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BTF3931 Taxation law - Semester 2, 2010
Chief Examiner:Lecturer(s) / Leader(s):CaulfieldMr Toan Le Contact hours: 3 Dr Diane Kraal Contact hours: 3 Tutor(s):CaulfieldMrs Van Le Mrs Prachi Sinha Mrs Nance Frawley Maggie Shui IntroductionWelcome to BTF3931 Taxation Law. This unit is designed primarily as an appropriate elective/ compulsory unit for students enrolled in the Bachelor of Business [Law] and other related degree programs. This unit has been designed to provide students with an understanding of the key legislation and common law principles applicable to taxation law in Australia. Unit synopsisAssessable income and exempt income; deductions; special classes of taxpayers including trusts, partnerships and companies; objections and appeals; capital gains tax; fringe benefits tax; superannuation; eligible termination payments; tax collection; goods and services tax.Learning outcomesThe learning goals associated with this unit are to:
Contact hours3 hours per weekWorkloadThe unit has three contact hours per week – two in lecture format with one hour of tutorials. In addition to attending lectures it is expected that students will complete an average of at least two hours of personal study for each one hour of contact time. The personal study time includes reading and preparing for class, completing assignments, revising and making summaries. Students are expected to undertake the prescribed reading set out in the Reading Guide during personal study time. Unit relationshipsTeaching and learning methodThe classes will be conducted in lecture style and based upon readings and materials set out in the reading guide. Students will be expected to read prescribed materials and/or relevant class exercises in advance and generally be prepared to participate in class discussion. Timetable informationFor information on your timetable, including tutorial allocation if required, please refer to: http://allocate.its.monash.edu.au/ Unit Schedule
This Unit covers the following 14 topics. All references in square brackets “[…]” are references to readings from 2010 Foundations of Taxation Law. (FTL)Key legislation and cases are also mentioned. The key legislative provisions are contained in Core Tax Legislation and Study Guide. (CTLSG) Detailed summaries of the key cases are contained in the Australian Tax Casebook. (ATC) There are 10 important cases that have been marked with an asterisk “*”. At least one exam question will relate to issues raised in one or more of these cases. To answer the exam question, students are expected to have fully read the judgments in the relevant cases. The exam question may deal with some issues raised in the cases that may not have been focused on in lectures. The object of this exercise is to encourage students to undertake independent reading of important tax cases. It will allow students to demonstrate in the exam how well they understand relevant cases. 1. TAXATION THEORY Introduction [1.1] Functions of taxation [1.2] Tax expenditures [1.3] Structural features of taxes [1.4] Tax system design [1.5] Features of a good tax system [1.6] Level of taxation [1.7] 2. THE AUSTRALIAN TAX SYSTEM Introduction [2.1] Australian tax mix [2.2] History of taxation in Australia [2.3] Tax policy [2.4] ANTS reforms [2.5] Australia’s Future Tax System [2.6] Tax administration [2.7] Tax profession [2.8] 3. CONSTITUTIONAL FRAMEWORK OF THE AUSTRALIAN TAX SYSTEM Introduction [4.1] Commonwealth taxation power (s 51(ii)) [4.2] Powers of Houses (s 53) [4.3] Law imposing taxation (s 55) [4.4] Exclusive power to impose customs and excise duties (s 90) [4.5] Prohibition on taxing property belonging to the states (s 114) [4.6] Consolidated Revenue Fund and Appropriation Acts (s 81 and s 83) [4.7] 4. GOODS AND SERVICES TAX Introduction [5.1] GST legislative scheme [5.2] Basic GST principles [5.3] Registration of entities [5.4] Charging GST and claiming input tax credits [5.5] Net amount [5.6] Taxable supplies [5.7] GST-free and input tax supplies [5.8] Creditable acquisitions [5.9] Taxable importations and creditable importations [5.10] Accounting for GST and input tax credits [5.11] Increasing and decreasing adjustments [5.12] Reporting and payment requirements [5.13] Tax invoices, adjustment notes and GST records [5.14] GST turnover [5.15] Going concerns [5.16] Financial supplies [5.17] Margin scheme [5.18] Key legislation A New Tax System (Goods and Services Tax) Act 1999, s7-1, s9-5, s9-10, s9-15, s9-20, s9-25, s9-70, s9-75, s11-10, s11-15, s11-20, s11-25, Div 23, Div 29, Div 38, Div 40, s70-5, Div 75 A New Tax System (Goods ad Services Tax) Regulations 1999,r40-5-01 to r40-5-13, r70-5-02 5. INCOME TAX LEGISLATIVE FRAMEWORK/ INCOME TAX LIABILITY Introduction [6.1] Tax Law Improvement Project [6.2] Coverage of the Income Tax Assessment Acts [6.3] Introduction [7.1] Income tax formula [7.2] Taxable income [7.3] Tax rates [7.4] Tax offsets [7.5] Medicare levy and surcharge [7.6] The HELP system [7.7] Sample income tax and Medicare levy calculation [7.8] Reconciling income tax with GST and FBT [7.9] Key legislation Income Tax Assessment Act 1997, s 4-5, s 4-10, s 4-15, Div 6, Div 8, Div 10, Div 11 Div 12. 6. INCOME TAX ADMINISTRATION/IDENTIFICATION AND PAYMENT SYSTEMS Introduction [40.1] Income tax returns [40.2] Assesments [40.3] Due date [40.4] Taxation rulings [40.5] Objections, appeals [40.6] Challenges [40.7] Record keeping [40.8] Audit [40.9] Introduction [41.1] TFN [41.2] ABN [41.3] PAYG [41.4] Key legislation and cases ss6, 167,170,204, 262A,263,264 ITAA 36. Div 357,358 ITAA 97. Pt 4-25, 4-15 , Sch 1, TAA. ANTS(ABN) Act 1999, pt VA ITAA 36. 7. ORDINARY INCOME Introduction [9.1] Characterising income — key concepts [9.2] Categories of income [9.3] Income from personal exertion [9.4] Income from business [9.5] Residence [8.2] Source [8.3] Derivation of Income [11.2] Gains made from isolated and extraordinary transactions [9.6] Income from property [9.7] Compensation amounts and reimbursements [9.8] Key legislation and cases Income Tax Assessment Act 1997, s 6-5 Eisner v Macomber (1920) 252 US 189 Keily v FC of T 83 ATC 4248 FC of T v Blake 84 ATC 4661 FC of T v Harris 80 ATC 4238 FC of T v Dixon (1952) 86 CLR 540 Kelly v FC of T 85 ATC 4283 Tennant v Smith [1892] AC 150 FC of T v Cooke & Sherden 80 ATC 4140 Payne v FC of T (1996) 66 FCR 299; 96 ATC 4407 Moorhouse (Inspector of Taxes) v Dooland [1955] 1 All ER 93 Brent v FC of T (1971) 125 CLR 418; 71 ATC 4195 Calvert v Wainwright (1947) 27 TC 475 Kelly v FC of T 85 ATC 4283 FC of T v Dixon (1952) 86 CLR 540 C of T (Vic) v Phillips (1936) 55 CLR 144 Hayes v FC of T (1956) 96 CLR 47 Scott v FC of T (1966) 117 CLR 514 Dickenson v FC of T (1958) 98 CLR 460 Higgs (Inspector of Taxes) v Olivier [1951] 1 Ch 899 FC of T v Woite 82 ATC 4578 *Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159 *Scottish Australian Mining Co Ltd v FC of T (1950) 81 CLR 188 Statham & Anor v FC of T 89 ATC 4070 FC of T v Merv Brown Pty Ltd (1985) 7 FCR 1; 85 ATC 4080 *FC of T v Whitfords Beach Pty Ltd (1982) 150 CLR; 82 ATC 4031 FC of T v Stone 2005 ATC 4234 GP International Pipecoaters Pty Ltd v FC of T (1990) 170 CLR 124; 90 ATC 4413 *FC of T v The Myer Emporium Ltd (1987) 163 CLR 199; 87 ATC 4363 *Westfield Ltd v FC of T (1991) 28 FCR 333; 91 ATC 4234 Henry Jones (IXL) Ltd v FC of T (1991) 31 FCR 64; 91 ATC 4663 Moana Sand Pty Ltd v FC of T 88 ATC 4897 FC of T v Cooling (1990) 22 FCR 42; 90 ATC 4472 FC of T v Montgomery (1999) 198 CLR 639; 99 ATC 4749 Levene v IRC [1928] AC 217 FCT v Applegate 79 ATC 4307 FCT v Jenkins 82 ATC 4098 De Beers Consolidated Mines v Howe [1906] AC 455 Esquire Nominees Ltd v FCT 72 ATC 4076 Malayan Shipping Co. Ltd v FCT 1946 71 CLR 156 FCT v French [1957] 98 CLR 398 FCT v Efstathakis 79 ATC 4256 FCT v Mitcham (1965) 113 CLR 401 The Commissioner of Taxes (South Australia) v. The Executor Trustee and Agency Company of South Australia Limited (1938) 63 CLR 108 (Carden's case). Henderson v FCT 70 ATC 4016 Arthur Murray (NSW) Pty Ltd v FCT (1965) 114 CLR 314 Barratt and Ors v FCT 92 ATC 4275 FCT v Rowe 97 ATC 4317 8. GENERAL DEDUCTIONS Introduction [10.1] Loss or outgoing and apportionment [10.2] Positive limbs [10.3] Negative limbs [10.4] Clothing expenses [10.5] Travel expenses [10.6] Child-minding expenses [10.7] Self-education expenses [10.8] Home office expenses [10.9] Rent and licence fee expenses [10.10] Interest expenses [10.11] Legal expenses [10.12] Management expenses [10.13] Key legislation and cases Income Tax Assessment Act 1997, s8-1 W Nevill & Co Ltd v FC of T (1937) 56 CLR 290 Charles Moore & Co (WA) Pty Ltd v FC of T (1956) 95 CLR 344 Lunney v FC of T & Hayley v FC of T (1958) 100 CLR 478 Cecil Bros Pty Ltd v FC of T (1964) 111 CLR 430 FC of T v Finn (1961) 106 CLR 60 *Ure v FC of T 81 ATC 4100 *Fletcher & Ors v FC of T (1991) 173 CLR 1 FC of T v Janmoor Nominees Pty Ltd 87 ATC 4813 Madigan v FC of T 96 ATC 4640 FC of T v Maddalena 71 ATC 4161 Magna Alloys & Research Pty Ltd v FC of T 80 ATC 4542 FC of T v Phillips 78 ATC 4361 Placer Pacific Management Pty Ltd v FC of T 95 ATC 4459 *FC of T v Brown 99 ATC 4600 FC of T v Jones 2002 ATC 4022 FC of T v Smith (1981) 147 CLR 578; 81 ATC 4114 FC of T v Snowden & Willson Pty Ltd (1958) 99 CLR 431 Softwood Pulp and Paper Ltd v FC of T 76 ATC 4439 Steele v DFC of T (1999) 197 CLR 459; 99 ATC 4242 British Insulated & Helsby Cables Ltd v Atherton [1926] AC 205 Vallambrosa Rubber Co Ltd v Farmer (1910) 5 TC 529 *Sun Newspapers Ltd v FC of T (1938) 61 CLR 337 Broken Hill Theatres Pty Ltd v FC of T (1952) 85 CLR 423 Hallstroms Pty Ltd v FC of T (1946) 72 CLR 634 John Fairfax & Sons Pty Ltd v FC of T (1959) 101 CLR 30 FC of T v South Australian Battery Makers Pty Ltd (1978) 140 CLR 645 FC of T v Cooper (1991) 29 FCR 177; 91 ATC 4396 FC of T v Edwards (1994) 49 FCR 318; 94 ATC 4255 FC of T v Faichney (1972) 129 CLR 38; 72 ATC 4245 FC of T v Finn (1961) 106 CLR 60 Handley v FC of T (1981) 148 CLR 182; 81 ATC 4165 FC of T v Hatchett (1971) 125 CLR 494; 71 ATC 4184 FC of T v Highfield 82 ATC 4463 Jayatilake v FC of T 91 ATC 4516 Martin v FC of T (1984) 2 FCR 260; 84 ATC 4513 Lodge v FC of T (1972) 128 CLR 171; 72 ATC 4174 Lunney v FC of T & Hayley v FC of T (1958) 100 CLR 478 FC of T v Maddalena 71 ATC 4161 Mansfield v FC of T 96 ATC 4001 FC of T v Munro (1926) 38 CLR 153 FC of T v Roberts and Smith (1992) 37 FCR 246; 92 ATC 4380 *Steele v DFC of T (1999) 197 CLR 459; 99 ATC 4242 FC of T v Studdert (1991) 33 FCR 75; 91 ATC 5006 Swinford v FC of T 84 ATC 4803 FC of T v Payne (2001) 202 CLR 93; 2001 ATC 4027 FC of T v Wiener 78 ATC 4006 Anstis v FC of T 2009 ATC ¶20-098 Spriggs v FC of T; Riddell v FC of T 2009 ATC ¶20-109 The Specific deductions part of Deductions is taught after the general deductions topic. Introduction [14.1] Tax related expenses [14.2] Repairs [14.3] Borrowing expenses [14.4] Bad debts [14.4] Gifts [14.8] 9. CAPITAL WRITE-OFFS AND ALLOWANCES Introduction [17.1] Capital allowance regime [17.2] Business related “black hole” capital expenditure [17.3] Investment allowance [17.4] Key legislation Income Tax Assessment Act 1997, Div 40, Div 41 10. TRADING STOCK Introduction [18.1] Meaning of trading stock [18.2] General treatment of trading stock [18.3] Accounting and valuing trading stock [18.4] Special trading stock rules [18.5] Key legislation Income Tax Assessment Act 1997, Div 70 11. CAPITAL GAINS TAX Introduction [19.1] Net capital gains and net capital losses [19.2] Capital gains and capital losses [19.3] CGT events — overview [19.4] CGT assets [19.5] Specific exemptions and special rules [19.6] CGT event A1 — disposal of a CGT asset [19.7] Capital proceeds [19.8] Cost base and reduced cost base [19.9] Discount capital gains [19.10] Small business concessions [19.11] Main residence exemption [19.13] Foreign and temporary residents [19.14] Key legislation Income Tax Assessment Act 1997, s102-5, s102-10 s102-20, s103-30, s108-5, s108-10, s108-20, s104-10, s110-25, s110-55, s115-5, s115-10, s115-15, s115-20, s115-25, s116-20, s116-30, s116-40, s116-45, s116-50, s116-55, s118-10, s118-24, 118-25, s118-110, s118-120, s960-270, s960-275 12. COMPANIES Introduction [23.1] Nature of a company and the interests of its members [23.2] Corporate capital raisings and profit distributions [23.3] Dividends [23.4] Taxation of dividends [23.5] Imputation system [23.6] Franking distributions [23.7] Gross-up and credit mechanism for franked distributions [23.8] Key legislation Income Tax Assessment Act 1936, s44(1), s128B, s128D Income Tax Assessment Act 1997, Div 202, Div 203, Div 205, Div 207 13. FRINGE BENEFITS TAX Introduction [20.1] Liability to pay FBT [20.2] Fringe benefits taxable amount [20.3] Fringe benefits [20.4] Calculating the taxable values of fringe benefits [20.5] Chart of the steps involved in calculating FBT [20.6] Taxable value of a car fringe benefit [20.7] Taxable value of a debt waiver fringe benefit [20.8] Taxable value of a loan fringe benefit [20.9] Reportable fringe benefits total [20.20] Key legislation Fringe Benefits Tax Assessment Act 1986, s5B, s7, s14, s15, s16, s18, s 19, s66, s136 (definition of fringe benefit) 14. SUPERANNUATION Introduction [24.1] Overview of the superannuation taxation concessions [24.2] Superannuation regulatory scheme [24.3] Superannuation plans [24.4] Superannuation guarantee scheme [24.5] Phases in the tax treatment of superannuation [24.6] Contributions — deductions, tax offsets and co-contributions [24.7] Reportable superannuation contributions and reportable employer superannuation contributions[24.8] Tax on excess contributions [24.9] Taxation of superannuation entities [24.10] Taxation of superannuation benefits [24.11] Key legislation Income Tax Assessment Act 1997, Div 290, Div 295, Div 300, Div 301 Unit ResourcesPrescribed text(s) and readingsThis unit is closely linked to the following three textbooks (available from CAMPUS bookstores) which are the prescribed texts for this subject:
Reminder: It is imperative that you bring the selected textbooks mentioned in the Unit Schedule to the relevant lectures as your lecturer will be referring extensively to material contained in these textbooks. Recommended text(s) and readingsThe Monash University Library site contains details about borrowing rights and catalogue searching. To learn more about the library and the various resources available, please go to http://www.lib.monash.edu.au Library resourcesThe Monash University Library provides a range of services and resources that enable you to save time and be more efficient in your learning and research at URL: http://www.lib.monash.edu.au or via the Library tab in the my.monash portal. Blackboard (MUSO)
Under “Online Systems” click the MUSO hyperlink In order for your MUSO unit(s) to function correctly, your computer needs to be set up and certain programs may need to be installed such as a compatible Java version (eg version 1.5.0). This can easily be done by going to http://www.monash.edu.au/muso/support/students/browserset.html to update the relevant software. You can contact MUSO Support by: Jobdesk: http://jobdesk.monash.edu.au/login/index.cfm?jobdesk_id=14 Operational hours (Monday – Thursday) – local time Australia: 8 am to 10 pm (8pm Non Teaching period) Operational hours (Friday) – local time Australia: Australia: 8 am to 8 pm Operational hours (Saturday-Sunday) – local time (Teaching and Exam Period Only) Australia: 1 pm to 5 pm Further information can be obtained from the following site http://www.monash.edu.au/muso/support/index.html Study resourcesAll unit and lecture materials, including a reading list with links to digitized materials, are available through the Monash Portal at http://my.monash.edu.au You will also find an electronic copy of this guide on the unit webpage. All lectures are taped and available on mulo. Unit and lecture materials are available through the MUSO (Monash University Studies Online) site. You can access this site via the portal (http://my.monash.edu.au). Click on the My Units tab, then the Monash University Studies Online hyperlink. AssessmentAssessment SummaryWithin semester assessment: 30%Examination (3 hours, open-book): 70% Faculty assessment policyFor information regarding assessment policy, please refer to the appendix at the end of this Unit Guide. Hurdle requirementsIn order to pass this unit you must obtain a total of 50 marks out of 100. If you do not obtain this, the maximum final mark you can receive is 48%. Second markingFor information regarding second marking practice, please refer to http://www.buseco.monash.edu.au/asg/agu/policies/written-assign.html#secmark Return of final marksThe final mark that a student receives for a unit will be determined by the Board of Examiners on the recommendation of the Chief Examiner taking into account all aspects of assessment. The final mark for this unit will be released by the Board of Examiners on the date nominated in the Faculty Calendar. Applications for extension of timeFor information regarding extensions of time, please refer to http://www.buseco.monash.edu.au/asg/agu/policies/written-assign.html#extoftime Assessment tasks
Examinations
Special considerationFor information regarding special consideration, please refer to the appendix at the end of this Unit Guide. Assessment criteria - grading descriptors table
AppendixPlease visit the following URL: http://www.buseco.monash.edu.au/unit-guide/appendix.html for further information about:
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