Tax Law Assignment Essay

3538 WordsApr 6, 201315 Pages
Discussions: Recognition of taxpayer-cash / accruals Separate legal entity deduction on land refinancing principal Deduction of legal fee Depreciate of asset- prime cost vs diminishing Lease incentive- NCBB s21AA – otherwise deductible rule ss3 – tax free- no income tax implication Set up cost- BP Australian GST implication Bad debts s23-35 4 conditions –bad debt adjustment PAYG- Franking acc – TFN – Total Car expenses s28 – FBT – luxury car limit- depn Education- no deduction Resignation of dirention – nexus- dedutiblity? Compensation payment – giving the right Lump sum payment Salary- superannuation deductible Entertainment s35 FBT Carry for loss Marketing- deductible Dear Nick and Paula, In my capacity as your tax agent, I wish to advise you on the tax treatments that arise in the Victorian Specialist Driving Training (VSDT) throughout the income year 2009/2010. A :Basis of Accounting According to Henderson’s case[1] “in order to determine the actual appropriateness of an accounting method, regard must be had to the nature and circumstances of taxpayer’s income and enterprise”. Referring to the facts given, I would suggest that accrual basis of accounting would substantially reflect VSDT’s true income as a company. B: Income 1. Fees Received from LCD Drivers Inc. VSDT had incorporated in Australia since 1982, thus the incorporation in Australia test applies. VSDT is resident of Australia in tax purpose; this lump sum of payment from LCD could be considered as assessable income. However, VSDT and LCD entered into a contract on 1 September 2009, but payment was made at 1 October 2009. Referring to Arthur Murray[2] case, VSDT is allowed in its accrual accounting to defer recognition of amounts received for provision of future services. So we assumed that the payment payable

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