StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Law of Business Taxation - Essay Example

Cite this document
Summary
The ITTOIA 2005 and ITEPA 2003 Laws are usually amended as the public and law-makers determine better ways to cope with problematic situations. This is the case for ITEPA 2003 or Income Tax (Earnings and Pensions) Act 2003 amended for clearer provisions of incomes and allowable deductions…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.7% of users find it useful
Law of Business Taxation
Read Text Preview

Extract of sample "Law of Business Taxation"

Download file to see previous pages

It was suggested that about 25% of the deduction for such expenditure is increased. Specifically, it provides that contract work outside of “any person otherwise than in the course of a trade, profession or vocation the profits of which are chargeable to tax under Case I or II of Schedule D,” (paragraph 4(6)(b) of Schedule 12. It disallows deduction for activity of trade, profession or vocation undertaken in any part of the United Kingdom. The Income Tax (Trading and Other Income) Act 2005 or ITTOIA 2005 imposes charges to income tax under trading income, property income, savings and investment income, and certain miscellaneous income.

It also dealt with exemptions from the charges, provisions about rent-a-room relief and foster-care-relief, special rules for foreign income, special rules for partnership, and certain calculation rules and general provisions. The limited guidance provided by the previous legislation makes interpretation problematic such as in determining whether a particular activity constitutes trading. Under ITTOIA, trading was defined as “any venture in the nature of a trade” (ITA 2007 s. 989) that leans on the substance of what is being carried on and how it is being carried on.

The understanding of the activity by the individual conducting it may be derailed. James (2011) suggested that it “does not necessarily need to have all the attributes associated with a trade I order to be chargeable,” (16). Previously, under the ITEPA 2003, Schedule D Case 1 provides that profits derived from trade were taxable. Profits from a vocation or profession were taxable under Schedule D Case II. ITTOIA 2005 removed this distinction and trading income has encompassed incomes from vocation, trade, or profession under ITTOIA 2005 section 5 (James, 2011).

Other contentions are statutory trades such as farming, market gardening, and occupation of land managed on a commercial basis for the purpose of gaining profits. For the case of woodlands, occupation may not be taxable but once an actual trade, an example of which is the selling of timber, occurred, then, a taxable activity is committed (James, 2011). Numerous tests called the “badges of trade” also help determine trading activities, but already, confusion have proven costly through litigations.

One specific example is the American Leaf Blending Co. SDN BHD v Director-General of Inland Revenue (1979) (AC676). Lord Diplock opined that: …in the case of a company incorporated for the purpose of making profits for its shareholders any gainful use of which it puts any of its assets prima facie amounts to the carrying on of a business… Assets held as investment due to their nature as income-producing, or have the potential for capital appreciation, or possible profit for its sale cannot be considered a trading profit.

An asset acquired by loan with the potential to bear an income but only as a motive to offset interest from income gained is also considered of irrelevance. An investment of a property later appropriated as trading stock will have the sale as trading. Such was the case of Wisdom v Chamberlain (1969) 45 (TC 103). In this case, actor Norman Wisdom bought silver bullion as a hedge against devaluation. He then sold it at lower cost but bought more bullion which when sold gave Wisdom a profit. The second transaction was considered a trading because it was bought for short-term profit (James, 2011).

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/law/1448628-law-of-business-taxation
(Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 Words)
Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/law/1448628-law-of-business-taxation.
“Law of Business Taxation Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/law/1448628-law-of-business-taxation.
  • Cited: 0 times

CHECK THESE SAMPLES OF Law of Business Taxation

United States Federal Tax Law

United States Federal Tax law ... Kathy and Frank made a $400,000 down payment and took out a $2,600,000 mortgage to finance the remaining cost of the house with Outside Lender.... Kathy and Frank are personally liable for the mortgage loan, which is secured by the home.... hellip; At the beginning of 2012, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt....
8 Pages (2000 words) Assignment

The Analysis of Taxation v Dixon and Scott v Federal Commissioner for Taxation Cases

taxation LAW TUTOR MODULE DATE Abstract This paper explains why the payment to the taxpayer in FCT v Dixon (1952) 86 CLR 540 was assessable income but the payment in Scott v FCT (1966) 117 CLR 514 was not.... Keywords: Assessable income, tax position PART A The 2 cases concerned in the current situation are Federal Commissioner for taxation v Dixon and Scott v Federal Commissioner for taxation.... His annual salary being 250 pounds and declared taxable by the taxation commissioner....
7 Pages (1750 words) Essay

Corporate Taxation in Germany and England

Reduced numbers can mean more foreign investment in the country and a highly competitive business sector and that is exactly what Germany and England had sought out to accomplish.... Corporation taxes are sometimes misunderstood because of their complexity and continuous scrutiny under the law.... orporation taxes are sometimes misunderstood because of their complexity and continuous scrutiny under the law....
17 Pages (4250 words) Essay

Taxation Law Practice

Taxation law means a law of the commonwealth or of a territory imposing a tax or otherwise dealing with Australian tax.... Tax includes income, excise and other taxation devices.... hellip; business organizations focus upon the entities themselves (ATO, 2007). ... Fire Service Charges are also frequently applied to domestic house insurance and business insurance contracts.... Commercial law, trade, intellectual property, and others deal with the transactions giving rise to tax....
11 Pages (2750 words) Essay

Study of the Legal Problems Concerning Taxation in Electronic Commerce in China

lthough the development of electronic commerce has been both rapid and dramatic, it makes an ongoing process in taxation even more evident.... Since 1990s with the development of computer technology and wide use of the Internet a new kind of trade – electronic commerce came into being....
28 Pages (7000 words) Essay

Personal & Business Taxation

This piece of research evaluates the current tax legal system related to small business taxation Basically, there are domains for the taxation in UK, they are personal taxation and company taxation.... Company or business taxation is applicable if the company situates in the UK and it is payable as given below ... A business man, no matter whether it is sole proprietorship or partnership or other form of business, will be eligible for tax relief if his taxable value is below £18,000 (but £25,500 in London)....
4 Pages (1000 words) PowerPoint Presentation

Assignment taxation law

business taxation and financial decisions.... taxation includes all forms of income generating activities such as property ownership, licenses and duties.... In most countries, taxation law… Things such as property including land or real estates making the initial business costs fall under direct taxation.... Indirect taxes include taxation Law taxation Law Tax law refers to laws that govern the collection of taxes by the central government to enable it perform its objectives (Cordes, 2005)....
2 Pages (500 words) Assignment

The Payment to the Taxpayer in FCT versus Dixon

This work called "taxation Law" describes why the payment to the taxpayer in FCT v Dixon (1952) 86 CLR 540 was assessable income but the payment in Scott v FCT (1966) 117 CLR 514 was not.... hellip; The 2 cases concerned in the current situation are Federal Commissioner for taxation v Dixon and Scott v Federal Commissioner for taxation.... His annual salary is 250 pounds and declared taxable by the taxation commissioner....
7 Pages (1750 words) Report
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us