TAXATION

Taxation in Australia

Taxation in Australia

Introduction

Tax is a financial charge or financial obligation that a government or state impose on individuals and business entities. Like other nations, Australia has also developed a systematic and effective tax structure. Australian Economists are famous in making economical policies all around the world. Taxation history of Australia is based on the development of several events.

In this assignment, we are going to access and elaborate several cases related to the Australian taxation. We have classified the assignment into 4 parts. In the first part, we are discussing the nature and treatment of income earned from property. Second part of the assignment will elaborate the understanding about the income classification. In the third part, case regarding the calculation of fringe benefits taxation is discussed. Finally, we are going to explain the impact of certain activities on the overall structure of the taxation.

Question # 2 (Income from Property)

In question one, we are supposed to answer three questions related to the treatment of Timber sales by a landowner Mr. Smith. This question basically deals with the disposing of Timber tree. Timber Tree can be dispose off (sale) through three ways that are discussed in question, and we are going to elaborate the tax requirements or treatment of each case (Jimmy, 2013, Pp. 500-740). Part 1

In part1 George the owner of the land is allowing MR., Smith to enter in his land for the purpose of felling timber at the rate of $20 per tree removed. In total George receives an amount of $ 10,000.

Tax Treatment

The case of allowing Mr Smith for the purpose of felling the Timber tree is treated under the economic interest retained (IRC) section 631 (b). The act is also known as pay by scale or pay as cut. We are considering this specific case under the IRC section 631 b because both parties have decided the price per unit in advance, but the totals amount of timber being harvested is not. Income from the sale of Timber is actually dependent upon the volume of the harvested trees. The seller (Mr. George) keeps the legal tile and economic interest of the standing Timber trees until and unless it is cut.

In such kind of Timber sale, the income earned by George is treated with in the provision of special tax category of business property. This overall treatment is determined under the section 1231 that is a question to capital gains treatment. Therefore, the amount of $10,000 that George receives from MR. Smith will be considered as a capital gain receipts. In short, this case represents that you are have not received any advances payment for the Timber but have received as it was cut.

Part 2

In the second part, George is supposed to sell 9000 Timber trees to Mr. Smith for the amount of $90,000. Payments will be discharged in the form of instalments no matter weather the trees are removed or not.

Tax Treatment

The case of selling 9000 Timber trees ...