科技进步策略

CO5120TaxationLawModule2DerivationofTaxableIncomeModuleObjectives1.Applyconceptsofordinaryandstatutoryincome.2.Understandtheconceptof“derivation”ofincome.3.Understandthegenerallawprinciplesfordeterminingincome–andtheirstatutorymodifications.4.Understandthedifferencesbetweenincome,capitalreceipts,windfallgainsandmutualpayments.5.Understandtherulesgoverningnon-cashreceipts.6.Understandtherulesgoverningincomesubstitutionandcompensationpayments.7.Understandthetaxeffectofreceiptsfromillegalactivity.TheAustralianTaxSystemThreeCriticalQuestions:•Whodowetax?•Whatdowetax?•Howmuchdowetax?TheTaxationEquationsAssessableIncome=Grossincome–(Exemptincome+Non-assessablenon-exemptincome)(sees6-1).TaxableIncome=Assessableincome-Deductions(sees4-15).TaxPayable=(TaxableincomexRate)-TaxOffsets(sees4-10(3)).Grossincome=Allincome(fromanysource)“Allincome”includesboth:a.‘exemptincome’;andb.‘non-assessable,non-exemptincome’.Therefore(becauseofs6-15)AssessableIncome=All“ordinaryincome”PLUSAll“statutoryincome”LESSAny“exemptincome”ANDAny“non-assessablenon-exemptincome”.OrdinaryandStatutoryIncomeSections6-5(1):•“ordinaryincome”is“incomeaccordingtoordinaryconcepts”.Section6-10(2)•“statutoryincome”includes“amountsthatarenotordinaryincomebutareincludedinyourassessableincomebyprovisions[intheAct]aboutassessableincome”.Therefore:WhetheraparticularreceiptisINCOMEthatistaxableinthehandsofataxpayerdependsonwhetheritis:a.INCOMEONORDINARYCONCEPTS(‘Ordinaryincome’);orb.IncomeundersomeSPECIFICSTATUTORYPROVISION(‘Statutoryincome’).ANDWhetherithasbeenderivedIncomeonOrdinaryConcepts•TheITAAdoesnotdefinetheterm“income”;•Section6(1)(ITAA1936)doesdefine:–incomefrompersonalexertion;–Incomefromproperty;–Incomefromcarryingonabusiness.•TheITAAalsodeemssomereceiptstobe“income”fortaxationpurposes(egnon-cashbusinessbenefits,tipsandgratuities,post-1985capitalgainsetc).Thesereceiptsarecalled‘statutoryincome’;•BUT,apartfromthosereceipts,determiningwhetheraparticularreceiptis“income”hasbeenlargelydeterminedbythecourts.Section6(1)ITAA1936Defines:•Incomefrompersonalexertion;•Incomefromproperty;and•Incomefromcarryingonabusiness.SOsuchreceiptsare‘ORDINARYINCOME’.StatutoryIncomeReceiptsthatwouldnotbeincomeunderordinaryconceptsbutwhichareincludedinincomebecausesomeprovisionofataxingstatutemakethemincome.Majorexamplesinclude:–s21A(non-cashbusinessbenefits)–s15-2(allowances,gratuitiesetc);–s15-15(incomefromprofitmakingundertakingsorplans)Otherexamplesinclude:–Capitalgains(s102-5);–Deemeddividends(varioussections-inclDiv7A);–Balancingadjustments(Div40);–Recoupments(s20-20);–SomeETPs(‘employmentterminationpayments’).“Derivation”ofIncome1.Incomebecomesassessablewhenitis“derived”–ss6-5(2)and(3)2.You“derive”incomewhenyoureceiveitorwhen“itisappliedordealtwithinanywayonyourbehalforasyoudirect”–s6-5(4)ands6-10(3).TaxableIncome=AssessableincomeLESSDeductionsDeductionsLossesandoutgoingsincurredingainingorproducingassessableincome–s8-1(1)(a)ORNecessarilyincurredincarryingonabusinessforthepurposeofgainingorproducingassessableincome–s8-1(1)(b)OROtheramountstheITAAallowsyoutodeduct(specificdeductions)-s8-5Question:Giveanexampleofthedifferencebetween“assessableincome”and“taxableincome”inthecontextof:a.Wageandsalaryincome;b.Interestincome;c.Rentalincome;d.Businessincome.Question:Arethefollowingreceipts“income”–and,ifso,aretheyincomefrompersonalexertionorincomefromproperty?a.awagereceivedbyanemployee;b.acommissionreceivedbyasalesman;c.asign-onfeereceivedbyaprofessionalfootballer;d.abonusreceivedforbeingthefirm’s‘TopSalesman’;e.ashareinprofitsreceivedbya‘silentpartner’;f.gamblingwinnings;g.aredundancypayment;h.apension;i.acapitalgainfromsellingablockofland;j.royaltypaymentsreceivedforatechnologylicence;k.aloanfromaprivatecompanytoitsmanagingdirector;l.‘keymoney’paidtoalandlordforalease.Income-GeneralLawPrinciples1.Itmust“comein”tothetaxpayer(Cooke&Sherden).2.Itmustbemoneyorsomethingreadilyconvertibletomoney.3.Noteverythingwhichcomesinisnecessarilyincome:a.Capitalreceiptsb.Windfallgains(the“NormalProceeds”ofpersonalexertion,propertyorbusinessareincome-WindfallGainsarenot.)c.“Mutualpayments”.4.Itmustbereceivedbythetaxpayerasincome;a.Isitincomeinthehandsofthistaxpayer?-FederalCokeb.Hasitbeen“received”?-Brent5.Itoftenexhibitscharacteristicsofperiodicity,regularityandrecurrence.6.“IncomeSubstitution”orcompensationpaymentsmaybeincome.7.Illegal,immoralandultraviresreceiptsmaybeincome.ItMust“ComeIn”Atgenerallawameresavingofexpenditureisnotenoughtoconstituteincome(TennantvSmith;CookeandSherden);Thishasbeenstatutorilymodifiedunder:a.s15-2(theformer26(e))-whichtaxesthe“valuetoyou”(subjecttotheFBTlegislation–sees23L);andb.s21(whichdeemsamoneyequivalent);andc.s21A(whichdealswith“non-cashbusinessbenefits).Question:Which,ifany,ofthefollowingamountsareassessableincomeundertheITAA?a.aholidayvaluedat$5,000awardedbyafirmtoits“SalesmanoftheMonth”;b.thesameholidayawardedtoitsbestperformingnon-employeeagent?TheReceiptShouldBeMoney1.Linkedtotherequirementthat,tobeincome,thereceiptshould‘comein’andnotbeameresavin