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Question
1- Write a note on Tax return and letter of advice with references to APA.
Answer
Letter of Advice
To
From: Tax Consultants
Date: 30th January, 2019
Dear Sir,
Thanking you for giving us the opportunity to address you tax related problems. This letter will provide you with full information regarding you tax issues. This is to inform that as per your report the gross salary is $140,000 and the total tax withheld of $42,232. The gross salary that has been reported by you is to be treated as an ordinary income during the calculation of taxable income which has been provided under Section 6-5, ITA Act, 1997. However, the taxation law provides that you can claim tax offset from the taxable income that has been withheld from the gross salary.
The information that has been provided by you includes superannuation contribution. This superannuation value is an allowable deduction under the provisions of the Act. The information that has been provided by you also includes the sale of BHP Shares. However, the BHP shares has been bought by you before 20th September, 1985 and therefore it will be treated as Pre-CGT asset and therefore it cannot be included in the assessment for the current year. However, as report you have sold MYR shares which shows capital losses. This capital loss can be carried forward by you until you get a capital gain which shall be made by selling shares so that a set-off can be made on the same.
The letter will recommend that you should balance you income with your expenses because this will show a good financial health and a better savings ability. You have also provided that you use car for business purpose. The expenses that you make on the car can be claimed as deduction under the Section 8-12 of the ITA Act, 1997.
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Place Your OrderThe information provided by you also shows that you have rental property which have been rented to your daughter. As per the provisions of the Act it has been stated that when a property is rented to a relative then the property shall be charged at a general commercial rate. Therefore, you are entitled to receive a rent at general commercial rate.
We hope that the issues has been resolved through the information that has been provided by us though this ‘letter of advice’. We are looking for appositive response from you.
Thanking You
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Working Papers:
This section covers the income and deduction which is related to the work and includes salary before deductions, various perks and other benefits that the employer has paid with respect to the salary (Braithwaite 2007). According to the provisions of the ITA Act, 1997 it has been stated that the gross salary is a part of the assessment of the income tax and the dividends received has been stated under the taxation legislation (Section 44(1), ITAA, 1997).
The capital gains that has been made through the sale of the BHP shares is not included within the taxable income as the shares are Pre-CGT assets (Mellon 2016). The loss that has been resulted from the sale of MYR shares needs to be carried forward until a gain can be made by selling shares.
If a property has been rented to one of the relative of the tax payer than the tax payer needs to charge rent from that relative on general commercial rate. However, the expenses that shall be incurred by the tax payer at the time of let out period shall be deducted from the taxable income of the tax payer.
Compensation is one of the sources of income. However, the deduction can be made on the expenses that has been made on laundry which is related to the job and expenses that has been made in relation to the job or charitable purpose.
Reference:
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Braithwaite, V., 2007. Responsive regulation and taxation: Introduction. Law & Policy, 29(1), pp.3-10.
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Mellon, A.W., 2016. Taxation: the people’s business. Pickle Partners Publishing.
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