Taxation Law

‘The Plumber Mate’ radio program

The first thing that should be identified is that money he recevied from radio station is on cash basis. In ‘the Plumber Mate’ program, Oscar takes calls from listeners and discuss plumbing issues . As Dixon J stated in Carden’s case, the correct method to be adopted is that which “is calculated to give a substantially correct reflex of the taxpayer’s true income. Taxation Ruling TR98/1 explains the factors considered by the ATO when it chooses the most appropriate accounting method for any given method. Oscar can be seen as a employee in this radio program that he is paid once a year. Thus, it should be on cash basis. S6-5.s6-5(4)

As we decided it is under cash basis, then income will be derived by taxpayer when received. In the case of Tilley v The Official Receiver, the handing over of a cheque is regarded as payment at the time of tender by the person tendering the cheque and receipt by the person accepting it. Oscar did not collect the cheque until 3 July 2014, therefore he did not receive the cheque in the income year of 2014. As a matter of fact, $6000 may not be counted as assessable income.

Compensation payment( insurance)

At first, March 2014 is in the income year. Under S15-30, the amount he received by way of insurance for the loss of an amount can be included in the assessale income if the lost amount woulld have been included in assessable income and the amount he receive is not assessable a s ordinary income as section 6-5. In this case, $25000 is the compensation for loss of income, so it fit the requirement of s15-30. Therefore, $25000 should be assessable income. However, medical expenses and loss of part finger cannot be assessable income because this part’s loss would not be assessable income. As a result, for this part assessable inome is $25000.

Plumber’s registration board

The fees received by Oscar for his attendance and contribution to the work is ordinary income under s6-5 because it relates to earning...