Taxation law Essay Example | Topics and Well Written Essays - 2000 words

Taxation law - Essay Example The main issue that arises is the income tax being payable in one case and exempted in the other. Why Dixon’s income is assessable income but Scott’s income decided to be a gift. Tax payer Scott was employed as a clerk by a firm, which was a shipment agency. His annual salary being 250 pounds and declared taxable by the taxation commissioner. This taxpayer respondent, Dixon, enlisted himself in the armed forces hence ceasing his employment with the former employer. The employer of the respondent came up with a policy that of compensating their employees by paying the difference between the pay in the respondents’ income currently being their employee and while being a staff member of the armed forces (Woellner, Vella & Burns, 1993).  . The respondent tax payer, after serving the armed forces joined his firm again in January 1946. An assessable income is the amount of money one makes within any given year that is subject to income tax. It is the sum of the money one has made from his job or by selling his property or any sort of investment or liquidation involved in ones total revenue held. In this particular case the tax commissioner was leading the case in terms of section 25 of the income tax assessment act 1936. 104 pounds were included in the tax payers’ assessable income in terms of section 25 (Woellner & CCH Australia Limited, 1987). ... The main difference between Dixon’s case and Scott’s case is the payable tax to be held with effect of 2 different sections of the act. Section 25 constitutes tax payment through means of assessable income whereas s 26e is tax to be paid on any type of income earned through means of a reward.in any sense be a recompense or consequence of the continued or contemporaneous existence of the relation of employer and employee or a reward. In Scott v Federal Commissioner for Taxation the tax payer is a solicitor who had known her client, a widow for quite some time now. She regularly visited the tax payer who dealt her with regard to being a solicitor but had been involved in constituting business together for some time now. Mrs. Freestone the client now trusted the tax payer who was make representations on her behalf to all legal matters related to a land called green acres which was under a restriction from the local government. Mrs. Free stone while making several attempts in lifting these bans was unsuccessful and decided to allow her solicitor deal with this matter who was later successful in lifting the restriction. Later, part of the green acres plot was sold in which the solicitor had played an important role. Later Mrs. Freestone had already decided to give out some of her estate and her money as a reward to people. Out of which 10,000 was to be paid to the tax payer as a reward. The main argument that led to the case in Scott v FCT was that 10000 pounds paid by Mrs. Free stone was either a reward to her solicitor, the tax payer or a fee rendered to him in terms of the services provided by him. It was established and proved later that this was a mere reward in return of his kindness and friendship