Arthur Murray(Ns) Pty Ltd V Fct (1965) 114 Clr 314
Part A
(i)
the fact arises on Arthur Murray(NS) Pty Ltd V FCT (1965) 114 CLR 314 is that the taxpayer sold prepaid dancing lessons with prepaid fees attributable in part to lessons to be provided in future income years. The commissioner assessed the tax payer on the basis that prepaid fees constituted income derived by the taxpayer when received. The high court concluded that amount received in respect of service to be provided in future years are not earned until the future obligations for which they are paid are discharged. Arthur Murray’s case can be co-related with the given condition of RIP Pty Ltd as the company is providing funeral services which is provided only after the death of client. For this they are receiving money in advance in order to provide future service .that’s why the case is related to Arthur Murray case ii a) The professional people like Doctor, engineer and small business they can access their income in cash basis if their income turnover is up to $ 2 million a year. Section 6 of ITAA 97, Provisions for ordinary income and statutory income are given in s6-5 and s 6-10 in income tax assessment act 1997.Income is derived upon the arising of enforceable debt for taxpayer who carries business of supplying goods. Professional fees for services are derived upon the arising of recoverable amounts during course of carrying business however if the amounts are basically reward for the personal service then the fees are derived upon its reception. The prepayments for goods and services are assessable only when that services or goods are provided. Dividends, wages and salaries are derived when paid and received respectively. Likewise, interest is also derived upon it receipt but if the taxpayer is in the course of lending business then accrual basis is appropriate. And, all the trading income is derived at the point of sales. (Gilders et. al. 2009). According to Arthur Murray case, income is derived when the service is provided .Relating to RIP
(i)
the fact arises on Arthur Murray(NS) Pty Ltd V FCT (1965) 114 CLR 314 is that the taxpayer sold prepaid dancing lessons with prepaid fees attributable in part to lessons to be provided in future income years. The commissioner assessed the tax payer on the basis that prepaid fees constituted income derived by the taxpayer when received. The high court concluded that amount received in respect of service to be provided in future years are not earned until the future obligations for which they are paid are discharged. Arthur Murray’s case can be co-related with the given condition of RIP Pty Ltd as the company is providing funeral services which is provided only after the death of client. For this they are receiving money in advance in order to provide future service .that’s why the case is related to Arthur Murray case ii a) The professional people like Doctor, engineer and small business they can access their income in cash basis if their income turnover is up to $ 2 million a year. Section 6 of ITAA 97, Provisions for ordinary income and statutory income are given in s6-5 and s 6-10 in income tax assessment act 1997.Income is derived upon the arising of enforceable debt for taxpayer who carries business of supplying goods. Professional fees for services are derived upon the arising of recoverable amounts during course of carrying business however if the amounts are basically reward for the personal service then the fees are derived upon its reception. The prepayments for goods and services are assessable only when that services or goods are provided. Dividends, wages and salaries are derived when paid and received respectively. Likewise, interest is also derived upon it receipt but if the taxpayer is in the course of lending business then accrual basis is appropriate. And, all the trading income is derived at the point of sales. (Gilders et. al. 2009). According to Arthur Murray case, income is derived when the service is provided .Relating to RIP