Allocation of Profit Rental Property †Free Samples to Students

Question: Discuss about the Allocation of Profit Rental Property. Answer: Introduction: The overall issue that could be identified from the case is that allocation of profit from the rental property which is jointly owned by two owners.There are different types of laws that need to be evaluated such as Section 51 of the ITAA 1997, Taxation rulings of TR 93/32, and F.C. of T. v McDonald (1987). The above identified laws and cases could eventually help in solving the current situation of the co owners of rental property. As per the taxation rulings of TR 93/32, all the relevant provisions that needs to be conducted by co owners of rental property for dividing the income or loss are adequately depicted. The situation directly indicates that Jackie Chan title to 10% of the overall profit value, while Jill is entitled to 90% of the property value. However, the taxation ruling mai1nly states the overall taxable position of the co owners responsible for selling the property (ROBIN, 2017). However there are two different types of ownership pattern that need to be followed under Taxation rulings TR 92/32. Taxation ruling directly indicates that co-ownership is mainly considered as partnership in terms of income tax, which in general laws, is not considered.However, partnership in general laws mainly indicates that are relevant business practices needs to be conducted by the partners. Therefore, under the taxation ruling and only for taxation purposes Jack and Jill could show the rental properties as Partnership. Hence, Jack and Jill will hold the property as joint renters, which could help in supporting the common factor for income tax purpose. Moreover, the case F.C. of T. v McDonald (1987) 18 ATR 957, directly states that Agreement between taxpayers wife and legal authority for owning the property as joint renters. Therefore, any kind of game from there and field property will be distributed as 75% for Mrs McDonald and 25% for McDonald. Consequently, from the evaluation of Jack and Jill case it could be understood that they are joint renters, where any kind of loss or profit from the sale of property will be entertained according to the share (Milton, 2013). However, this overall joint ownership does not account for any kind of partnership business between Jack and Jill, as per the taxation ruling and court case. IRC v Duke of Westminster [1936] AC 1 is mainly one of the regularly quoted tax avoidance measure, which is used by taxpayers in Australia. The principle of the relevant case directly indicates that Taxpayers are able to establishment principle from which they are allowed to reduce tax liability. This type of ruling mainly attracted for maximum of the taxpayers, as they allow reducing the tax liability by making adequate agreements with appropriate authority. Adequate cases could be evaluated such as WT Ramsay v. IRC principle, where the court was mainly restrictive regarding the leniency provided to taxpayers. However this case directly indicated that transaction was rearranged and did not show the form of commercial purposes, where directly indicates that the perfect rule for imposing tax was when transaction had been conducted (Kenny, 2013). However, under different situation there are relevant principles that are used in Australia by individuals, which secure their overall inland revenues and do not force them to pay higher tax due to increased revenue. This also allows the organisation structure adequate financial agreements, which directly helps in decreasing the tax liability and fixing your objectives, which in turn provides structure within structure of laws. The main issue that could be identified from the evaluation of the question is the sale of field Timber under the Income Tax Assessment Act 1936.Moreover, for the evaluation of the Income-Tax adequate laws are used such as Subsection 6 (1) of the Income Tax Assessment Act 1936 and McCauley v/s The Federal Commissioner of Taxation. These identified laws could eventually help in detecting the relevant Income Tax that needs to be paid. The evaluation of the case it could be identified that build own a large piece of land where several Pine trees grow, But you wants to use the land for grazing sheeps, which needs a cleared forest. Therefore, Bill discovers a Lodging company that could pay him $1,000 for every 100 M of timber situated in it premises. Bring company could eventually clear out the whole forest and provide adequate come to Bill for the timbers. Under the taxation ruling of 95/6, it directly indicates that Income Tax consequence is generated from any kind of activities conduct ed in production and forestry (Barton, 2013). Under the subsection 6(1) Income tax assessment act 1936, individuals who are indulging forest operation are mainly considered as primary creator, where adequate Income Tax needs to be imposed on Revenue generation. The trees planted in the land for not conducted by Bill, but in one instance or other relevant receipt of money is conducted, which indicates that relevant tax needs to be paid. Under different circumstances have a lump sum amount of $50,000 is received by Bill and provide right to the logging organisation for removing all the relevant timber. This could directly resulted royalties under the section 26(f) receipt of loyalties. Under these circumstances, Bill will not be considered as trader for the forest operations. As from the start he did not plan to sell the trees for gaining profit from the overall endeavour. As per McCauley v/s The Federal Commissioner of Taxation, All the Income will be considered under taxation law (Barkoczy, 2016). Therefore, it could be understood that the cutting of timber is considered as a taxable income under subsection 6 (1) of the ITAA 1997. Reference List: Barkoczy, S., 2016. Foundations of Taxation Law 2016.OUP Catalogue. Barton, 2013. Management of the Australian Taxation Office's property portfolio. ACT: Australian National Audit Office. Kenny, P. 2013.Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths. Milton, 2013. The taxpayers' guide 2013 2014. Qld.: Wrightbooks. ROBIN, H., 2017.AUSTRALIAN TAXATION LAW 2017. OXFORD University Press. Woellner, R. 2013.Australian taxation law select 2013. North Ryde, N.S.W.: CCH Australia.