claw 6026 group assignment
Taxation Law and Practice Group Project
ZHAO ZHAO：430064847 YUN ZHOU：430401835 YULING YAN：430048777 HAOHAN：420049283
Stream: 2 (3:00pm-6:pam Tuesday) Lecturer: Antony Ting
Introduction
Bigshoes Ltd, as a company that incorporated in Australia, meets the requirement of a resident in Australia based on s6 (1) of ITAA 1936. The company incorporated in Australia would become a resident of Australia automatically. Moreover, according to s6-5 and s6-10 of ITAA 1997, a resident of Australia should be taxed on ordinary and statutory income from all sources (Sadiq et al. 2014).
S328-110 of ITAA 1997 suggests that if the aggregated turnover is less than $2 million, the entity should be treated as a small business entity. However the annual turnover of Bigshoes is $300 million. Therefore the rules related to small business entity, such as s328-D of ITAA 1997, are not applicable to Bigshoes Ltd.
In order to calculate the taxable income, the relevant assessable income and deductible items should be identified.
(a)
According to s40-25 of ITAA 1997, a depreciating asset that used for the purpose of producing assessable income is deductible. ‘A depreciating asset is an asset has a limited effective life and the decrease of value can be reasonably expected over the useful life based on s40-30 of ITAA 1997’. Lands, trading stocks and ordinary intangible assets are not depreciation assets. Bigshoes acquired the competitor’s business could be treated as an expansion of business and the main purpose of this acquisition is to make profit. Three assets are acquired by Bigshoes though this transaction.
Intangible assets are not depreciating assets. Both goodwill and registered design are intangible assets. According to s108-5 (2) of ITAA 1997, good will is a CGT asset. And goodwill could not be depreciated for tax purpose (Tregoning 2010). However s40-30 (2) (c) of ITAA 1997 suggest that items of intellectual property can be regarded as depreciating assets. As defined
ZHAO ZHAO：430064847 YUN ZHOU：430401835 YULING YAN：430048777 HAOHAN：420049283
Stream: 2 (3:00pm-6:pam Tuesday) Lecturer: Antony Ting
Introduction
Bigshoes Ltd, as a company that incorporated in Australia, meets the requirement of a resident in Australia based on s6 (1) of ITAA 1936. The company incorporated in Australia would become a resident of Australia automatically. Moreover, according to s6-5 and s6-10 of ITAA 1997, a resident of Australia should be taxed on ordinary and statutory income from all sources (Sadiq et al. 2014).
S328-110 of ITAA 1997 suggests that if the aggregated turnover is less than $2 million, the entity should be treated as a small business entity. However the annual turnover of Bigshoes is $300 million. Therefore the rules related to small business entity, such as s328-D of ITAA 1997, are not applicable to Bigshoes Ltd.
In order to calculate the taxable income, the relevant assessable income and deductible items should be identified.
(a)
According to s40-25 of ITAA 1997, a depreciating asset that used for the purpose of producing assessable income is deductible. ‘A depreciating asset is an asset has a limited effective life and the decrease of value can be reasonably expected over the useful life based on s40-30 of ITAA 1997’. Lands, trading stocks and ordinary intangible assets are not depreciation assets. Bigshoes acquired the competitor’s business could be treated as an expansion of business and the main purpose of this acquisition is to make profit. Three assets are acquired by Bigshoes though this transaction.
Intangible assets are not depreciating assets. Both goodwill and registered design are intangible assets. According to s108-5 (2) of ITAA 1997, good will is a CGT asset. And goodwill could not be depreciated for tax purpose (Tregoning 2010). However s40-30 (2) (c) of ITAA 1997 suggest that items of intellectual property can be regarded as depreciating assets. As defined