must use the correct law and principles in Australia

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Law – Case study Joe Harper is an electrician and works as an independent contractor. He provides you with the following information for the purpose of preparing his income tax return for the year ended 30 June 2019. - He received $150,000 as payment from clients for electrical services he provided. During the year he also paid $45,000 PAYG withholding tax to the ATO when he lodged his Business Activities Statements. - He requested a client who owed him $3,000 for services he had provided in May to have the full amount paid to a charity (Red Cross) on 2 June 2019. - On 13 May 2019, Joe received an iPad (market value $500) from one of his clients. It was accompanied by a note thanking Joe for his service. - Upon the early and prompt completion of a job for a client, he received a non-transferable voucher with a market value of $2,000 for a two-night stay at a luxury resort on the 20th and 21st of June 2019. The client also offered Joe an all-expenses paid trip to the ‘Melbourne Electrical Trade Expo’. The Expo featured the latest technical developments and trade products. The cost of the trip was $1,250. - On 3 August 2018, Joe sold some of his assets to finance the purchase a holiday house. Details of the assets that he disposed of are as follows: - During the 2019 financial year, Joe received rental income of $60,000 from a shop which he brought five years also. The following expenditures were also incurred during the year in respect of the shop: Council rates 1,680 Insurance 850 Repairs Painting of the internal walls of the shop 1,025 Painting of the external walls of the shop 1,160 At the request of the local council, the trimmed back shop awning that was protruding over a driveway 750 Replaced part of a rotten wooden floor with a cheap Concrete floor on 1 July 2018 1,200 Interest on shop mortgage (paid up to May) 5,078 Interest on shop mortgage (June interest is due on 5 July) 462 - Joe also made the following payments during the year: 1) Gifts: • Red Cross $100 • Successfully bid $1,000 at an auction conducted by the Salvation Army for painting that had a market value of $150 2) Fee paid to a tax agent for preparing and lodging his 2017/18 individual income tax return ($500) and for lodging an objection to an income tax assessment from a previous year ($1,000) 3) Telephone calls - to clients $300 - to his wife and kids $450 REQUIRED 1. Advise Joe on what amounts have to be included in his taxable income for the 2018/19 tax year. (21 Marks) 2. Calculate the taxable income which Joe need to declare in his income tax return. (4 Marks) ➢ You must cite relevant cases, ATO rulings, and legislative references to support your answers. ➢ Your response must also provide reasons that explain and support your answers.
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Australian Tax Laws
Introduction
Taxation can be considered as a central approach of increasing the income of a particular
nation. In Australia, taxations are meant to pay for both the federal governments and local states.
Tax can be paid either at personal, level or company level (Evans, and Pinto, 2010). Even though
the process of taxation is very beneficial to the state, at company and personal level the process
of taxation does not have any advantage since it does not add any profit making them not willing
to pay. But they are obliged to pay personal tax, service and goods tax, custom duty taxes, excise
taxes, capital taxes and income taxes for the benefit of their state. In such a case, steering of
fraud related to tax is a determinable challenge. To encounter such challenges, Australian
government has developed the Australian Taxation Office (ATO). The ATO has established the
approach of ‘Taxable Payment Annual Report’ which needs to be submitted to the ATO by July
on 21st on annul basis by each individual business.
Taxable income is the income amount which is used when calculating the amount of tax
an individual or a company is owing to the government in a specific tax period. It basically
dictates a gross income or an adjusted gross income which is calculated less any amount of
deductions or any form of exemptions which is allowed in that specific tax period. Taxable
income incorporates wages, tips, salaries and bonuses an also unearned income and investment
income. Taxable income which is sometimes considered unearned income may entail
government benefit, alimony payments and cancelled debts, lottery, and some forms of strike
benefits. Taxable income can be calculated by the use of the following general formula:
Taxable income= Assessable income – allowable deductions

Taxable income again incorporates earnings which are generated from assets which are
appreciated which have been sold out or capitalized within the year and from interest income and
dividends. The amount of your income which is taxable is determine...