BTF3931 TAXATION LAW

SEMESTER 1, 2020

Reading Guide
Introduction | Prescribed Resources

This document is the reading guide for students undertaking BTF3931 Taxation Law in semester one, 2020.

Prescribed Resources

The prescribed readings are from two main sources:

1. Textbook (referred to as 2. Case Book (referred to as

PoTL in this reading “ATLC”)
guide)

The prescribed readings also include legislation, which may be accessed at: http://www.austlii.edu.au.

FBTAA Fringe Benefits Tax Assessment Act 1936

GST Act A New Tax System (Goods and Services Tax) Act 1999
ITAA1936 Income Tax Assessment Act 1936
ITAA1997 Income Tax Assessment Act 1997
TAA1953 Taxation Administration Act 1953

Alternatively you can purchase a hard copy of the legislation from the Campus bookshop. The recommended
hard copy of the legislation is ‘Fundamental Tax Legislation’ 2020 Pinto, Kendall and Sadiq

Lecturers may refer to other supplementary materials during the semester which will form part of the
prescribed readings. Students are required to have a thorough understanding and working knowledge of all
legislative provisions discussed and principles from case law which have been listed in the reading guide, cases
raised in lectures and tutorials and in other supplementary materials referred to during the course of the
semester.

Online purchase and delivery

Students may purchase the books online through the Campus Bookstore website and have them delivered in
Australia: https://www.thecampusbookstore.com/. If you are purchasing your text books from overseas, you
will need to email the Campus Bookstore web team (weborders@thecampusbookstore.com) with your postage
information and the text book you are purchasing and team member will contact you regarding payment and
shipping charges

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lecture 1 | Readings

Australian Tax System

a) Introduction to the Australian Tax Laws

Legislation: sections 1-1, 1-2, 1-3, 2-1, 2-5, 2-10, 2-15, 2-20, 2-25, 2-30,
2-40, 2-45, 3-5, 3-10, 3-15, 4-1, 4-5, 4-10, 4-15 of ITAA97

PoTL: • Introduction [1.10]-[1.20]

• Understanding tax law and the doctrine of precedent [1.30]-[1.60]
• Origins of judicial tax law concepts [1.150] – [1.170]
• Sources of tax law [1.180]-[1.300]
• Introduction and Australian taxes [3.10], [3.30]

b) Constitutional Considerations

Legislation: sections 53, 55, 81, 83, 90, 96, 114 of the Commonwealth of Australia Constitution
Act 1900, Division 4 of the ITAA 1997

PoTL: • Power to tax [3.20]

Indirect Tax: Goods and Services Tax

Legislation: sections 7-1, 7-5, 7-10, 7-15, 9-5, 9-10, 9-15, 9-20, 9-25, 9-26, 9-27, 9-30, 9-40, 9-
70, 9-75, 23-5, 23-10, 23-15, 99-1, 99-5, 99-10

GST Regulations 40-5.09 – 40-5.13 of the A New Tax System (Goods and Services
Tax) Regulations 1999

Cases: Reliance Carpet Co Pty Ltd (2008), Qantas Airways Ltd (2012), Luxottica Retail
Australia (2011)

PoTL: • Introduction [25.10]-[25.40]

• Registration [25.50]-[25.80]
• Taxable supply [25.90]-[25.130]
• Mixed or composite supply [25.175]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lecture 2 | Readings

Goods and Services Tax (Continue)

Legislation: sections 11-5, 11-10, 11-15, 11-20, 11-25, 17-5, 19-10, 27-5, 27-10, 29-1, 29-5, 29-
10, 29-20, 29-75, 29-80, 31-1, 31-5, 31-8, 31-10, 38-1, 38-187, 38-325, 40-1, 40-5,
40-35, 40-65, 188-10, 188-15, 188-20, Divisions 38 and 40 of the GST Act 1999

PoTL: • GST-free supply [25.140]-[25.150]

• Input taxed supply [25.160]-[25.170]
• Supply summary [25.180]
• Creditable acquisition [25.190]-[25.240]
• Administration [25.300] – [25.310]
• Interaction with other taxes [25.320]-[25.330]

Income Tax – Key Concepts

a) Sources of Law

PoTL:
• Introduction to income tax [3.100]-[3.110]

b) Income Tax Equation and Income Tax Rates

Legislation: Division 4 of the ITAA97; section 5 Income Tax Act 1986; Income Tax Rates Act
1986

PoTL: • The income tax formula [3.120]-[3.180], [3.220]

• Income tax rates [3.190]-[3.210]

c) Exempt Income & Non-Assessable Non-Exempt (“NANE”) Income

Legislation: Divisions 11, 15, 50, 51 of ITAA97

PoTL: • [3.170]

d) Levies & Charges

Legislation s 251S of the ITAA36

• Medicare levy [3.40]-[3.70]

PoTL: • Medicare levy surcharge [3.80]
• Repayments of higher education debts [3.90]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lectures 3 | Readings

Residence and Source

Legislation: section 6-5(2), 6-5(3), 6-10(4) of the ITAA 97, section (6)(1) of ITAA36 and relevant
definitions of s995-1 of ITAA97

Cases: Joachim, Applegate, Jenkins, Harding, Levene, Lysaght, Koustrup, Malayan Shipping,
Bywater Investments, French, Efstathakis, Mitchum, Rhodesia Metal Ltd (Liquidator),
Thorpe Nominees, Esquire Nominees

PoTL: • Introduction [4.10]

• Legislative framework [4.20]
• Income tax rates for individuals [4.30]
• Residence [4.40]-[4.145], [4.155]-[4.160], [4.170]-[4.220]
• Source [4.230]-[4.290]
• Tax Treaties [22.440]-[22.490]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lectures 4 | Readings

General Concepts of Income

Legislation: sections 6-5, 15-2 of ITAA97 and 21A of ITAA36

Cases: Harris, Keily, Dixon, Blake, Tennant v Smith, Cooke & Sherden, Payne (1996),
Hochstasser v Mayes, La Rosa, Federal Coke, Bohemians Club v Acting FCT, RACV

PoTL: • General concepts [5.10]-[5.40]

• Prerequisites and characteristics of ordinary income [5.50]-[5.130]
• Other general principles [5.140]-[5.170]

Income from Personal Services and Employment

Legislation: sections 6-5 and 15-2 of the ITAA97

Cases: Brown, Payne, Brent, Calvert & Wainwright, Laidler v Perry, Kelly, Dixon, Hayes,
Scott, Bennett, Jarrold v Boustead, Pickford, Higgs v Olivier, Hepples. Woite, Reuter

PoTL: • Ordinary income as a reward for services [6.10]-[6.20]

o Nexus with service [6.30]-[6.60]
o Prizes, voluntary payments and unexpected payments [6.70]-[6.120]
o Non-cash benefits [6.130]
o Capital receipt or personal exertion [6.140]-[6.180]
• Section 15-2: Statutory income from services and employment [6.190]-[6.230]
o Section 15-2’s interaction with sections 6-5 and FBT [6.240]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lecture 5 | Readings

Income from Property

Legislation: section 6-5 of ITAA97 and section 44 of ITAA36

Cases: Lomax v Peter Dixon & Son Ltd, Adelaide Fruit and Produce Exchange Co Ltd,
McCauley, Stanton, Kosciusko Thredbo, Egerton-Warburton

PoTL: • Income from property: introduction [9.10]

• Interest [9.20]-[9.40]
• Dividends [9.150]
• Rent [9.160]-[9.180]
• Royalties [9.190]-[9.200]
• Annuities [9.210]

Income from Business

Legislation: sections 6-1, 6-5, 6-10, 6-15, 6-20, 6-25, 15-2, Division 35, and relevant definitions
of s 995-1 of ITAA97; sections 6(1), 21A and 23L of ITAA36

Cases: Ferguson, Brajkovich, JR Walker, Thomas, Trautwein, Martin, Evans, Babka,

Spriggs, Riddell, Stone, London Australia, AGC Investments, St Hubert’s Island Pty
Ltd, Softwood Pulp & Paper, Osborne, Californian Copper Syndicate v Harris, GP
International Pipecoaters, Merv Brown, Memorex, Hyteco Hiring Pty Ltd, Cooke &
Sherden.

PoTL: • Introduction [8.10]

• Carrying on a business [8.20]-[8.50]
o Gambling [8.60]-[8.70]
o Sportspeople [8.80]
o Investment activities [8.90]
o Land sales [8.100]
o Sharing economy [8.105]
o Crowdfunding activities [8.107]
• Commencement and termination of a business [8.110]-[8.120]
• Normal proceeds of a business [8.130]-[8.150]
• Non-cash business benefits [8.160]

Tax Accounting for Income Receipts

Legislation: section 6-5(4) of ITAA97

ATLC: Henderson, Barratt, Carden’s case, Arthur Murray, BHP Billiton Petroleum
(Bass Straight)

PoTL: • Introduction [16.10]

• Meaning of “derive” [16.20]
• Timing of derivation & cash v accruals accounting [16.30]-[16.60]
• Switching between cash and accruals basis [16.70]-[16.80]
• Payment before earning activity has commenced [16.90]-[16.95]
• Dividend income [16.100]
• Derivation and delay because of dispute [16.110]
Monash Business School
BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lectures 6 | Readings

Isolated and Extraordinary Transactions

Legislation: sections 6-5, 15-10 and 15-15 of ITAA97

Cases: California Copper, Scottish Australian Mining, Whitfords Beach, Statham, Stevenson,
Casimaty, Myer Emporium, Westfield, Cooling, August, McCurry, Henry Jones (IXL)
Ltd; Greig

PoTL: • Extraordinary and isolated transactions: introduction [8.170]

• Transaction forms a business in itself [8.180]-[8.200]
• Two strands of Myer [8.210]-[8.260]
• Statutory provisions that may apply to extraordinary and isolated transactions
[8.265], [8.270], [8.290]

Compensation Receipts in Relation to a Business

Legislation: sections 6-5, 15-30 and 70-115; and relevant definitions of s995-1 of ITAA97 and
section (6)(1) of ITAA36

Cases: Dixon, Heavy Minerals, Allied Mills Industries Pty Ltd, Californian Oil Products,
Glenboig Union Fireclay, Ensign Shipping, Sydney Refractive Surgery Centre Pty Ltd,
McLaurin

PoTL • Principles of compensation: introduction [10.10]-[10.30]

• Compensation for business losses [10.150]-[10.160]
• Compensation for breach of contract – ordinary trading contracts [10.170]-[10.180]
• Compensation for breach of contract going to fundamental structure of business
[10.190]
• Compensation for loss of asset – depreciable assets [10.200]
• Compensation for loss of asset – capital assets [10.210]
• Compensation for loss of asset – trading stock [10.220]
• Compensation by way of insurance proceeds [10.230]
• Composite claims [10.240]-[10.250]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lecture 7 | Readings

Statutory Income: Capital Gains Tax

Legislation: Divisions 100, 102, 104, 108, 109, 110, 112, 114, 116, 118-A and 118-B of ITAA97,
and note in particular: sections 102-5, 102-10 102-15, 103-30, 104-10, 104-20, 108-
5, 108-55, 108-70, 108-85, 110-25, 110-35, 110-36(1)-(2), 110-55, Subdivision 112-
A; 114-1, 114-10; 115-15, 115-20, 115-25, 116-20(1), 116-30, 116-40, 116-45, 116-
50, 116-55, 116-60, 960-270

PoTL: • Capital gains tax: introduction [11.10]-[11.20]

• Capital gains and capital losses [11.30]-[11.80]
• CGT assets [11.170]-[11.240], [11.270], [11.275], [11.310]
• Exempt or loss denying transactions [11.280]-[11.300]
• Anti-overlap [11.310]
• Main residence [11.380]-[11.420]
• Working out capital gains and losses [11.440]-[11.500]
• Working out net capital gain or loss for the income year [11.510]-[11.580]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lectures 8 & 9 | Readings

General Deductions

Legislation: sections 8-1, 26-5, 26-19, 26-10, 26-20, 26-22, 26-30, 26-31, 26-35, 26-40, 26-45, 26-
50, 26-54, 26-55, Divisions 32 and 34 of ITAA97

Cases: Charles Moore & Co (WA) Pty Ltd, Amalgamated Zinc (De Bavay’s) Ltd, Ronpibon
Tin No Liability, W Nevill, Lunney, Hayley, Payne, Day, Anstis, Herald & Weekly
Times, Snowden & Wilson, Magna Alloys & Research Pty Ltd, La Rosa, Steele,
Placer Pacific Management, AGC (Advances), Brown, Vallambrosa Rubber, British
Insulated and Helsby Cables Ltd v Atherton, Sun Newspapers Ltd and Associated
Newspapers Ltd, BP Australia, Strick v Regent Oil Co Ltd, National Australia Bank
Ltd, Colonial Mutual Life Assurance Society Ltd, Star City Pty Ltd, Cooper, Ure,
Fletcher, Spriggs, Riddell, Maddalena, Fullerton, John Holland Group, Brandon,
Ballesty, Lodge, Collings, Wiener, Vogt, Studdert, Hatchett, Highfield, Peter Lenten,
Finn, Carlos Sanchez, Faichney, Handley, Forsyth, Edwards, Mansfield, Morris,
Westcott, Munro, Hallstroms, Broken Hill Theatres, John Fairfax & Sons Pty Ltd,
Consolidated Fertilizers Ltd, Jones, James Flood Pty Ltd, Commercial Union
Assurance, Nilsen Development Laboratories, RACV Insurance

PoTL: • General deductions - introduction [12.10];

o General deduction rule [12.20], Loss or outgoing [12.30];
o The nexus test - positive limbs of s 8-1 [12.40]-[12.150]
• Non-deductible expenses – the negative limbs of s 8-1 [12.160]
o Capital or capital in nature [12.170]-[12.210]
o Private or domestic [12.220]
o Incurred in gaining or producing exempt or non-assessable non-exempt
income [12.230]
o Denied deductions [12.240]-[12.260]
• Apportionment – deductibility of dual purpose expenses [12.270]-[12.280]
• Amount of deduction [12.290]-[12.310]
• Application of sec 8-1 to commonly incurred expenses [12.330]:
o Expenses incurred in gaining employment [12.340]-[12.350]
o Relocation expenses [12.360]
o Child care expenses [12.370]
o Travel expenses (including car) [12.380]-[12.570]
o Self-education expenses [12.580]-[12.690]
o Home office expenses [12.700]-[12.730]
o Clothing and dry-cleaning expenses [12.740]-[12.800]
o Interest [12.810]-[12.820]
o Legal expenses [12.840]-[12.850]
• Timing – deductions and deductibility [16.120] – [16.240]

Specific Deductions

a) Repairs

Legislation: section 25-10 of the ITAA97.

Cases: Lurcott v Wakely and Wheeler, Law Shipping, W Thomas & Co, Western Suburbs
Cinemas, Lindsay, Samuel Jones & Co (Devondale), Case J47

PoTL: • Introduction [13.10]; Repairs [13.30] – [13.70]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lecture 10 | Readings

Specific Deductions (Continue)

b) Capital Allowances

Legislation: Division 40 of ITAA97

PoTL: • Depreciation deductions [14.10]-[14.20]

• Depreciating asset [14.30]-[14.35]
• Claiming a deduction [14.40]-[14.100]
• Balancing adjustments [14.110]-[14.118]
• Cars [14.125]
• ‘Blackhole expenses’ (Business -related costs) [14.180]; [14.200-14.210]

c) Capital Works

Legislation: Division 43 of ITAA97

PoTL: • Capital works deductions [14.170]

d) Other Deductions

Legislation: sections 25-5, 25-25, 25-35 and Division 30 and 36 of ITAA97

PoTL: • Tax-related expenses [13.20]

• Bad debts [13.80]-[13.83]
• Travel between workplaces [13.110]
• Gifts [13.130]-[13.160]
• Borrowing expenses [13.210]
• Prior year losses [13.180] - [13.200]
• Other specific deduction provisions [13.210]

Provisions Limiting Deductibility

Legislation: sections 26-35 and Divisions 35 and 900 of ITAA97

PoTL: • Non-arm’s length prices between associated parties [23.120]

• Non-commercial business losses [23.150]
• Substantiation of deductions [12.320]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lecture 11 | Readings

Tax Offsets

Legislation: sections 160AD, 6(1), 159N of the ITAA36, Div 63, 67, Subdiv 61-G,
sections 13-1, 207-20 of the ITAA97;

PoTL: • Tax offsets [3.220]

• Introduction [15.10]
• Types of tax offsets [15.20]-[15.60]
• Tax offsets for shareholders [15.70]-[15.80]
• Concessional tax offsets provided as subsidies [15.110]-[15.130]
• Dependent offset [15.150]
• Private health insurance offset [15.160]
• Low income rebate [15.170]

Fringe Benefits Tax

Legislation: Sections 5B, 5C, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 20A, 21, 22, 23, 24,
Division 9A, Division 11, 53, 54, 58F, 58H, 58P, 58Y, 58Z, 65J and 66 of FBTAA

Cases: Slade Bloodstock Pty Ltd (2007), Westpac Banking Corporation (1996), J&G
Knowles & Associates (2000), Starrim Pty Ltd (2000)

PoTL: • Fringe benefits tax: introduction [7.10]

• Fringe benefit – definition [7.20]-[7.75]
• Exclusions [7.80]-[7.85]
• Categories of fringe benefits [7.90]
• Selected fringe benefits:
o Car fringe benefits [7.100]-[7.140]
o Debt waiver fringe benefits [7.150]-[7.160]
o Loan fringe benefits [7.170]-[7.190]
o Expense payment fringe benefits [7.200]-[7.220]
o Meal entertainment fringe benefits [7.230]-[7.240]
o Property (external) fringe benefits [7.250]-[7.270]
o Exempt fringe benefits [7.310]-[7.350]
o Reductions in taxable value [7.360]
▪ Recipient’s contribution [7.380]
▪ Otherwise deductible rule [7.390]
o Type of fringe benefit [7.400]
o Fringe benefits taxable amount [7.410]
o Fringe benefits tax liability [7.420]
o Interaction with income tax [7.430]-[7.440]
o Interaction with GST [7.450]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide
Lecture 12 | Readings

Tax Compliance and Administration

Legislation: sections 161, 161A, 162, 163, 166, 166A, 167, 174, 175 ITAA 1936; sections 5-5,
995-1 ITAA 1997, sections 350-10 Sch 1 TAA 1953

Cases: Ex parte Briggs, Prestige Motors, FJ Bloemen, Futuris Corporation

PoTL:

• Introduction [24.10]
• Annual returns [24.20]-[24.30]
• Business Activity Statements [24.35]
• Assessments [24.40]-[24.140]

Monash Business School

BTF3931 Taxation Law | Semester One, 2020 | Reading Guide