# Taxation Theory Practice and Law

Assessment Task – Tutorial Questions Assignment

Facts:
Munir has obtained loan as amount of \$5000 (interest free) from the Good Mates Pty ltd
.Demanding the loan will in danger his health and unable to provide basic needs for his
family. Board waived the loan of Munir on compassionate reasons.

Rules and or cases:

Fringe benefit tax has levied on the employer. It is evaluated under Fringe Benefit Tax
Assessment Act 1986 and the imposition of tax is under Fringe Benefits Tax Act 1986.
In situations where the employer write-off a real obligation and the write-off is obligation for
details unconnected to the service association, a debt relinquishment fringe benefit does not
arise.
Application:
In the given case the Munir has suffering from financial hardship .Therefore; the employer
has waived the loan or writes off a genuine bad debt. As per the rule, when the employer
write-off a unaffected bad debt, debt relinquishment fringe benefit does not ascend.

Conclusion:

The conclusion has been made that fringe benefit does not arise. Therefore, the company is
not required to pay any fringe benefit tax (Australian Taxation office, 2021).

Cost base are the money value of the assets paid, acquisition indexation cost, improvement
Indexation cost, and cost of transfer.
Indexation of the cost base: Elements of a cost base (other than the assets acquired after 20
August 1991 but not use personal assets or collectables) may be indexed for inflation:
 Assets was held for further period of 12 months.
 Asset was acquired prior to 11:45 am on 21 September 1999
 Choice to index has been made (Australian Taxation office, 2021).
The following formula is to be used in calculating the long-term capital gains tax payable:
Long-term capital gain = Total rate of consideration received or accruing – (acquisition
indexation cost+ improvement Indexation cost + cost of transfer),
=12000-(5000+1379.89+50)
=12000-6429.89
= 5570.11 Ans

Where:

Acquisition indexation cost= cost of achievement x cost inflation index of the year of
transfer/cost inflation index of the year of acquisition
5000*51.7/51.7=5000

Improvement Indexation cost = cost of improvement x cost inflation index of the year of
transfer/cost inflation index of the year of improvement =1500*51.7/56.2=1379.89
Capital gain tax = 5570.11*30%=1671.033

GST is introduced on July 1, 2020. It is owed at a uniform rate of 10% on purchases of the
most of belongings and amenities by listed organization and the goods admission. GST is
levied on taxable purchases and the taxable importation. It is not indicted on GST free
purchases, non-taxable importation and input taxed supplies.
In the given case the Alex ltd is an organization supplies the product of \$22000 that is
inclusive of GST to Beta Ltd. On 1 August 2019 that is the local customer. The tax on the
amount of \$22000 is paid to the account of GST by the Alex ltd. Beta paid the bill amount in
installment. Even though Beta is GST- non registered entity also paid the GST charge on the
amount of the product to the seller.

Assessable income − allowable deductions = taxable income

Calculation of Taxable income

Particulars Amount
in \$

Employment income of Andre 63,013

:PAYG withholding

16,467

Total Assessable income 80480

Less :allowable deductions 500

Total Taxable income 79980

The estimated tax on your taxable income is \$17,540.50

Particular Amount \$

Total taxable liability \$17540

Estimated tax rate 30%

Total income tax 5262

Medicare levy @2 %( \$79980*2%) 1600

Medical surcharge 0% Nil

Tax offset (800)

Total tax payable or Net tax liability 6062

Factors significantly affect tax avoidance are:
 The substance and form of the scheme
 Any change in the financial position of the pertinent tax payer that has resulted from
the arrangement.
 The manner by which the game plan was shown up into or endorsed out
 The bring about connection to the activity of the Demonstration
 The nature of any associate on whether of family , business or other nature between
the relevant citizen and any individual referenced in the plan.
 The different outcomes for the significant citizen or any individual alluded in the plan
having been conveyed or gone into.
 Change in the monetary situation of any individual who has or had association
whether of the family , business or other nature with the pertinent tax payer may be
expected to be the outcome from scheme (Janský and Palanský, 2019)

• net income = assessable income less allowable deductions Calculation of Taxable income

Particulars Amount
in \$ Net profit of law firm( Profit divided equally
among three partners, therefore 1200000/3)  400000

Total Assessable income 410000

Less :allowable professional subscription 300

Total Taxable income 409700

The estimated tax on Maria taxable income is \$157,462.00

Amount earned by Maria from gambling is not included in partnership income.

References:

 Ato.gov.au. 2021. Elements of the cost base and reduced cost base. [online] Available
at: &lt;https://www.ato.gov.au/general/capital-gains-tax/working-out-your-capital-gain-
or-loss/cost-base/elements-of-the-cost-base-and-reduced-cost-base/&gt; [Accessed 13
February 2021].
 Australian Taxation office, 2021. [online] Available at:
&lt;https://www.ato.gov.au/law/view/document?DocID=SAV/FBTGEMP/00009&amp;PiT=9999123123
5958/#:~:text=A%20debt%20waiver%20fringe%20benefit%20arises%20where%20you%20(
the%20employer,related%20to%20the%20employment%20relationship.&amp;text=the%20emplo