Reading Guide BTF3931 S1 2019 PDF

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BTF3931 TAXATION LAW SEMESTER 1, 2019

Reading Guide

Introduction | Prescribed Resources This document is the reading guide for students undertaking BTF3931 Taxation Law in semester one, 2019. Prescribed Resources The prescribed readings are from two main sources:

1. Textbook (referred to as PoTL in this reading guide)

2. Case Book

The prescribed readings also include legislation, which may be accessed at: http://www.austlii.edu.au. FBTAA GST Act ITAA36 ITAA97

Fringe Benefits Tax Assessment Act 1936 A New Tax System (Goods and Services Tax) Act 1999 Income Tax Assessment Act 1936 Income Tax Assessment Act 1997

Alternatively you can purchase a hard copy of the legislation from the Campus bookshop. The recommended hard copy of the legislation is ‘Fundamental Tax Legislation’ 2019 Pinto, Kendall and Sadiq Lecturers may refer to other supplementary materials during the semester which will form part of the prescribed readings. Students are required to have a thorough understanding and working knowledge of all legislative provisions discussed and principles from case law which have been listed in the reading guide, cases raised in lectures and tutorials and in other supplementary materials referred to during the course of the semester.

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 1 | Readings Australian Tax System a) Introduction to the Australian Tax Laws Legislation:

sections 1-1, 1-2, 1-3, 2-1, 2-5, 2-10, 2-15, 2-20, 2-25, 2-30, 2-40, 2-45, 3-5, 3-10, 3-15, 4-1, 4-5, 4-10, 4-15 of ITAA97

PoTL:

   

Introduction [1.10]-[1.20] Understanding tax law and the doctrine of precedent [1.30]-[1.60] Origins of judicial tax law concepts [1.150] – [1.170] The taxation formula and Australian taxes [3.10], [3.30]

b) Constitutional Considerations Legislation:

sections 53, 55, 81, 83, 90, 96,114 of the Commonwealth of Australia Constitution Act 1900, Division 4 of the ITAA 1997

PoTL:



Power to tax [3.20]

Income Tax – Key Concepts a) Sources of Law PoTL:  Introduction to income tax [3.100]-[3.110]  Sources of tax law [1.180]-[1.300] b) Income Tax Equation and Income Tax Rates Legislation:

Division 4 of the ITAA97; section 5 Income Tax Act 1986; Income Tax Rates Act 1986

PoTL:

 

The income tax formula [3.120]-[3.180], [3.220] Income tax rates [3.190]-[3.210]

c) Exempt Income & Non-Assessable Income Legislation:

Divisions 11, 15, 50, 51 of ITAA97

PoTL:



[3.170]

d) Levies & Charges Legislation

PoTL:

s 251S of the ITAA36   

Medicare levy [3.40]-[3.70] Medicare levy surcharge [3.80] Repayments of higher education debts [3.90]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 2 | Readings Residence and Source Legislation:

section 6-5(2), 6-5(3), 6-10(4) of the ITAA 97, section (6)(1) of ITAA36 and relevant definitions of s995-1 of ITAA97

Cases:

Joachim, Applegate, Jenkins, Levene, Lysaght, Bywater Investments, French, Efstathakis, Mitchum. Rhodesia Metal Ltd (Liquidator), Thorpe Nominees, Esquire Nominees

PoTL:

    

Introduction [4.10] Legislative framework [4.20] Residence [4.40]-[4.145], [4.155]-[4.160], [4.170]-[4.220] Source [4.230]-[4.290] Tax Treaties [22.440]-[22.490]

General Concepts of Income Legislation:

sections 6-5, 15-2 of ITAA97 and 21A of ITAA36

Cases:

Harris, Keily, Dixon, Blake, Tennant v Smith, Cooke & Sherden, Payne (1996), Hochstasser v Mayes, La Rosa, Federal Coke, Bohemians Club v Acting FCT, RACV

PoTL:

  

General concepts [5.10]-[5.40] Prerequisites and characteristics of ordinary income [5.50]-[5.130] Other general principles [5.140]-[5.170]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lectures 3 | Readings Income from Personal Services and Employment Legislation:

sections 6-5 and 15-2 of the ITAA97

Cases:

Brown, Payne, Brent, Calvert & Wainwright, Laidler v Perry, Kelly, Dixon, Hayes, Scott, Bennett, Jarrold v Boustead, Pickford, Higgs v Olivier, Hepples. Woite, Reuter

PoTL:





Ordinary income as a reward for services [6.10]-[6.20] o Nexus with service [6.30]-[6.60] o Prizes, voluntary payments and unexpected payments [6.70]-[6.120] o Non-cash benefits [6.130] o Capital receipt or personal exertion [6.140]-[6.180] Section 15-2: Statutory income from services and employment [6.190]-[6.230] o Section 15-2’s interaction with sections 6-5 and FBT [6.240]

Income from Property Legislation:

section 6-5 of ITAA97 and section 44 of ITAA36

Cases:

Lomax v Peter Dixon & Son Ltd, Adelaide Fruit and Produce Exchange Co Ltd, McCauley, Stanton, Kosciusko Thredbo, Egerton-Warburton

PoTL:

     

Income from property: introduction [9.10] Interest [9.20]-[9.40] Dividends [9.150] Rent [9.160]-[9.180] Royalties [9.190]-[9.200] Annuities [9.210]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 4 | Readings Income from Business Legislation:

sections 6-1, 6-5, 6-10, 6-15, 6-20, 6-25, 15-2, Division 35, and relevant definitions of s 995-1 of ITAA97; sections 6(1), 21A and 23L of ITAA36

Cases:

Ferguson, Brajkovich, JR Walker, Thomas, Trautwein, Martin, Evans, Babka, Spriggs, Riddell, Stone, London Australia, AGC Investments, St Hubert’s Island Pty Ltd, Softwood Pulp & Paper, Osborne, Californian Copper Syndicate v Harris, GP International Pipecoaters, Merv Brown, Memorex, Hyteco Hiring Pty Ltd, Cooke & Sherden.

PoTL:

 

  

Introduction [8.10] Carrying on a business [8.20]-[8.50] o Gambling [8.60]-[8.70] o Sportspeople [8.80] o Investment activities [8.90] o Land sales [8.100] o Sharing economy [8.105] Commencement and termination of a business [8.110]-[8.120] Normal proceeds of a business [8.130]-[8.150] Non-cash business benefits [8.160]

Tax Accounting for Income Receipts Legislation:

section 6-5(4) of ITAA97

ATLC:

Henderson, Barratt, Carden’s case, Arthur Murray, BHP Billiton Petroleum (Bass Straight)

PoTL:

     

Introduction [16.10] Meaning of “derive” [16.20] Timing of derivation & cash v accruals accounting [16.30]-[16.60] Switching between cash and accruals basis [16.70]-[16.80] Payment before earning activity has commenced [16.90]-[16.95] Derivation and delay because of dispute [16.110]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lectures 5 | Readings Isolated and Extraordinary Transactions Legislation:

sections 6-5, 15-10 and 15-15 of ITAA97

Cases:

California Copper, Scottish Australian Mining, Whitfords Beach, Statham, Stevenson, Casimaty, Myer Emporium, Westfield, Cooling, August, McCurry, Henry Jones (IXL) Ltd; Greig

PoTL:

   

Extraordinary and isolated transactions: introduction [8.170] Transaction forms a business in itself [8.180]-[8.200] Two strands of Myer [8.210]-[8.260] Statutory provisions that may apply to extraordinary and isolated transactions [8.265], [8.270], [8.290]

Compensation Receipts in Relation to a Business Legislation:

sections 6-5, 15-30 and 70-115; and relevant definitions of s995-1 of ITAA97 and section (6)(1) of ITAA36

Cases:

Dixon, Heavy Minerals, Allied Mills Industries Pty Ltd, Californian Oil Products, Glenboig Union Fireclay, Ensign Shipping, Sydney Refractive Surgery Centre Pty Ltd, McLaurin

PoTL

        

Principles of compensation: introduction [10.10]-[10.30] Compensation for business losses [10.150]-[10.160] Compensation for breach of contract – ordinary trading contracts [10.170]-[10.180] Compensation for breach of contract going to fundamental structure of business [10.190] Compensation for loss of asset – depreciable assets [10.200] Compensation for loss of asset – capital assets [10.210] Compensation for loss of asset – trading stock [10.220] Compensation by way of insurance proceeds [10.230] Composite claims [10.240]-[10.250]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 6 | Readings Statutory Income: Capital Gains Tax

Legislation:

Divisions 100, 102, 104, 108, 109, 110, 112, 114, 116, 118-A and 118-B of ITAA97, and note in particular: sections 102-5, 102-10 102-15, 103-30, 104-10, 104-20, 1085, 108-55, 108-70, 108-85, 110-25, 110-35, 110-36(1)-(2), 110-55, Subdivision 112A; 114-1, 114-10; 115-15, 115-20, 115-25, 116-20(1), 116-30, 116-40, 116-45, 11650, 116-55, 116-60, 960-270

PoTL:

       

Capital gains tax: introduction [11.10]-[11.20] Capital gains and capital losses [11.30]-[11.80] CGT assets [11.170]-[11.240], [11.270], [11.275], [11.310] Exempt or loss denying transactions [11.280]-[11.300] Anti-overlap [11.310] Main residence [11.380]-[11.420] Working out capital gains and losses [11.440]-[11.500] Working out net capital gain or loss for the income year [11.510]-[11.580]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lectures 7 & 8 | Readings General Deductions Legislation:

sections 8-1, 26-5, 26-10, 26-20, 26-40, 26-45, 26-50, Divisions 32 and 34 of ITAA97

Cases:

Charles Moore & Co (WA) Pty Ltd, Amalgamated Zinc (De Bavay’s) Ltd, Ronpibon Tin No Liability, W Nevill, Lunney, Hayley, Payne, Day, Anstis, Herald & Weekly Times, Snowden & Wilson, Magna Alloys & Research Pty Ltd, La Rosa, Steele, Placer Pacific Management, AGC (Advances), Brown, Vallambrosa Rubber, British Insulated and Helsby Cables Ltd v Atherton, Sun Newspapers Ltd and Associated Newspapers Ltd, BP Australia, Strick v Regent Oil Co Ltd, National Australia Bank Ltd, Colonial Mutual Life Assurance Society Ltd, Star City Pty Ltd, Cooper, Ure, Fletcher, Spriggs, Riddell, Maddalena, Fullerton, John Holland Group, Brandon, Ballesty, Lodge, Collings, Wiener, Vogt, Studdert, Hatchett, Highfield, Peter Lenten, Finn, Carlos Sanchez, Faichney, Handley, Forsyth, Edwards, Mansfield, Morris, Westcott, Munro, Hallstroms, Broken Hill Theatres, John Fairfax & Sons Pty Ltd, Consolidated Fertilizers Ltd, Jones, James Flood Pty Ltd, Commercial Union Assurance, Nilsen Development Laboratories, RACV Insurance

PoTL:





  



General deductions - introduction [12.10]; o General deduction rule [12.20], o Loss or outgoing [12.30]; o The nexus test - positive limbs of s 8-1 [12.40]-[12.150] Non-deductible expenses – the negative limbs of s 8-1 [12.160] o Capital or capital in nature [12.170]-[12.210] o Private or domestic [12.220] o Incurred in gaining or producing exempt or non-assessable non-exempt income [12.230] o Denied deductions [12.240]-[12.260] Apportionment – deductibility of dual purpose expenses [12.270]-[12.280] Amount of deduction [12.290]-[12.310] Application of sec 8-1 to commonly incurred expenses [12.330]: o Expenses incurred in gaining employment [12.340]-[12.350] o Relocation expenses [12.360] o Child care expenses [12.370] o Travel expenses (including car) [12.380]-[12.570] o Self-education expenses [12.580]-[12.690] o Home office expenses [12.700]-[12.730] o Clothing and dry-cleaning expenses [12.740]-[12.800] o Interest [12.810]-[12.820] o Legal expenses [12.840]-[12.850] Timing – deductions and deductibility [16.120] – [16.240]

Specific Deductions a) Repairs Legislation:

section 25-10 of the ITAA97.

Cases:

Lurcott v Wakely and Wheeler, Law Shipping, W Thomas & Co, Western Suburbs Cinemas, Lindsay, Samuel Jones & Co (Devondale), Case J47

PoTL:



Introduction [13.10]; Repairs [13.30] – [13.70]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 9 | Readings Specific Deductions (Continue) b) Capital Allowances Legislation:

Division 40 of ITAA97

PoTL:

      

Depreciation deductions [14.10]-[14.20] Depreciating asset [14.30]-[14.35] Claiming a deduction [14.40]-[14.100] Balancing adjustments [14.110]-[14.118] Cars [14.125] Pooling of assets [14.130]-[14.155] ‘Blackhole expenses’ [14.180]-[14.210]

c) Capital Works Legislation:

Division 43 of ITAA97

PoTL:



Capital works deductions [14.170]

d) Other Deductions Legislation:

sections 25-5, 25-25, 25-35 and Division 30 and 36 of ITAA97

PoTL:

     

Tax-related expenses [13.20] Bad debts [13.80]-[13.83] Travel between workplaces [13.110] Gifts [13.130]-[13.160] Borrowing expenses [13.210] Prior year losses [13.180] - [13.200]

Provisions Limiting Deductibility Legislation:

sections 26-35 and Divisions 35 and 900 of ITAA97

PoTL:

  

Non-arm’s length prices between associated parties [23.120] Non-commercial business losses [23.150] Substantiation of deductions [12.320]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 10 | Readings Tax Offsets Legislation:

sections 160AD, 6(1), 159N, 159L, 159P of the ITAA36, Divs 63, 67, Subdiv 61-G, Subdiv 61-K, sections 13-1, 207-20 of the ITAA97;

PoTL:

       

Tax offsets [3.220] Introduction [15.10] Types of tax offsets [15.20]-[15.60] Concessional tax offsets provided as subsidies [15.110]-[15.130] Tax offsets for shareholders [15.70]-[15.80] Dependent offset [15.150] Private health insurance offset [15.160] Low income rebate [15.170]

Indirect Tax: Goods and Services Tax Legislation:

sections 7-1, 7-5, 7-10, 7-15, 9-5, 9-10, 9-15, 9-20, 9-25, 9-26, 9-27, 9-30, 9-40, 970, 9-75, 11-5, 11-10, 11-15, 11-20, 11-25, 13-5, 13-10, 13-15, 13-20, 15-5, 15-10, 15-15, 15-20, 19-10, 23-5, 23-10, 23-15, 27-5, 27-10, 29-1, 29-5, 29-10, 31-1, 31-5, 31-8, 31-10, 38-1, 38-325, 40-1, 40-5, 40-35, 40-65, 42-5, 75-5, 75-10, 75-11, 7514, 75-20, 75-30, 83-5, 83-20, 84-5, 84-10, 84-12, 84-13, 99-1, 99-5, 99-10, 188-10, 188-15, 188-20, and Divisions 38 and 40 of the GST Act 1999 GST Regulations 40-5.09 – 40-5.13 of the A New Tax System (Goods and Services Tax) Regulations 1999

Cases:

Reliance Carpet Co Pty Ltd (2008), Qantas Airways Ltd (2012), Luxottica Retail Australia (2011)

PoTL:

           

Introduction [25.10]-[25.40] Registration [25.50]-[25.80] Taxable supply [25.90]-[25.130] GST-free supply [25.140]-[25.150] Input taxed supply [25.160]-[25.170] Mixed or composite supply [25.175] Supply summary [25.180] Creditable acquisition [25.190]-[25.240] Importation [25.250]-[25.290] Offshore supplies [25.295] – [25.299] Administration [25.300] – [25.310] Interaction with other taxes [25.320]-[25.330]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 11 | Readings Fringe Benefits Tax Legislation:

Sections 5B, 5C, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 20A, 21, 22, 22A, 23, 24, 37A, 37AA, 37AB, 37AC, 37AD, 40, 41, 43, 44, 45, 47, 48, 49, 50, 51, 53, 54, 57, 58F, 58H, 58K, 58P, 58Y, 58Z, 62, 65J and 66 of FBTAA

Cases:

Slade Bloodstock Pty Ltd (2007), Westpac Banking Corporation (1996), J&G Knowles & Associates (2000), Starrim Pty Ltd (2000)

PoTL:

    

Fringe benefits tax: introduction [7.10] Fringe benefit – definition [7.20]-[7.75] Exclusions [7.80]-[7.85] Categories of fringe benefits [7.90] Selected fringe benefits: o Car fringe benefits [7.100]-[7.140] o Debt waiver fringe benefits [7.150]-[7.160] o Loan fringe benefits [7.170]-[7.190] o Expense payment fringe benefits [7.200]-[7.220] o Meal entertainment fringe benefits [7.230]-[7.240] o Property (external) fringe benefits [7.250]-[7.270] o Exempt fringe benefits [7.310]-[7.350] o Reductions in taxable value [7.360]  Recipient’s contribution [7.380]  Otherwise deductible rule [7.390] o Type of fringe benefit [7.400] o Fringe benefits taxable amount [7.410] o Fringe benefits tax liability [7.420] o Interaction with income tax [7.430]-[7.440] o Interaction with GST [7.450]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide

Lecture 12 | Readings Tax Compliance and Administration Cases: Ex parte Briggs, Prestige Motors, FJ Bloemen, Futuris Corporation PoTL:   

Introduction [24.10] Annual returns [24.20]-[24.30] Assessments [24.40]-[24.140]

Monash Business School BTF3931 Taxation Law | Semester One, 2019 | Reading Guide...