Sunday, April 28, 2019

Assessment for Taxation Law Assignment Example | Topics and Well Written Essays - 1000 words

Assessment for Taxation Law - appointment ExampleA orchis sum is subjected to tax on the extent to which it is quantifiable and identifiable as representing reimbursement of income loss. In this case, we shall analyze cases related to this scenario, and try to relate the extent to which the upon that was paid to Nutra tech Pty Ltd is assessable for tax purpose. Cases and judgments In McLaurin v FCT, the romance resolved a case that complex payment of lump sum amount, paid as damages caused by a bush fire on the taxpayers graze property. 1 This lump sum was a collection of particular items of damage, which were not clearly disclosed to the taxpayer. The court ruled that the distrisolelyion was in order after analyzing the details of the case. The decision in this case support dissection of a payment into several heads and classify some as income and others as non-income, given that the payments is in parity to separate claims, some of which must be liquidated (Nethercott, Devos , & Richardson, 2010). In train den Berghs Ltd v Clark,2 the judge rarefied groovy from income through two tests. One test aimed at establishing whether the bewilder was part of a primed(p) framework, that the capital belonged. The other test was to establish whether the contract was purely supplementary to profit-making or a of the essence(p) part of the process itself. In this case, the taxpayer entered a contract with a Dutch company, but the contract was end and Van den Berghs paid ?450,000 as damages for cancellation of the agreement. The judges held that this amount was capital in nature, since Van den Berghs gave up its right under the agreement. In addition, it was argued that the agreement which was canceled was not commercial in nature, but only affected the manner in which profit-making activities were run. Furthermore, examination of the companys circumstances exposed that the contract stood for the permanent framework that Van den Berghs run its trade (Nethercott , Devos, & Richardson, 2010). The case of calciumn Oil Products (In Lia) v FC is also related to capital and revenue income. The case was concerned with a taxpayer, who entered into an agreement with a overseas company, which accorded it rights to dispense its oil products in Australia. 3As a result, the oil company terminated the contract and compensated California Oil for the termination. The court ruled that the amount paid as damages for termination of the contract involved ditching a fundamental sole business hence, the compensation was of a capital nature. In FC of T v CSR, it was decided that capital gain tax provisions, were applicable if the taxpayer obtained a lump sum in supercede of damages for breach of contract. In regard to Income Tax Assessment Act, 118-20, which is related to CGT taxing powers relationships to the rest of the provisions, the capital gain would be reduced if the amount was assessable income, as stipulated in sections 20-25(4) (CCH Australia Limited , 2009). Application of the cases To establish whether the damage received by Nutra Tech Pty Ltd is of capital or income nature, it is important to consider whether the terminated agreement, which was related to consultancy services, was associated to its profit-making activities. If Nutra Tech Pty Ltd could be able to obtain another contract to replace the terminated one, then it can be held that the agreement did not obstruct Nutra Tech Pty Ltds profit-making act

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