|
|
|
LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
Showing 99 out of 157
LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 99
(8)
This secon supplements the general permission and overrides the capital limitaon, the exempt income limitaon, and
the withholding tax limitaon. The other general limitaons sll apply.
This secon supplements the general permission – a company is allowed a deducon for interest incurred even if the
interest was not incurred in deriving assessable income
o
In other words, it doesn’t maer what the purpose is – a company that incurs interest can deduct it even if it is
not incurred in deriving assessable income or is of a capital nature
NEGATIVE GEARING
Subpart EL (ss EL 1 to EL 20) deals with negave gearing
o
Negave gearing is where landlords would operate their investment properes at a loss:
They would finance the acquision of the property by borrowing money
Their expenditure (especially the interest payments on the mortgage) would then exceed the rent, so
deducble expenditure exceeded rental income
o
At the me, there was no ring-fencing rule:
This means that since the landlord was operang the property at a loss, he could set the loss off
against his other income and thus pay less tax
o
As properes tend to increase in value over me, the landlord will also be able to make a capital gain (which is
not taxable) when he sells the property
It is complex but the essenal rules are as follows:
o
Secon EL 4(2) provides that the deducons that a taxpayer is allowed each year for expenditure incurred in
relaon to any “residenal rental property” cannot exceed the amount of his “residenal income” for that
year.
o
Secon EL 4(3) provides that any excess can be carried forward and deducted against “residenal income” in a
subsequent year.
o
Secon EL 5(3) provides that, if you sell all your rental properes, you generally cannot use any leſt-over excess
deducons unless you acquire some new residenal property (in which case you can deduct the excess against
the rental income, subject to s EL 4).
o
Subpart EL applies on a “porolio basis” unless the taxpayer elects for it to apply on a “property-by-property
basis”: s EL 6.
Secons EL 9 to EL 13 provide for exclusions for:
o
The taxpayer’s “main home”;
o
Land held on revenue account;
o
Companies (other than close companies);
Subpart EL took effect on 1 April 2019
OTHER SPECIFIC RULES
lease transacon costs are deducble: s DB 18;
the cost of revenue account property is deducble: s DB 23;
o
If it turns out that the proceeds of sale of a property is taxable, then the intenon is that you only pay tax on
the profit and not the gross proceeds of sale – therefore, you can deduct the cost of the property when you
acquired it (i.e. the purchase price)
o
“Revenue account property” includes any property of which its proceeds of sale are counted as income –
therefore, this secon entles you to a deducon for the cost of land or other property that is brought to tax
under subpart CB
the value of property the subject of a profit-making undertaking or scheme (under s CB 3) is deducble: s DB 26;
the value of land the subject of a major development (under s CB 13) is deducble: s DB 27;
the value of land affected by a zoning change (under s CB 14) is deducble: s DB 28;
bad debts are deducble if wrien off: s DB 31;
scienfic research: s DB 33
research and development: s DB 34
theſt by employees and contractors is deducble: s DB 42;
bribes are not deducble: s DB 45;
expenditure on not discharging contaminants is deducble: s DB 46;
Ace your assessments! Get Better Grades
Browse thousands of Study Materials & Solutions from your Favorite Schools
Vanderbilt University
Vanderbilt_University
School:
Tax_Law
Course:
Great resource for chem class. Had all the past labs and assignments
Leland P.
Santa Clara University
Introducing Study Plan
Using AI Tools to Help you understand and remember your course concepts better and faster than any other resource.
Find the best videos to learn every concept in that course from Youtube and Tiktok without searching.
Save All Relavent Videos & Materials and access anytime and anywhere
Prepare Smart and Guarantee better grades
Know more
Students also viewed documents
lab 18.docx
lab_18.docx
Course
Course
3
Module5QuizSTA2023.d...
Module5QuizSTA2023.docx.docx
Course
Course
10
Week 7 Test Math302....
Week_7_Test_Math302.docx.docx
Course
Course
30
Chapter 1 Assigment ...
Chapter_1_Assigment_Questions.docx.docx
Course
Course
5
Week 4 tests.docx.do...
Week_4_tests.docx.docx
Course
Course
23
Week 6 tests.docx.do...
Week_6_tests.docx.docx
Course
Course
106
