Principles Political Economy And Taxation -Myassignmenthelp.Com

Question: Discuss About The Principles Political Economy And Taxation? Answer: Introducation The capital assets generally comprised of the real assets such as property and acquisition of the shares. The sale and purchase either ends up with incurring a gain or loss to an individual or trade that in known for capital loss and capital gain (Dalton, 2013). One thing is very important to be recognized while filling the form of income tax that is these losses and gains. The losses or gains can be calculated by the extracting the disposal amount of the asset from the current amount worn-out for purchasing the asset. Section 108-10 of the ITAA 1997 defines that an individual cannot set off the loss against the ordinary gains (Graetz Schenk, 2013). Therefore, any gains earned by Eric upon his assets are mainly subjected to taxes. To deliver the taxation-law benefits to tax payers some of the capital gains are not allowed to be incurred into the income of the person. As defined under section 108-20 of the ITAA 1997 Eric is barred from claiming offset generated from the disposal of personal asset. Capital gain or loss calculation Therefore, from the given example Eric has a capital gain of $5,000. This income amount is important to be included in to the income tax of return for the year end by 2016-17. The elaborated case is about the estimation of taxable value of loan fringe benefits related to the employer after he lends the loan f $1 m to its employee, Brian at 1%p.a. The fringe benefit taxation ruling of TR 93/6 lay down the provision of setting off loan interest for the taxpayers (Grange et al., 2014). Taxation authority of the Australia guides that the fringe benefits should be impacted by the fringe benefits states the requirements. The concessional rate of the loan will be extracted from the income while the tax could be charged on the fringe benefits. All of these fringe benefits should be distributed to the employees who has been granted loan by their employer. The benefits from the loans will be distributed to the employees and will mention in the accounting of the employees. Given the circumstances that Brian is in compliance with section 16 of the Fringe Benefit Tax Assessment Act 1986, he is not required to pay tax for the benefit derived from the loan interest offset account (James, 2014). The fringe benefit is generally taxable by nature so the employers must be required for calculating the fringe benefits for accuracy and appropriate tax calculation. For the calculation of fringe benefits Brian on opting to pay the collectively in the end of the year will also allowed for paying the same amount and no amount of the benefit will be transported to the employees. If the bank released Brain from repaying the interest on the loan, then the taxable value for the debt waiver fringe benefit is 27,900 The issue explains the conflict of filing taxes on the capital gains and losses that are incurred by two partners namely Jack and Jill. The issue elaborates about the two partners Jack and Jill, who shared the profit 1:9 ration for purchasing a property by raising a loan against this. These two partners then have agreement that is subjected to the condition that if there will be any loss Jack will be completely liable for that. This case follows the guidelines for Income-tax Assessment Act 1997. The ITAA 1997 elaborates that any property raised by loan by two partners is accountable for the shares with respect to the ratio mentioned in the contract signed by them (Ricardo, 2013). The act mainly guides that there are no additional liability will be made based on any of the partners for repaying the losses accordingly their mentioned shares. Partners neither by their own choice could bear the whole loss that came out as a principle of the issue of McDonald v FCT 1987. Application A properly has been purchased by two partners Jack and Jill and they agreed to sharing the profits according to the ratio of 1:9. The principle decided by the case of McDonald v FC of T that suggests that the partners will be responsible for the losses and gains incurred according to the ratio mentioned in the contract (Sadiq et al., 2014). Therefore, the capital losses of $10,000, which is owned by Jack and Jill, will be handed out in a same way if the profit has been distributed and made Jack and Jill responsible for $1,000 and $9,000 respectively. On the other hand, if Jack undertakes a decision of sale then the cost base of property must be considered and capital gains or loss should be distributed among the taxpayers equally. Therefore, regardless of the terms of the contract the loss will be distributed accurately as the profit has been generated. The ITAA Act 1997 specifies that no party can solely presume the responsibility for paying the losses incurred. This stands for partners for sharing the losses in the ratio of 1:9 as elaborated in the contract. The issue discussed in this question is for checking the application of the principle within Australia that has been drawn out from the IRC v Duke of Westminster [1936] AC 1 (Schreiber, 2013). The case of IRC v Duke of Westminster is about appointing a Gardner by the Duke of Westminster that will be paid later the wages after Duke pays taxes based on the income. This mainly causes the Duke to pay high amount of taxes which the Gardner will be paid tax wages before the payment of tax so that the tax benefits can be earned by paying taxes upon low- income that unfavourably impacts on the amount of tax also. The rule derived from the above case is that the net income is termed to be taxable instead of the gross income. Net income is calculated by deducting expenses from the gross income earned by a individual person (Bernstein, 2013). These rules allows all the individual or businesses for taking the benefits of tax exemptions and credits. The above analysis related to the considered case, which reflects that the government of Australia provides the records of probable deductions available so that the business and individuals can gain the benefits from tax (Martin, 2015). This deductions will offer them a higher benefits from tax as the income of the individual is lowered down as the deductions are made and the tax is charged on the lower income will also be considered as less amount. From the above analysis, this can be concluded that individuals are not allowed for misrepresenting their income but it is also pointed out that some possible deductions those individuals can take advantage of filing the income tax. The income is generally reduced on the income statement can be calculated properly. The issue elaborated is regarding the management of the income gained by Bill from selling the pine tree to the logging company at the rate of $1,000 for every 100m of the timber log or accepting a lump sum of $50,000 that helps in granting the logging company for using as much as they are searching for. Regarding the above issue, TR 95/6 Act will be applied. The act particularly helps in guiding the taxation policy upon the income gained from the actions of manufacturing and forestry (Smith, 2013). Another rule that will be applicable is or classifying the income gained by individual as operational or non-operational. The logging company issued receipts for the purchasing timber from Bill at the rte $1,000 for every 100m timber log that is income Bill. The selling of the timber by Bill is not a normal activity that will be mentioned under the income supervisor of the individual and not of trade. This income gained by Bill is subjected to taxes and deductions can be made for relational expenses such as plantation cost and transportation cost etc. Any other expenses that are non- relational to selling of the timber would not be deducted and will be included within the income for the calculation of the taxes according to the guidance of TR 95/6 act. On the other hand, if Bill decides to grant the right of taking the as much as the amount of timber from his land to the logging then this will give rise to royalties under section 26 (f) of the ITAA 1997 (Weltman, 2013). Citing the reference of McCauley v FC of T (1944) receipt of sum from granting rights results in royalties that will ultimate give rise to royalties, which will be subjected to taxation for Bill. It is clear that the operational expenditures can be deducted from the assessable income gained from the trade or individual. Reference list: Bernstein, P. (2013).The Ernst Young tax guide 2013. [Somerset, N.J.]: Ernst Young. Dalton, H. (2013).Principles of Public Finance. Hoboken: Taylor and Francis. Graetz, M., Schenk, D.(2013). Federal income taxation. Grange, J., Jover-Ledesma, G., Maydew, G.2014 principles of business taxation. James, S.(2014). The economics of taxation. Martin, F (2015).Income tax, native title and mining payments. Ricardo, D. (2013).Principles of political economy and taxation. [Place of publication not identified]: Theclassics Us. Sadiq, K., Coleman, C., Hanegbi, R., Jogarajan, S., Krever, R., Obst, W., Ting, A.Principles of taxation law 2014. Schreiber, U. (2013).International company taxation. Berlin: Springer. Smith, R. (2013).Compilation of state and federal privacy laws. Providence, RI: financial Journal. Weltman, B. (2013).J.K. Lasser's 1001 deductions and tax breaks 2013. Hoboken, N.J: John Wiley Sons