Tax Law Lecture 7 Krishn A Shah Individual Income Taxation • It is a major source of revenue • Most important most important source of government revenue Individual Income Tax • Taxable Income • Gross Income less allowable deductions Exempt Income • Welfare payments • Scholarships • Through Convention • Example: Vienna Convention on Diplomatic relations • Structural Reasons • Example • Double Taxation Deductions • Retirement Fund Contributions etc Employment income • Salaries or wages Should we tax these as income? • Should we tax the benefits: • Lets examine the following and decide which one we should tax? • Also, in your answers comment on whether any of these should receive tax concessions due to inflation. Situation A • Mrs. Fong receives FJD$3,333.00 every month as a pensioner. She is twenty two years old and got legally married to an ex-High court judge in January this year. The ex High Court Judge had served for more than thirty years on the bench, and was on pension. Upon his demise the spouse was entitled to 1/3 of his quitting salary as pension for life. Mrs. Fong also does part time dancing at one of the local bars, and receives $500 for every dance. On average she performs once a fortnight, but sometimes if there are tourist ships around then almost daily from Thursday to Saturday. Situation B • Mrs. Brown was in a defacto relationship for quite some time. She has three children from that relationship, and has since broken up. She recently lost her job when Air Fiji closed down. • She receives $50 per child per week from an NGO, and $80 per month from the Social welfare. In addition she has applied for unemployment benefits from FNPF who have agreed to give her $200 per month, from her contributions to the extent of $4,800 or two years which ever occurs first. Before Air Fiji closed down on 31st April she was receiving a salary of $1,200 net per month. Situation C • Mr. Raymond is a retired military personnel. He is on pension for life at FJD$2,000. In addition his FNPF contributions are at $400,000 and he has opted for pension which entitles him to FJD$6,000 every month. He also receives dividends from ATH at about $2,000 per month on an average yearly level. Recently he has started tutoring law at Laucala Campus in 2nd semester and his Tutoring Contract gives him a salary of $8,000 per semester. The contract is for only one semester, and he was not employed in semester 1. Situation D • Dave is a shoeshine boy. He receives $80 per month from social welfare. He earns $20 daily from shining shoes, and about the same from begging. • He has also started a side business of selling BBQ’s at night beside hot spots in town at night. Last week he registered the business as “Daves BBQ.” On average he rakes in $50 every Thursday Friday and Saturday night. Sometimes he also gets tips from nightclub patrons for arranging companionships as he is very popular with the girls in the bars.
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