Summary of the Case
Issue
In the given case study, it has been recognized that the Hillary is known for her achievements. For this, the Daily terror newspaper offered $10000 huge payment for her real story. The story will depict the lifestyle of her, achievements of her glory and the problems that she faced during the mountaineering process. Hillary accepted the offer and gave her life story. She wrote the story of her own without taking help of anyone because the terms and conditions was stated by Daily Terror. She signed the contract and gave the copyright to the Daily Terror for $10,000. She told her manuscript of the story to the Mitchell Library for an amount of $5000. She also sold the mountain climbing photograph for an amount of $2000. The case shows the contract between Hillary and the Daily terror newspaper. The terms and conditions in the contract is to be evaluated on the basis of the Australian law (Amatucci, 2012). The appropriate analysis of the issue is being made by showing the appropriate structure of the issues which are framed by showing the proper execution of the workforce and also these must be explained by showing the enhancement of the work. The main issue in this case is that all the three payments were received by Hillary are to be considered as the income from the personal efforts or not. The case study shows that the story written by her was for own but after that she decided to sell the story. The issue is that whether the income from the sale would be considered as for tax consequences (Barker, 2007).
As per the Australian Taxation Act, the income tax is one of the noteworthy assessment, which tolls to the inhabitants of the nation as indicated by their yearly salary. The use of income tax can contrast on the basis of the salary (Burrell and McGinn, 2009). As per the income assess Act 1936, it is the revision of personal effort pay 1997 incorporate the salaries from compensation, rewards, commission, pay rates, superannuation allowances, retiring allowances and annuity.
The noteworthy explanations are provided in the form of the contrast which is being made by showing the access made to the Income Assess Act 1936, and it will enable the establishment of the personal exertion of the case as the individual effort is depicted to be incorporated by showing the enhancement of the work as undertaken for the study (Coleman et al., 2013). The Australian taxation laws need to be followed by the individuals or group.
Evaluation of Personal Effort Income
The utilization of the govern decides the income produced from the activities must be under the tax assessment law. In the given case study, it has been seen that the Hillary is not the full time writer and composes her story but she was not her profession. The story was composed her and it was published by Daily Terror newspaper. There was a contract between Hillary and the newspaper. In this way, the income can’t be considered as income tax (Deutsch, 2008). The original copy and her photos are falls under the capital gain tax. The case shows, the payment given by the Daily Terror newspaper would be considered as the ordinary income. As per the appropriate applications are considered, the structure is simply defining the ways for the mitigation of the issues which are illustrated in the following ways.
Conclusion
The income earned by Hillary from the Daily Terror and the story was used by the company. On account of, she thought of her story for her fulfillment. According to the income tax act 1997, and segment 26 AB, in the main case, of the case analysis will be assessable income. The rest of the income can be considered as the capital gain tax as per the law (Withers, 2007).
Issue
In the given case study, the mother lent an amount of $40,000 to her son in order to help him with the housing loan. Thus, there was a verbal agreement made between son and her mother. It was agreed that the son will an amount of $50,000 to his mother for the loan. The case shows, that there was no written agreement between them and the son also did not ask for any security against the loan taken by him. The money amount was given to the son by the mother (Deutsch, 2008).
Following two years the son gave back everything of cash to his mother alongside an interest of 5% for an annum on the measure of cash acquired by him. The loan amount given to the son by the mother in a check. The mother did not ask aby interest from her son and helped him to pay the debts.
The question that comes in the situation is the impact that the additional sum given by the son will have on the wage of the customer (White, 2008). The Australian taxation laws need to be followed by the individuals or group.
Rule
Impact of Additional Loan Amount
According to the taxation law of Australia, assessable income of the resident is referred to as the income earned by the individual that can be taxed when the amount of money earned by the resided is more than tax-free thresholds permitted by the Australian constitution. The assessable income of an individual consists of wages and salary for the work done (Dykes, 2011).
In the given case study, the mother gave the loan amount to her son that cannot be considered as the investment because she did not ask for any interest. The interest amount paid by the sum of amount is equal to five percent for two years of $40,000 which equivalent to the sum of $4,000. The money amount is less than the assessable income as per the Australian Taxation Office. According the law, the amount received by the son would be the part of the assessable income (Homburg, 2008).
Conclusion
The mother gave extra amount of money to her son which is not considered as the ordinary income and it would be not cross the limit of the assessable income. This is the motivation behind why the entirety of cash won’t have any impact on the assessable income of the client under segment 10-1.
a)
In the given case study, it has been seen that the Scott an accounting profession buy a vacant land in October 1980 in Brisbane. Thus, at the time of building the house, the estimation of the land remains at $90,000, and additionally, the development cost is $60,000. After the culmination of the house, he leased the property, and according to the thought of the present tax collection, the Scott sold the property for $800,000 at the sale. The leasing of the property is being shown by illustrating the appropriate work which is showing the sale of the house of the leased property. Therefore, the Scott is responsible for paying taxes as per the property, and the present taxes are made for the purpose of structuring the work (Lazarevich, 2011). Scott was the professional accountant and he was involved in the development of the land property. The income earned was to be considered as the ordinary income as per the taxation law of ATO 1936 that should be considered as capital gain. The tax deduction should be take place in form of the capital gain tax. The Australian taxation laws need to be followed by the individuals or group.
Tax Consequences of Selling Property
As indicated by Australian Taxation Law, pay created from the offer of the benefits is considered as the capital increase under segment 408. The individual or the association needs to pay to assess on the gains derived from the sale assets. The land property will be considered as the long term capital because it was purchased before 3 years. The enhancement of the capital can be made by showing the exchanges for the betterment of the assessment of the capital (Lodin, 2011). The contextual investigations are appropriately made by showing the enhancement of the structure by showing the management of the work and also the enhancement of the work can be made by showing the appropriate framing of the laws related to the sequential presentations which are represented in the following ways. In the given case study, the Scott purchased a vacant land and the value of the land was $90,000 and the cost of construction was $60,000. The property value was $150,000. The property subsequent to building houses was given to lease and wage created from the lease would be considered as ordinary income. The land property was sold at the auction for the amount of $80,000. The net earnings of him was $650,000 and the income will be considered as the assessable income. The construction of the work is being made by showing the enhancement of the work which is being conducted by showing the structure in the following ways (Solomon, 2009). The Australian taxation laws need to be followed by the individuals or group. The Taxation laws are implemented for the development of the work which is depicted to be concerned with the assessable capital assessments which are made for assessing the appropriate structure for the work.
Total value of the property = ($90,000+ $60,000)
= $150,000.
The property sold for ab amount $ 800,000
Total Capital gain = ($ 800,000-$150,000)
= $650,000
b)
In the given case study, as on 1st October 1980 vacant land was purchased by Scott. The value of the vacant land in the year 1986 was $90,000 and cost of the building was $60,000. Scott sold the house and capital gain tax was applicable on the amount of selling. The capital gain is the measure of income earned by a person from the offering of a benefit. Capital gain tax is the expense charged on the wage produced from the offer of the benefits. Capital resources incorporate land, building, apparatus, licenses, trademarks, property, and so on (Thomas, 2010). In the given case study, the property will be sold by Scott to his daughter at an amount of $2,00,000. On the basis of the selling price of the land property, the capital gain tax will be estimated. According to the taxation law of Australia, the property land would be considered as the gift which would be exempted from the capital gain tax. The capital gain tax would not be estimated and assets will be a gift. The Australian taxation laws need to be followed by the individuals or group.
C)
If the proprietor of the property is the firm rather than an individual, then the appropriate response world somewhat unique which appeared to be straightforwardly reliant on the kind of the organization discussed. In the case study, the property will be considered as the capital asset and the capital gain tax would be applied. The capital gain tax would be implemented on the person if the case is examined on the basis of the law. If the organization is considered as a real estate corporation while dealing with the purchasing and selling of the properties and houses. The organization will not be charged as per the capital gain taxes. The real estate company is purchasing and selling the properties would be considered as the part of ordinary income and the tax amount will come under the income tax (Watson, Gleeson and Higgins, 2013). The Australian taxation laws need to be followed by the individuals or group.
References
Amatucci, A. (2012). International tax law. Alphen aan den Rijn, NL: Kluwer Law International.
Barker, D. (2007). Essential Australian law. Sydney, N.S.W.: Routledge/Cavendish.
Burrell, D. and McGinn, J. (2009). Cornerstone law series. 1st ed. [Adelaide]: Law Society of South Australia.
Coleman, C., Hart, G., Bondfield, B., McKerchar, M., McLaren, J., Sadiq, K. and Ting, A. (2013). Australian tax analysis. Pyrmont, N.S.W.: Thomson Reuters (Professional) Australia Limited.
Deutsch, R. (2008). Australian tax handbook. Pyrmont, N.S.W.: Thomson.
Deutsch, R. (2008). Australian tax handbook. Pyrmont, N.S.W.: Thomson.
Dykes, C. (2011). International tax law. Buffalo, N.Y: Hein.
Homburg, J. (2008). Cornerstone law series. 1st ed. [Adelaide]: Law Society of South Australia.
Lazarevich, A. (2011). Cornerstone series – property law. 1st ed. [Adelaide]: Law Society of South Australia.
Lodin, S. (2011). The making of tax law. Amsterdam, The Netherlands: IBFD.
Solomon, R. (2009). Cornerstone law series. 1st ed. [Adelaide]: Law Society of South Australia.
Thomas, G. (2010). Cornerstone law series. 1st ed. [Adelaide]: Law Society of South Australia.
Watson, J., Gleeson, J. and Higgins, R. (2013). Historical foundations of Australian law. Annandale, N.S.W.: Federation Press.
White, R. (2008). Cornerstone law series. 1st ed. [Adelaide]: Law Society of South Australia.
Withers, B. (2007). Cornerstone law series. 1st ed. [Adelaide]: Law Society of South Australia.
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