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Essay / Research Paper Abstract
This 6 page paper considers a case provided b the student. The first question assesses if income due under a contract annually for three years will be classified as ordinary income or a capital gain. The second question then considers how it may be classified as a capital gain and which concessions may be claimed if this is undertaken by a small business. The bibliography cites 5 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEauordin.rtf
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Unformatted sample text from the term paper:
no set definition of what is classified as ordinary income. The determination is indicated in the Income Tax Assessment Act 1997 section 6.5 which has taken over from he former
Income tax Regulations 1936 and a number of subsequent acts. Under this section there is the statement that "Your assessable income includes income according to ordinary concepts, which is called
ordinary income" many commentators have seen this as very ambiguous and potential confusion for tax payers (Lehmann, 1995). Lehmann states that this is "a loquacious, patronising and confused babble of
educationalese. Reading it is like trying to wade through styrofoam mixed with treacle.(Lehmann, 1995; 530). The reference to ordinary concepts include many aspects that have been tested in the
courts. For example regular income from wages will count as ordinary income. However, it is not a simple definition of the type of transaction, for example, a sale of shares
by an individual where usual income is from wages would have the gain from the sale classified as a capital gain, whereas an insurance company where this is a daily
transaction will have be classified as ordinary income. This indicates that where there is a regular income that is part of usual trading of income creation hen it will
be classified as ordinary income. One of or irregular payment are treated as a capital gain. As the income is either ordinary income or a capital gain, and we have
no definition of ordinary income, and as such may argue that it is a contract for regular payment so may be treated as in some, we may also look to
the definition of what is meant by a capital gain, as this is the alterative. Capital gains are made when there is the sale of an assets, with a
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