Principles of tax income law Essay Example | Topics and Well Written Essays - 2750 words

Principles of tax income law - Essay ExampleIn washbasins case, he is an employee of a real estate agent but he is carrying out personalised investment activities. This dismiss be seen with the barter for of the motel in order to sell it out as a kindergarten later. A purchase of this kind can be considered as an investment carried out with the intention to make a take in. In terms of the bigger picture, Johns investment activity can be considered as a business activity in cut-and-dried usage since he invests money in order to reach a profit. Receipts or profits created through business activities are treated as ordinary income for most circumstances3 4. In cases where there may be payment complications or where receipts cannot be created from harvest-home of business, income may not be seen as ordinary5. However, in Johns case, if the real estate change out it would have produced a simple income receipt that would have been considered as ordinary income. The onset of the fl oodlight and the clearing up of the farming can further be considered as business activities on Johns part in order to add value to his property. The assessment that Johns land carried underground hot water reservoirs merely added even more value to his land. John is now be completeered money based on the value rise to power on the motel site he purchased. The value assenting activities of John can be seen as business activities analogous to each former(a) value entree properties carried out by any other business. As long as there is sufficient connector between Johns income derived from the sale of land and value addition on the land, Johns income will be categorised as ordinary income according to FCT v Consolidated Press Holdings Ltd (No 2)6 7. A scrutiny of Johns circumstances reveals that he purchased land with a view to make profit and his final transaction with Green Energy results in profit. Such income is considered ordinary income for taxation purposes. Problem mo tility 1B The capital gains tax (CGT) applies to any forms of capital gains made when an asset is disposed off except for certain(prenominal) exemptions. Most exemptions related to CGT in Australia are based on items of personal use as closely as exemptions to promote certain business activities. Moreover, the CGT enforced in Australia provides for rollovers under certain circumstances. The contention derriere CGT is to tax income that falls within the capital gain category so that it cannot be drained off for other purposes. Assessments for CGT rely on considering any net gains as part of the taxable income structure for a single tax year8. The net gains may result from the sale of owned assets or from any other forms of disposal of assets. Any form of assets held by an individual for a period of one year or more are given a fifty percent discount when considering the CGT on disposal9. CGT was introduced to Australia in 1985 and any assets held by a person before this are exempt from CGT. Assets acquired by a person in or after 1985 are considered alone in CGT deductions10. In the case of Kimberly, her assets were mostly formed sound after 1985 so CGT applies to most of her assets except those that are exempt under current CGT laws. In addition to this observation, it is noteworthy that up to 1999, CGT applied after an assessment of the consumer set index (CPI). Under this scheme, changes in the price of an asset due to consumption