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The ATO office is responsible for collecting and organizing how tax income should come. The income assessment act of 1997 gives an insight of the taxation income as per the Australian law and states that it is derived from the incomes you receive either directly or indirectly. The rental income is alse determined by the marginal rates. The higher the rental income the higher the marginal rates. This means that even if Demos has increased the rental income to raise money due to the rate caps in banks it does not mean that they are going to raise more money since the taxable income will highly increase with the increase in rent. A case law that gives insight into this is references In the case above Demos raised the amount of rent due to the presiding market conditions and the rate caps that banks were given by the financial oversight body
A good case law example is ATO ID 2014/38 in the Australian taxation office legal database that gives insights on even on undeducted capital expenditure. This also gives insights on what is available for issue in the rent offerings for the expenditures given. This Act also gives the time frames on when the rental income is viable. The time when the old town houses were not being used they did not incur any kind of rental income. The rental income requirements were only taken in after the clients moved into the space. Demos increased the amount of rent for the tenants to be in a position to raise money for development. In an ideal market the government should not interfere with the market forces of demand and supply. The only time that the law can take its course is if there is malpractices in the offering of goods and services.
The Australian taxation office gives an insight on the taxations in the country and how they should be done/ foregone. For rental income, the taxation office should give insight on rentals. There are various records that the Australian tax office requires Demos to keep to analyze its taxation income they include. Keeping information on all the tenants in the building and also declaring all the rental tax income returns in a financial period given. The Australian tax office also requires Demos party limited to declare all the assets in rentals in the tax returns.
As rental incomes are increased the marginal rates also increase at a huge rate. Hence Demos should be keen to ensure that the rentals are in line with the marginal rated and are paid for the marginal rates. However, even with looking at the marginal rates for the Taxations, the law is also very specific on consumer protection. One of the provisions of consumer protection state that customers should not be given a property by false pretence. By this it means that if Demos states that the rental space is in a specific condition it should show that specific condition and hence people should not be lured to something that looks standards and its not.
As seen from the description the rental income serves as ordinary income.as per section 10.5 of the income assessment law in Australia. Ordinary income refers to anything that is done directly or indirectly to bring income to a firm.
As decided by the directors of the firm they decided to follow the core foundation of the business which involved developing of properties. As the income tax law of 1997 gives an overview, the rental tax income will stop immediately DPL stops offering rental services to its tenants. However, ordinary tax will still be charged on the sale of the old properties and the new properties as described by the ordinary tax legal provisions that decribes that incomes earned must be taxed whether they are direct or indirect or on the other hand if they are by either foreigners or citizens. The tax provisions for citizens and foreigners are different, The Australian law does not have confides on location for the income tax and this means that Tax is also charged for even properties for citizens that are oversees or out of the country. For non-residents the income tax/ordinary tax is only for the businesses that are operating in Australia. One subtle rule to note about the Australian tax laws is that they are mingled with the common wealth income tax laws and are intertwined. Tax refunds are also common and there is a procedure for claims incase people are excessively taxed or wrongly taxed. The DPL should have a proper legal framework even for the residential properties that they are building. The residential properties will not accrue any tax when being developed and will only accrue tax after they are sold under the laws of income taxation.
There are various regulations that guide on the FBT as Jane needs to understand in the taxation environment. One of the places is the motor vehicle travelling taxation. The laws guiding on the taxation in travelling are not only measured by the distance travelled but also per the strength of the engine in terms of the CC. As per 31 March 2020, Cars below the CC 2500 paid 55cents and cars above 2500CC paid 66 cents per kilometers travelled.
The fringe benefits as provided by the Australian tax law help to describe the cost to be incurred as per the Australian laws. The common wealth Australian law plays a huge role in classification of fringe benefits.
FBT simply refers to tax obligations that are offered to employees or associates of a person who is doing business with Jane’s firm. If Jane is offering any kind of FBT she is supposed to register with the ATO. FBT never applies on wages and only applies on any benefit that Jane is giving to the employees of the firm. In terms of the income laws in Australia there are certain factors one is supposed to follow. One is that since Jane is doing business and is earning money she is supposed to pay ordinary tax which is derived by earning money from a certain venture. Any venture that earns money either directly or indirectly for a resident or a foreigner in the Australian space is liable to income and ordinary tax. Unlike many people confuse the income tax is calculated very differently from the fringe benefit tax. There is a certain deductible income when fringe benefits are paid and it is determined by the payments.
One of the classification of fringe benefits in Jane scenario was when the motor vehicle was used in travelling for private purposes that were not in the requirements of the business. There were 3000 more kilometers travelled from the log book more than those that were travelled for the business. The fringe benefits cost should be calculated from the private tours that were not related to the business. As per Jane transactions we also determine that there is stamp duty that she pays worth 320$. The stamp duty can help to recede or add onto some costs as per the Australian law. In the calculation of fringe benefit amount there is the reportable fringe benefit which is important in showing the amount accumulate able and how much it should be taxed.
The set limit for the classification of reportable fringe benefits is a worth of 2000$ which is calculated from the first of march to the end of April 31 in a financial accounting period. The amounts exceeding 2000$ should then be paid to the payments summary of the accounting period in the time frame given. In the fringe benefits regulations as per the Australian law, there are certain benefits that are not to be accumulated and cannot be accounted for or seen as fringe benefits and Jane needs to be keen on them. Some of them include if Jane actually gave a space for an employee to part his or her car.
Other fringe benefits that may not be included look at factors like security and personal securities. Such benefits are not taxable by law and are seen more as necessities for a firm to run and human survival. The repairs and maintenance form a huge part of arguments on the legal procedures focusing on their implementations. There are certain procedures that should be followed. As seen in the example Jane pays a certain amount of fees on the repairs and maintenance. The repairs as per the taxing procedure form as part of expenses and are restricted to taxing. However, the extent of taxation is limited to the kind of repair and maintenance a good example is if the repair is done on capital goods or the equipment used in production. The tax payable from Jane buying a whole set of equipment and Jane repairing the existing exquipment is very different and hence reference should always be made in terms of laws for the extent of repairs.
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