The essay must be between 1,000 – 1,500 words in length (inclusive of footnotes).
The essay is worth 20% of the total marks for this unit.
It must be lodged on-line via Assessments on Blackboard. Australian Taxation Law Case.
It is due by 9.00 a.m. WST Monday 30 th April 2018. The link for lodgement of this
essay will be automatically removed at 9.00 a.m. WST on Monday 30 th April 2018.
Late lodgement of the assignment will attract penalties. Australian Taxation Law Case.
Essay Topic – Do both Parts A and B
Part A (700 – 1,000 words)
Gertie and Eddie are getting divorced. They have one jointly-owned asset – a rental
property. It is currently worth $600,000 and has no mortgage on it.
It has been decided that Eddie will obtain a mortgage for $300,000 and pay-out
Gertie. Australian Taxation Law Case.
Eddie has sought your advice regarding the deductibility of the interest and
borrowing expenses against the rental income.
Research this problem. In presenting your argument provide any relevant sections,
cases and rulings which may support your position. You should also provide
commentary on any opposing arguments.
This section must be referenced in accordance with the Australian Guide to Legal
Citation (AGLC). A summary of this document has been provided on Blackboard.
Part B (300 – 500 words)
Prepare a letter of advice to Eddie.
For this section it is not necessary to use referencing. Australian Taxation Law Case.
Australian Taxation Law Case
The main issues is whether Eddie qualify for deductibility of the interest and borrowing
expenses against the rental income, and if yes, which ones?
According to Australian Taxation Law, a person can claim a deduction under different
grounds for a rental property. The principle law guiding deduction is s. 8-1 of Income Tax
Assessment ACT 1997, which provides 2 limbs rule – non-business income and business income.
S. 8-1(a) provides for deductibility of income or loss incurred in gaining or producing assessable
income like for rent, salary, dividends, royalty, interest, and others. S. 8-1(b) provides for
deduction on losses or outgoings that are incurred in carrying out a business that ends up in
gaining or producing assessable income. However, such a deduction cannot be claimed on a loss
or outgoing that is of a capital nature, private, or domestic nature……….
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