Towards The Development System Complexity -Myassignmenthelp.Com

Question: Discuss About The Towards The Development System Complexity? Answer: Introducation As defined under the Fringe Benefit tax Assessment Act 1986 any kind of benefit apart from the salaries and wages provided to the employee would be regarded as the fringe benefit. Important criteria of Fringe Benefit tax Assessment Act 1986 is that there must be the existence of the employee and employer relationship to make an appropriate use of fringe benefit tax legislation (Barkoczy 2016). Given that the car is used by employee for their personal use of the same is available for use privately even though it is not in the course of employment will attract fringe benefit tax. Furthermore, section 7 of the Fringe Benefit Tax Assessment Act 1986 provides the determination of the car fringe benefit. Section 7 of the Fringe Benefit Tax Assessment Act 1986 evidently lay down that where the employer provides car to employee for his private use, it would constitute a fringe benefit. To determine the fringe benefit of car there are namely two methods. The process of determining the assessable amount of car fringe benefit is laid under section 9 of the Fringe Benefit Tax Assessment Act 1986 (Lang et al. 2015). The statutory method undertakes the value of car in determining the fringe benefit tax. Under section 10A and 10 B of the FBTAA 1986, the operating cost method is used in ascertaining the car fringe benefit. In determining, the fringe benefit tax under the operating method the administrative cost incurred in running the car should be recorded in a logbook. Importantly, the lowest amount fringe benefit tax that is yield from using both the method should be considered. Nevertheless, appropriate recording of expenses should be maintained under the operating cost method. Determination of fringe benefit: In the current case study, it is found that Charlie is an employer of Shiny Homes and he is provided by his employer a car which would be considered as fringe benefit with applicable provision of car fringe benefit tax. The car was used by Charlie for executing the employment related work and also the private purpose. Hence the use of car by Charlie would be considered liable for fringe benefit tax. To assess the fringe benefit tax of Charlie both statutory method and operating cost method is used. An applicable rate of 20% is applied under the statutory method. The applicable rate of 20% is multiplied with the base value of car under the statutory method (Tran?Nam and Evans 2014). While in the operating cost method the operating cost incurred in running the car is segregated from work and private purpose to arrive at the assessable value of fringe benefit.With reference to the formula stated under section 11 (1), the deemed depreciation is determined by employing the statutory rate of 25 per cent. On the other hand, the provision of section 11 (2) is employed to determine the deemed interest with statutory interest rate being 5.65% during the year 2016/17. As evident from the above stated computation, it is evident that the taxable value of fringe benefit tax under the statutory method is lower than the value derived under the operating cost method. Furthermore, Charlie employer also occurred expenses for car hired for Charlies wedding and honeymoon accommodation charges. These charges would be accounted in determining the fringe benefit tax of Charlie. In compliance with section, 39A of the FBTAA 1986 a car parking fringe benefit tax is applicable under the circumstances when the car is parked by the employee at the premises of the employer that is either owned or leased by the employer (Miller and Oats 2016). However, it is noticed that Charlie parked the car at the separate entity and because of this; Charlie would not be liable for any fringe benefit tax. The present study of Alan and Betty is associated with the determination of the income tax consequences. It is understood from the case study that Alan and Betty derives their income as locum doctor and part-time accountant. Alan often receives cakes and scones from his patients and he is a well-recognized locum doctor. There was one instances where one of Alan client bought a dog whom snake had bitten. Alan treated the dog and as a mark of appreciation, he received a dozen of wine bottles that had the commercial worth of $360. According to the provision laid down under, the Section 6-5 of the Income Tax Assessment Act 1997 an individual that earns their income from business or profession would be held liable for taxation (Mellon 2016). The receipt of cakes and scones by Alan does not have any market value and it would not liable for tax. However, the receipt of wine bottles from his client with market value of $360 would be included in his assessable income along with the fees charged by him. Hence, the bottles of wine and fees would be included in his taxable income and will be considered for taxation purpose. The taxation ruling Taxation ruling of TR 97/11 is concerned with the determination of Hobby and Business (Weisbach 2014). The ruling states that Hobby is regarded as a recreational activity whereas business is revenue-generating activity. The ruling guides in determining whether the activity of primary production undertaken by individual is for profit or for leisure purpose. The below differences provide better understanding; Activities such as business possess profitable intentions. Hobby involves no form of profitable objective. A person generally has the purpose of engaging in business or commercial activity and hobby is free from such intent of engaging in business acts. Business is generally premeditated and it is carried out in for moneymaking manner while hobby is neither planned nor it is executed in a commercial manner. Business usually involves repetitive in nature while hobby is non-repetitive in nature. Citing the judgement of court in the circumstance of Evans v Federal Commissioner of Taxation (1989) 20 ATR, the court has defined whether the taxpayer has indulged in business or hobby (Baker 2014). A person engaging in activity for recreational purpose would be considered as hobby while generating profit from such activities in a repetitive manner would be regarded as business activities. The instances from the study provides that Betty has started making marmalade and the same turned out to be very famous in her neighbourhood. The taxation ruling of TR 97/11 is associated with the determination of whether the taxpayer has indulged in the activities of primary production (Mumford 2017). Additionally, it has been stated in section 6 (1) of the ITAA 1997 that a person executing the activities of cultivation will be treated as carrying the activities of primary production. As obvious, Betty regularly set up the stall on every second Sunday of the month and sold marmalade. Alan sold the extra amount to the suppliers regularly. The activities of Alan and Betty constitute the characteristics of business with recurring in nature. In agreement to the verdict made in Martin v. Federal Commissioner of Taxation (1953) there is no such sole element that would provide a decisive evidence (Gunn and Luts 2015). The selling of marmalade by Alan and Betty would be treated as business activities and will be subjected to income tax since their activities intended to yield profit with recurring nature. Subsection 25 (1) of the ITAA 1936 defines that any income that is made from the barter system by the taxpayer would be considered for assessment and would additionally accompany GST as well (Cao et al. 2015). Primarily, the transactions under the barter system are treated as at par with the transactions that is made in cash or credit. Evident it is found that Alan and Betty had set up a barter system and the amount of value that is received by Alan and Betty in the barter system is dependent on the nature of the amounts received by the receivers. Citing the judgement of court in the situation of FC of T. v. Cooke Sherden 1980 the amount of considerations that is received under the barter system by Alan and Betty would be considered for both tax assessment and GST consequences as well. This is because the transactions of barter system are treated equivalent to that of cash and credit transactions. Reference List: Baker, P.L., 2014. An analysis of double taxation treaties and their effect on foreign direct investment.International Journal of the Economics of Business,21(3), pp.341-377. Barkoczy, S., 2016. Foundations of Taxation Law 2016.OUP Catalogue. Cao, L., Hosking, A., Kouparitsas, M., Mullaly, D., Rimmer, X., Shi, Q., Stark, W. and Wende, S., 2015. Understanding the economy-wide efficiency and incidence of major Australian taxes.Treasury WP,1. Gunn, A. and Luts, J., 2015. Tax Rulings, APAs and State Aid: Legal Issue.EC Tax Review,24(2), pp.119-125. Lang, M., Pistone, P., Schuch, J. and Staringer, C. eds., 2015.Introduction to European tax law on direct taxation. Linde Verlag GmbH. Mellon, A.W., 2016.Taxation: the peoples business. Pickle Partners Publishing. Miller, A. and Oats, L., 2016.Principles of international taxation. Bloomsbury Publishing. Mumford, A., 2017.Taxing culture: towards a theory of tax collection law. Routledge. Tran?Nam, B. and Evans, C., 2014. Towards the development of a tax system complexity index.Fiscal Studies,35(3), pp.341-370. Weisbach, D.A., 2014. The use of neutralities in international tax policy.