Part AThe general deduction provision in ITAA97 sec. 8-1 allows a deduction for a loss or outgoing to the extentthat it is:(1) incurred in gaining or producing your assessable income; or(2) necessarily incurred in carrying on a business for the purpose of gaining or producing the taxpayer’sassessable income.However, even if the ‘first’ or ‘second’ limb is satisfied, a deduction is not permitted under sec. 8-1 to theextent the loss or outgoing is:(i) capital or of a capital nature.(ii) private or domestic nature.(iii) incurred in gaining or producing exempt income.(iv) prevented from being a deduction by other provisions of the ITAA97 or ITAA36.Required:Explain the relevance of the ‘first’ and ‘second’ limbs above and the impact of a deduction not beingallowed under parts (i), (ii), (iii) and (iv), using examples and case law decisions to highlight your answers.(
1 Melbourne Institute of Technology Pty Ltd CRICOS Provider No: 01545C, 03245K NSW Master of Professional Accounting MA 613 Taxation Law Group Assessment TRIMESTER 3, 2020 Due day/date: Friday, 5 February 2021 Time: 5:00 pm Duration N/A Total Marks: 20 marks Weight: 20% Word Limit: 2,000 words Unit Coordinator Assoc Prof Denis Vinen Moderator Prof. R. M. Wright No. of pages 02 pages (including this cover page) Unit learning outcomes assessed: a. Appreciate and understand the factors influencing the creation and interpretation of income tax legislation and their relationship to accounting concepts and practice. b. Explain and discuss income tax law in Australia and more particularly the taxation of capital gains, fringe benefits tax, goods and services tax and small business tax concessions. c. Explain and demonstrate how to calculate the taxable income for different types of taxable entities. d. Apply technical knowledge and analytical skills to evaluate and solve tax problems. e. Communicate knowledge of the importance of income tax law within the practice of accounting to specialist and non-specialist audiences. Instructions to Candidates 1. This is a group assessment. 2. Please complete all questions. 3. You may discuss with your group members while you are completing this assessment. 4. Please submit it to Moodle using the Turnitin submission link. 2 • Group Assignment (20 Marks) • [Assignment totals 40 marks and 50% will be allocated as the final mark out of 20 marks] • Students are to work in groups of three. • Correct referencing is important. Refer to Domestic legislation and ATO rulings. • You MUST write in your own words. You can use the textbook, lecture and tutorial slides, your study notes, to guide you. However, your answers should be written in your own words and/or referenced to tax legislation and case law. Do not copy and paste from the internet as you will not receive marks for this and you will be penalised for plagiarism. ASSIGNMENT ISSUE FOR RESEARCH: Taxpayers are required to subtract their deductions from their assessable income to arrive at their taxable income for an income year with the most common deductions falling within the general deduction provisions in sec. 8-1 ITAA97. Part A The general deduction provision in ITAA97 sec. 8-1 allows a deduction for a loss or outgoing to the extent that it is: (1) incurred in gaining or producing your assessable income; or (2) necessarily incurred in carrying on a business for the purpose of gaining or producing the taxpayer’s assessable income. However, even if the ‘first’ or ‘second’ limb is satisfied, a deduction is not permitted under sec. 8-1 to the extent the loss or outgoing is: (i) capital or of a capital nature. (ii) private or domestic nature. (iii) incurred in gaining or producing exempt income. (iv) prevented from being a deduction by other provisions of the ITAA97 or ITAA36. Required: Explain the relevance of the ‘first’ and ‘second’ limbs above and the impact of a deduction not being allowed under parts (i), (ii), (iii) and (iv), using examples and case law decisions to highlight your answers. (20 marks) Part B The taxation legislation also contains a number of provisions that provide deductions for particular kinds of expenditure that don’t fall under sec. 8-1 ITAA97. In particular, there are ITAA provisions that relate to expenses incurred with the following categories: (1) Capital Write-Offs & Allowances (2) Trading Stock; and (3) Motor Vehicles. Required: Discuss how and why the ITAA legislation operates with respect to deductions for expenses incurred in the three categories referred to above, using examples and reference to ITAA legislation and relevant case law decisions, to support your answer (20 marks) (20 + 20 = 40 MARKS) End of Document