Australian taxation law notes 澳大利亚税法概要

Topic 2 Ordinary Income1.Assessable income = ordinary income + statutory income (s. 6-1(1))Taxable income = assessable income - deduction (s. 995-1(1) & s. 4-15)2.Ordinary income: a. Periodicity, recurrence & regularity (Harris, Dixon)b. Income must be money or convertible into moneyc. Receipts from income producing activities will be regarded as ordinary income &income earning activity (Harris, Dixon)3.Income earning activities: a. Personal exertion (personal services, employment, one-off services)b. Property (interest, rent, dividend)c. Carrying on a business (sales, services)4.S. 21A enables value of benefit, non-cash benefit, to be assessed as ordinary income under s. 6-5.FCT v Cooke & Sherden5.S.21A does not operate in an employment relationship. If employment, the benefit is taxed under FBT.6.Non-cash benefit: property or services provided wholly or partly in respect of a business relationship,or for or in relation directly or indirectly to a business relationship. S. 21A(5)7.S. 21A(3): the value of the benefit is reduced to the extent that the taxpayer would have been entitledto a once only deduction if the taxpayer had incurred the cost.8. Entertainment is non-deductible per s. 32-5.9. If a receipt is ordinary income under s. 6-5, a receipt that substitutes for it will also be ordinary income under s. 6-5.FCT v Dixon 10.Receipts generally not considered as ordinary income include capital, windfall gains, hobby receiptsand mutual receipts.11.Purely gift from friend or family cannot be treated as ordinary income.FCT v Harris 12.The compensation for the cancellation of business contracts is income.Heavy Minerals Pty Ltd v FCT 13.Amount received for the sterilisation of assets are treated as capital (loss of use of asset or incomeproducing capacity).Glenboig Union Fireclay Co Ltd v IRC14. Payments received for entering into restrictive agreements are capital.Dickenson v FCT 15. Compensation for loss of trading stock is considered as income.CIR v Newcastle Breweries Ltd 16. Sales of knowledge or ‘know-how’ are income.Rolls-Royce Ltd v Jeffrey 17.Sale or assignment of income streams should be treated as income, and the lump sum is assesableunder s. 25(1).Myer Emporium 18.Undissected lump sum, where lump sum amounts comprising both income and capital, but withoutdissection into their actual components, should be treated as capital.Mclaurin v FCT19. Lottery prize are not income in the Australian jurisdiction.20. Gambling wins will only constitute deduction and assessable income, if they may be seen as proceedsof a business.Trautwein v FCT21. Receipts form gambling wins are not assessable. (Martin v FCT)22.No liability to tax arises where a person participates casually in a competition and wins a prize.However, a professional quiz player regular appearances on quiz programs the prizes may constitute assessable income.Case T14 23.Receipts or proceeds form hobbies, as distinguished from business, are deemed not to be assessableincome. Also, expenses and losses from hobbies are not deductibel.anizations have no identity separate from their members, thus subscriptions and othercontributions form members cannot be treated as income, they are mutual in character.The Bohemians Club v Acting FCT 25. Income from illegal activities are assessable.Partridge v Mallandaine 26. Profits arising from ultra vires actions of company directors may be assessable of the company.England v WebbTopic 3 Derivation of Income1.S 6-5(2) & (3): assessable income include ordinary income derived during the income year.2.The cash basis: used mostly by individuals, eg salary or wage earnersThe accruals basis: generally used in business3.Cash basis: income is derived when the cash is received.Brent v FCT Accruals basis: the income is derived when it has been earned, when an invoice has been issued.J Rowe & Son v FCT 4. Large chartered accounting firm should use accruals basis, because the income is not personal services income, it is the result of many accountants.Henderson v FCT 5. The income derived by a solicitor in sole practice with one secretary should be treated as personalservices income and cash basis appropriate.FCT v Firstenberg 6.Services can be provided by many people - AccrualServices provided by one person - CashSelling shoes by one or many people - trading business - AccrualIncome from rental property - Cash7.For a business selling goods or supplying services, amounts received in advance are not regarded asincome.Arthur Murray v FCT 8.S. 6-5(4): the case where the taxpayer, though he has not received the money itself, has had the benefitof it, or of something which is substantially equivalent to it. (cash basis only)9. Brent v FCT: Wife of the Great in not in business instead providing personal services - Cash basisS. 6-5(4) did not apply, and only the money actually received was derived.10. Asking for a cash payment to be delayed is not dealing with the income. (cash basis only)Brent v FCTTopic 4 Statutory Income and Exempt Income1.Dividends paid by a company to a shareholder are included in the shareholder’s assessable incomeunder s. 44(1).2.Tax paid on the profits from which a dividend was paid and passed onto the shareholder is alsoassessable under s. 207-20(1), which is called ‘franking’.从税后利润付股利给股东，这部分利润所含的已交公司所得税称为franking credit。