Curtin University, Curtin Law School, TAXA 5001

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Section A – The meaning of the Word “Incurred”

In Australian taxation law, the word “incurred” is defined by sec. 8-1 of the Income Tax Assessment Act 1997 (ITAA), and draws simile meaning to subsection 51(1) and 53 of the  Income Tax Assessment Act 1936. This section applies to taxpayers who claim a loss or an outgoing, whether or not one can account for income on the basis of either cash receipts or earnings.

Sec. 8.1 of the Income Tax Assessment Act 1997 (ITAA) an outgoing can be incurred in two ways or can be deducted from an assessable income under two conditions;

  1. If it is incurred in the process of gaining the assessable income; or
  2. If it is incurred in the process of carrying out a business that produces assessable income.

However, sect. 8.1(2) clarifies the nature of any outgoing limiting the extent to which it will be considered an outgoing.

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Curtin University
Curtin Law School
TAXA 5001

Second Semester 2018 Essay

Information:
The essay must be no more than 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.
It is due by 9.00 a.m. WST Monday 1 st October 2018. The link for lodgement of this
essay will be automatically removed at 9.00 a.m. WST on Monday 1 st October 2018.
Late lodgement of the assignment will attract penalties.

Essay Topic – Do both Parts A and B
Part A (1,000 words)
Discuss the meaning of the word “incurred”. Using relevant legislation and cases,
explain the relevance of this word in the calculation of taxable income.
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 (500 words)
Prepare a letter of advice to a client explaining what you have discussed in Part A
ins such a way that a person who has no tax knowledge would understand the
importance of this word and how it can be used to a taxpayer’s advantage.
For this section it is not necessary to use referencing.

 

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ANSWER

 

Section A – The meaning of the Word “Incurred”

In Australian taxation law, the word “incurred” is defined by sec. 8-1 of the Income Tax Assessment Act 1997 (ITAA), and draws simile meaning to subsection 51(1) and 53 of the  Income Tax Assessment Act 1936. This section applies to taxpayers who claim a loss or an outgoing, whether or not one can account for income on the basis of either cash receipts or earnings.

Sec. 8.1 of the Income Tax Assessment Act 1997 (ITAA) an outgoing can be incurred in two ways or can be deducted from an assessable income under two conditions;

  1. If it is incurred in the process of gaining the assessable income; or
  2. If it is incurred in the process of carrying out a business that produces assessable income.

However, sect. 8.1(2) clarifies the nature of any outgoing limiting the extent to which it will be considered an outgoing.