The paper "Australian Taxation Law" is a worthy example of an assignment on finance and accounting. Transaction One: Receipt of $6,000 per month as scholarship amountsThis is a product of the half of the income and other entitlements received by Susan as part of her agreement with the company. Since the company is paying for Susan’ s MBA, the amount received by Susan will be subject to income tax as it is described under the Section 51-35 of ITAA 1997 that any payment received by the individual from a person or authority under the condition that the individual will continue to be an employee of the person or authority will be included in the income tax.
Although this is scholarship, it is received by means of the income and therefore will be treated as income for tax purposes. The scholarship amount is an assessable income under section 15-2 of ITAA 1997 as the scholarship amount is derived from her income. This is an assessable income because the definition under this section holds that assessable income will include all the gratuities, allowances, benefits, bonuses, compensation or premiums that are provided to an employee in relation to any services rendered by them whether directly or indirectly.
Also, the amount of scholarship received is going to be a deduction under self-education expenses under the sections 8-1, 8-5, 8-10 of the ITAA 1997 Transaction Two: Receipt of $2,200 for textbooksSince Susan paid for the textbooks including the GST, the amount is not considered as assessable income and is not an exempt income as it includes increasing adjustment to the acquisition under Section 17.5 of ITAA 1997. Transaction Three: Receipt of $280,000 for the home loan plus interest of $11,000The acquisition of home or property is a CGT asset under Section 108-5 and according to the definition of property under Section 108-5 (1) (a).
The home is a personal use asset under Sections 108-20, 108-25, 108-30 and 118-10(3). No capital gain or loss would be recorded as the home property is not sold under any CGT Event. As this is personal property, it allows for deductions and so does the interest payment. Rules of acquisition also apply under section 109-5 and 109-10.
The interest is a deductible amount under section 8-1 of ITAA 1997 as well as under section 25-85 of ITAA 1997. Since interest is an expense for Susan, she can use the expense apportionment under section 8-1 of ITAA 1997 to receive a credit for it. In acquiring the house, no isolated transactions doctrine from FCT v The Myer Emporium Ltd does not apply here. Ownership of Shares and DividendsUnder the s6 (1) and s. 995-1, the dividends are those values that the company distributes to its shareholders. Dividends received by Susan are assessable income under Section 44 (1) and Section 47 of ITAA 1936 as under these sections dividends are considered income in relation to ordinary concepts.
The ownership of shares is considered CGT assets under Section 108-5. According to section 70-35, the value of any trading stock held within the income year has to be included in calculating the assessable income and deductions.