Produced Gains From Sale Of Ordinary Assets- Myassignmenthelp.Com

Question: Discuss About The Produced Gains From Sale Of Ordinary Assets? Answer: Introducation The present circumstances of Bill reflects that he is the owner of a large piece of land that has huge amount of pine trees. Bill originally thought of using the land for sheep grazing however after being approached by a logging company that agreed to pay $1000 for every 100 meters of timber, Bill decided to accept the offer. The Taxation ruling of TR 95/6 is applicable in respect of Bill since he is engaged in the activities of forest operations for selling the timber. According to the guidelines issued under subsection 6 (1) of the ITAA an individual indulged in a forest operations will be treated a primary producer for taxation purpose (Woellner 2013). Bill, in regard to Subsection 6 (1) of the ITAA 1997 will be treated as primary producer for being indulged in the forest operations of tending timber. Even though bill did not planted the pine trees in his land, he will be treated as primary producer for felling trees and income received by him from felling of timber would be treated as assessable income under subsection 36 (1) of the ITAA 1997. The sales constituted the part of the business assets and the value of pine trees constitutes a taxable proceeds in the current circumstances of Bill. On the contrary, if Bill is provided with a large sum of $50,000 for simply granting the right to the logging company of removing the required amount of timber from land that is owned by him, then under such situation the amount received by Bill would constitute royalties under section 26 (f) of the ITAA 1997 (Woellner et al., 2014). According to the decision made under McCauley v FC of T (1944) payment received for granting the right of tending down the trees for timber would be regarded as royalties. Hence, amount received by bill would be treated as royalties and would attract tax liabilities. Conclusion: From the analysis, it is understood that amount received by Bill for cutting down the timber would constitute assessable income under the forestry activities, as he was the primary producer. While receipt of lump sum for granting right to cut timber would be treated as royalties under section 26 (f) which will be held for taxation. Reference list: Barkoczy, S., 2016. Foundations of Taxation Law 2016.OUP Catalogue. Coleman, C. and Sadiq, K. (n.d.).Principles of taxation law 2013. Kenny, P. (2013).Australian tax 2013. Chatswood, N.S.W.: LexisNexis Butterworths. Krever, R. (2013).Australian taxation law cases 2013. Pyrmont, N.S.W.: Thomson Reuters. Morgan, A., Mortimer, C. and Pinto, D. (2013).A practical introduction to Australian taxation law. North Ryde [N.S.W.]: CCH Australia. ROBIN, H., 2017.AUSTRALIAN TAXATION LAW 2017. OXFORD University Press. Woellner, R. (2013).Australian taxation law 2012. North Ryde [N.S.W.]: CCH Australia. Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D. (n.d.).Australian taxation law 2014.