Law Extension Committee s6

LAW EXTENSION COMMITTEE

UNIVERSITY OF SYDNEY

12 TAXATION AND REVENUE LAW

SUMMER SESSION 2005-06

Course Description and Objectives / 1
Teacher / 1
Assessment / 1
March 2006 Examination / 1
Lecture Program / 2
Weekend Schools 1 and 2 / 3
Texts and Materials / 4
Assignments / 4
Assignment Questions / 5
Prescribed Topics and Course Outline / 6
Weekend School Questions / 11
Supplementary Materials / 20

LAW EXTENSION COMMITTEE

SUMMER 2005-06

12 TAXATION AND REVENUE LAW

Course description and objectives

The Taxation and Revenue Law course is an overview of the Income Tax Assessment Act and related legislation. General principles concerning the assessability and deductibility of different types of receipts and items of expenditure are considered, along with more recent developments in relation to the tax treatment of fringe benefits and capital gains. The differing tax consequences in respect of various legal entities, such as partnerships, trusts and companies, are also considered. The last part of the course deals with the collection and recovery of tax, and the procedures to be followed by a taxpayer in disputing a tax assessment with the Commissioner of Taxation.

The objective of the course is to provide an overview of the structure of the tax legislation which will enable students to determine, at least in broad terms, the tax consequences that flow from particular factual situations. This is achieved through a study of the legislation and decided cases, and the consideration of hypothetical factual situations that would commonly be encountered in practice.

teacher

Mr A J O'Brien, B Ec, LLM (Syd), CA

Tony O'Brien is a member of the New South Wales Bar and a Chartered Accountant. He holds the degrees of Bachelor of Laws, Bachelor of Economics and Master of Laws from the University of Sydney. Mr O'Brien was previously a Solicitor of the Supreme Court, and has worked in the tax divisions of large law and accounting firms.

ASSESSMENT

To be eligible to sit for the Board’s examinations, all students must complete the LEC teaching and learning program, the first step of which is to ensure that you have registered online with the LEC in each subject for which you have enrolled with the Board. This gives you access to the full range of learning resources offered by the LEC.

Then, students must achieve a satisfactory result (at least 50%) in each subject where a compulsory component is prescribed.

To register with the LEC, go to www.usyd.edu.au/lec and click on the WEBCAMPUS link and follow the instructions. Detailed guides to the Webcampus are contained in the material distributed by the LEC, in the Course Information Handbook, and on the Webcampus.

MARCH 2006 EXAMINATION

Candidates will be expected to have a detailed knowledge of the prescribed topics: General principles; Income from personal services; Income from property; Income from a business; Capital gains tax; Allowable deductions; Taxation of companies and shareholders; Taxation of partnerships; Taxation of trusts; Returns, assessments, objections and appeals; Collection and recovery and General anti-avoidance provisions.

Candidates will be expected to have studied the prescribed materials in relation to these topics, and to have analysed the cases contained in the Law Extension Committee's course outline.

All enquiries in relation to examinations should be directed to the Legal Profession Admission Board.

Examination Prize

The "CCH Prize" ($100 publication voucher) has been donated by CCH Australia Ltd for the best examination mark in Taxation.

LECTURE PROGRAM

Lectures in Taxation and Revenue Law will be given by Mr O'Brien and will be held on Tuesdays commencing at 6.00pm in the Law School Lecture Theatre 1 (LSLT 1).

Please note that this program is a general guide and may be varied according to need. Readings are suggested to introduce you to the material to be covered in the lecture, to enhance your understanding of the topic, and to encourage further reading. You should not rely on them alone.

WEEK / DATE / TOPIC / KEY READING
1 / 15 Nov / General principles / Chapter 6: Australian Tax Law (“ATL”)
2 / 22 Nov / General principles / Chapter 6: ATL
FCT v Cooke and Sherden
3 / 29 Nov / Income from personal services / FCT v Dixon
Smith v FCT
4 / 6 Dec / Income from property / IRC v Ramsay
Stanton v FCT
5 / 13 Dec / Income from business / FCT v Whitfords Beach
Westfield v FCT
6 / 20 Dec / Income from business / FCT v Whitfords Beach
Westfield v FCT
Study Break: Saturday 24 December 2005 – Sunday 8 January 2006
7 / 10 Jan / Capital gains tax
/ Chapter 10: ATL
8 / 17 Jan / Capital gains tax / Chapter 10: ATL
9 / 24 Jan / Allowable deductions / Herald and Weekly Times v FCT
Sun Newspapers and Associated Newspapers v FCT
10 / 31 Jan / Taxation of companies and
shareholders / 20-020 – 20-135 ATL
20-300 – 20-370 ATL
20-600 – 20-630 ATL
11 / 7 Feb / Taxation of partnerships
Taxation of trusts / 18-010 – 18-300 ATL
19-010 – 19-260 ATL
19-400 – 19-490 ATL
12 / 14 Feb / Returns
Collection and recovery
Anti-avoidance provisions / DFCT v Richard Walter
FCT v Citibank
31-400 – 31-500 ATL

Weekend SchoolS 1 AND 2

There are two weekend schools principally for external students. Lecture students may attend on the understanding that weekend school classes aim to cover the same material provided in weekly lectures and are primarily for the assistance of external students.

It may not be possible to cover the entire course at the weekend schools. These programs are a general guide and may be varied according to need. Readings are suggested to introduce you to the material to be covered in the lecture, to enhance your understanding of the topic and to encourage further reading. You should not rely on them alone.

Weekend School 1

TIME / MAJOR TOPICS / KEY READING
Friday 2 December 2005- in Carslaw Lecture Theatre 275 (CLT 275)
5.10pm-6.20pm / General principles / Chapter 6: Australian Tax Law (“ATL”)
6.30pm-7.35pm / General principles / Chapter 6: ATL
FCT v Cooke and Sherden
7.45pm-9.00pm / Income from personal
services / FCT v Dixon
Smith v FCT
Saturday 3 December 2005- in Carslaw Lecture Theatre 175 (CLT 175)
4.10pm-5.20pm / Income from property / IRC v Ramsay
Stanton v FCT
5.30pm-6.35pm / Income from a business / FCT v Whitfords Beach
Westfield v FCT
6.45pm-8.00pm / Capital gains tax / Chapter 10: ATL

Weekend School 2

TIME / MAJOR TOPICS / KEY READING
Friday 3 February 2006- in Carslaw Lecture Room 351 (CLT 351)
5.10pm-6.20pm / Capital gains tax / Chapter 10: ATL
6.30pm-7.35pm / Allowable deductions / Herald and Weekly Times v FCT
Sun Newspapers and Associated Newspapers v FCT
7.45pm-9.00pm / Allowable deductions / Herald and Weekly Times v FCT
Sun Newspapers and Associated Newspapers v FCT
Saturday 4 February 2006- in Carslaw Lecture Theatre 157 (CLT 157)
4.10pm-5.20pm / Taxation of companies and
shareholders / 20-020 – 20-135 ATL
20-300 – 20-370 ATL
20-600 – 20-630 ATL
5.30pm-6.35pm / Taxation of partnerships
Taxation of trusts / 18-010 – 18-300 ATL
19-010 – 19-260 ATL
19-400 – 19-490 ATL
6.45pm-8.00pm / Returns
Collective and recovery
Anti-avoidance provisions / DFCT v Richard Walter
FCT v Citibank
31-400 – 31-500 ATL

texts and materials

Course Materials

· Guide to the Presentation and Submission of Assignments (available on the LEC Webcampus)

Prescribed Materials

· Barkoczy, Core Tax Legislation & Study Guide – most recent edition available

· Woellner, Barkoczy, Murphy & Evans, Australian Taxation Law – most recent edition available

· Cooper, Krever and Vann, Income Taxation – Commentary Materials, 4th ed. Thomson Lawbook ATP, 2005

Reference Materials

· Australian Tax Practice, Thomson Lawbook ATP

· Australian Tax Handbook, Thomson Lawbook ATP, 2005

· Australian Federal Tax Reporter, CCH

· Australian Master Tax Guide, CCH

LEC Webcampus

Once you have registered online with the LEC, you will have full access to the facilities on the LEC Webcampus including links to relevant cases and legislation on the Course Materials section.

ASSIGNMENTS

In Taxation and Revenue Law, Assignment 1 is compulsory. Students must submit the assignment by the due date, and achieve a grade of at least 50%. The maximum word limit for each assignment is 1500 words (inclusive of all footnotes but not bibliography).

The rules regarding the presentation of assignments and instructions how to submit an assignment are set out in the LEC Guide to the Presentation and Submission of Assignments which can be accessed on the LEC Webcampus. Please read this guide carefully before completing and submitting an assignment.

If you do not achieve 50% or more in the compulsory assignment, you must complete a second assignment and attain a mark of 50% or more for the second assignment to be eligible to sit the examination.

Completed assignments should be lodged through the LEC Webcampus by 9.00am on the following dates:

Compulsory Assignment / Wednesday 14 December 2005 / (Week 5)
Assignment 2 / Wednesday 19 January 2006 / (Week 8)

Markers will attempt to mark the assignments as quickly as possible. However, please note that many of the markers are busy practitioners or academics. Do not wait for the return of one assignment before commencing the next assignment, even if it is not compulsory.

ASSIGNMENT QUESTIONS

To obtain copies of the Taxation and Revenue Law assignment questions for the Summer Session 2005-06, please follow the instructions below:

1. Register online with the LEC (see page 27 of the Course Information Handbook for detailed instructions). Once you have registered, you will have full access to all the facilities on the LEC Webcampus.

2. Then go into the Webcampus, select the Course Materials section and click on the link to the Assignment questions for this subject.

PRESCRIBED TOPICS AND COURSE OUTLINE

1. General principles

(1) Legislative framework

Income Tax Assessment Act 1997, Chapter 1

(a) Constitutional aspects of taxation

(b) Structure of the Income Tax Assessment Act 1997 and relationship to the Income Tax Assessment Act 1936

(2) Concept of income

Income Tax Assessment Act 1997, Division 6

Income Tax Assessment Act 1936, ss 6, 21, 21A, 26(e)

(a) Common law concept of income

(b) Receipt of money or money's worth

Tennant v Smith [1892] AC 150

FCT v Cooke and Sherden (1980) 80 ATC 4140

(3) Residence

Income Tax Assessment Act 1997, s 995-1

Income Tax Assessment Act 1936, s 6(1)

(a) Individuals

(aa) Ordinary meaning of "resident"

IRC v Lysaght [1936] AC 234

Gregory v DFCT (1937) 57 CLR 774

(ab) Extended definition of "resident"

FCT v Applegate (1979) 79 ATC 4307

FCT v Jenkins (1982) 82 ATC 4098

(b) Companies

Koitaki Para Rubber Estates v FCT (1940) 64 CLR 15

Unit Construction Co v Bullock [1960] AC 351

Malayan Shipping Co v FCT (1946) 71 CLR 156

(4) Source

Income Tax Assessment Act 1997, s 995-1

Income Tax Assessment Act 1936, ss 6C, 25(2)

(a) Sale of goods

(b) Provision of services

FCT v French (1957) 98 CLR 398

FCT v Mitchum (1965) 113 CLR 401

(d) Dividends

Esquire Nominees v FCT (1973) 73 ATC 4114

(e) Royalties

FCT v United Aircraft Corporation (1943) 68 CLR 525

(5) Derivation

Income Tax Assessment Act 1997, ss 6-5, 6-10

(a) Appropriate method of recognition of income: cash/accruals

C of T (SA) v Executor Trustee (Carden's Case) (1938) 63 CLR 108

(b) Salary and wages

J Rowe and Sons v FCT (1971) 124 CLR 421

(d) Income from professional practice

Henderson v FCT (1970) 119 CLR 412

FCT v Firstenberg (1976) 76 ATC 4141

(e) Prepaid income

Arthur Murray (NSW) v FCT (1965) 114 CLR 314

(6) Exempt income

Income Tax Assessment Act 1997, Divisions 11, 50, 51

2. Income from personal services

(1) Income according to ordinary concepts

Income Tax Assessment Act 1997, s 6-5

FCT v Dixon (1952) 86 CLR 540

Hayes v FCT (1956) 96 CLR 47

Scott v FCT (1966) 117 CLR 514

(2) Relevant statutory provisions

Income Tax Assessment Act 1997, s 10-5

Income Tax Assessment Act 1936, ss 26(e), 27A-27J

(a) Elements of s 26(e)

Smith v FCT (1988) 164 CLR 513

(b) Eligible termination payments

Reseck v FCT (1975) 75 ATC 4213

McIntosh v FCT (1979) 79 ATC 4325

(3) Fringe Benefits Tax Assessment Act

(a) Heads of liability

(b) Definition of "fringe benefit"

3. Income from property

(1) Annuities

Income Tax Assessment Act 1997, s 10-5

Income Tax Assessment Act 1936, s 27H

(a) What constitutes an annuity

(b) Significance of "a fixed gross sum"

Egerton Warburton v DFCT (1934) 51 CLR 578

Just v FCT (1949) 8 ATD 419

IRC v Ramsay [1935] 1 All ER 847

(2) Royalties

Income Tax Assessment Act 1997, ss 10-5, 15-20

Income Tax Assessment Act, ss 6, 6C

(a) Common law meaning of "royalty"

McCauley v FCT (1944) 69 CLR 235

Stanton v FCT (1955) 92 CLR 235

FCT v Sherritt Gordon Mines (1977) 137 CLR 612

(b) Extended definition of "royalty"

Murray v Imperial Chemical Industries [1967] 2 All ER 980

(3) Interest

Income Tax Assessment Act 1997, s 6-5

(a) Nature of interest payments

(b) Disguised interest payments

Lomax v Peter Dixon and Son [1943] 1 KB 671

(4) Lease and rental income

Income Tax Assessment Act 1997, s 6-5, 10-5

(a) Nature of lease/rental payments

(b) Premiums

4. Income from a business

(1) Concept of a business

Thomas v FCT (1972) 72 ATC 4094

Ferguson v FCT (1979) 79 ATC 4261

FCT v Walker (1985) 85 ATC 4179

Evans v FCT (1989) 89 ATC 4540

(2) Taxation of business income

Income Tax Assessment Act 1997, ss 6-5,10-5

Income Tax Assessment Act 1936, ss 21A

(a) Normal proceeds of business

Kosciusko Thredbo v FCT (1984) 84 ATC 4043