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46 Cards in this Set
- Front
- Back
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What does s. 6-5 relate to?
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Income according to ordinary concepts.
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What cases provide a definition of s. 6-5?
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Scott v FCT: "in accordance with the ordinary concepts and usage of man kind".
Arthur Murray v FCT: Consider the decision, ordinary commercial and accounting practice |
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What are the 4 categories of income?
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1. Income from personal exertion
2. Income from business 3. Income from profit making undertakings or schemes 4. income from property |
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What does Eisner v Macomber say?
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- Tree and apple metaphor: capital amount is not income according to ordinary concepts
- Amounts received for the use of property is assessable income. |
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FCT v. Dixon; GP International Pipecoater Pty Ltd v FCT says....
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income is a:
- regular, - recurrent, - periodic amount Isolated transactions is more likely to be capital. |
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What case says "amounts incidental to employment or services rendered are income?
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Kelly v. FCT
& Scott v. FCT |
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A gain from a isolated transaction received in the course of a commercial transaction or in carrying on a business may be income. Which case and tax ruling supports this?
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FCT v. Myer Emporium
TD2010/21: applies this concept to the disposal of shares in the leverage buyout. |
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What does FCT v Cooke & Sherden say?
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An amount that is not convertible into money is not income.
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What is are the characteristics of an replacement amount?
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The characteristics of the amount it replaces: Liftronic v FCT.
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What does capital usually relate to?
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Once off, non-recurring transaction
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Cases relating to the development and sales or property that has been used in business, the sales of that property may be income if...
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it is organised in a way that indicates the owner has undertaken a new business venture in relation to the development.
Cases: Scottish Australian Mining v FCT Whitfords Beach v FCT |
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Californian Oil Products v FCT, states...
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Proceeds are usually received as a lump sum, but proceeds received by instalments it doesn't change the characteristics of the principal amount.
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Single undissected amount is received in full compensation for a claim, which may include an income component, the full amount is treated as being capital in nature. Which case would I use to reference?
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McLaurin v. FCT
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What does s. 15-15 relate to?
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Profit making undertaking
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What does s. 15-20 relate to?
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Royalties
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What does s. 15-35 relate to?
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Interest on overpayments and early payments of tax
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What does s. 15-50 relate to?
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Sale of work in progress
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What does s. 20-20 relate to?
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Assessable recoupments
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What does s. 20-110 relate to?
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Disposal of leased car for profit
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What does s.70-35 relate to?
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Trading stock
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What does s. 70-90 relate to?
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Disposal of trading stock outside normal course of business
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What does s. 82-130 relate to?
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Employment termination payments
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What division relates to Employee share schemes?
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Division 83A
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Net capital gains should be referenced to...
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s. 102-5
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s21A relates to...
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Non- Cash benfiits
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s. 44, 47, 92 and 97 relate to...
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1. Dividends
2. Distributions by liquidator 3. Partnership income 4. Trust income distributed to beneficiary not under legal disability |
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What 2 sections relate to dividends?
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s. 109: excessive payments to shareholders and associates
Division 7A |
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What are the key sections of s21A?
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- 21A(1): reats any non-cash business benefit that is not convertible to cash as if it were convertible to cash
-21A(2): value of the non-cash business benefit is the arm’s-length value less the recipient’s contribution towards the benefit -21A(3): value is reduced by the amount the recipient would have been entitled to if they had of purchased it themselves (has to be a once only deduction) - 21A(5): value reduced by the amount that relates to "non-dedcutabel entertainment expenditure". |
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What does s. 23L(2) exempt?
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The amount under s21A(1) (net of reductions) if it does not exceed $300.
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What does subdivision 20-B relate to? When does it apply?
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Disposal of a lease car for a profit. Applies when a lessee acquires the car from the lessor and subsequently sells the car.
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s 995-1 defines....
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motor vehicle
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The amount included in assessable income for a disposal of leased car?
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The lowest of:
> the total lease payments that have been deducted over the term of the lease (s. 20-110(2)(a)) > the profit, ....difference between the consideration paid to the lessor to purchase the car and any subsequent capital improvements and the consideration on disposal of the vehicle (s. 20-115) > the notional depreciation, ...that is the difference between the cost to the lessor and the termination value to the lessor (s. 20-110(2)(b) and s. 20-120). |
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ETP have what two components? What are the section reference?
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s. 82-140: a tax free component.
This is NANE. It consist of: 1) invalidity segment (calculated by reference to normal retirement date and is not taxed) 2) pre July 1983 section: deducting any segment of the invalidity segment that is before 1 July 1983. s. 82-145: taxable component termination payment - tax free component |
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How does the concession for apply? What
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As a tax offset
Cap for 2012: $165,000 (amount over cap taxed at top marginal rate + medicare levy) Cap is reduced by any life benefit termination payment for the same employment termination. |
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Annual leave, long service leave accrued after what date is taxed at normal rates?
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18 August 1993
Payments that are part of a genuine redundancy payment is taxable at 30% (+ medicare levy) |
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What is the tax free component of a genuine redundancy and early retirement scheme?
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$8,435 + $4,218 for each year of completed year of service.
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What criteria have to be met to qualify as a genuine redundancy payment?
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1. employee must be dismissed before reaching the age of 65 year.
2. The payment must not exceed the amount that would be paid in an arm's length transaction 3. there must not be an agreement in place to employe the person following the dismissal. |
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Define the terms 'redundancy' and 'dismissal', and provide a reference.
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Re Long and FCT
Employment was terminated involuntarily as the services of the employee are not longer needed. |
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When are superannuation benefits tax free?
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When the recipient is over 60 years of age, provided the benefit comprises of a taxed element.
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What section does 11-55 cover?
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Non assessable, non-exepmt income
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How can exempt income be classified as?
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1. Exempt because of the entity that received it (s. 15-15)
2. exempt because of the type of income, no matter who receives it (s. 11-10) 3. exempt because the type of income in the hands of a particular recipient (s. 11-15) |
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What is the mutuality principle?
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Recognises that you cannot make profit dealing with yourself.
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What principle does Bohemians Club v Act FCT support?
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Where people have contributed together to a common fund to pursue a common purpose, and the fund will be returned to the contributors on winding up, any transactions between those members and the organisation does not create income.
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When are the following items derived?
1. Salary and wages 2. Interes (investor) 3. Interest (financial institution) 4. Rent 5. Dividends 6. Trading income 7. Professional service |
1. On receipt
2. On receipt 3. Accruals basis 4. On receipt 5. When paid 6. When the debt is due 7. May be on cash on csh or an accruals basis |
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What method should be used for large accounting partnership?
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Accruals - Henderson v. FCT
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What does the following relate to...an accountant practising as a sole practitioner on a cash basis introduced employees as partners. The work in progress at the date of the transfer was an asset of the former business. The new business operated on a cash basis. The Full Federal Court held that the new partnership was a new venture that had no relationship to income of the former business and the former basis of accounting continued in relation to that income?
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Dormer v. FCT
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