ARGUMENT ON WHETHER TAXPAYERS RUNNING A BUSINESS
Earning opportunities are based on
various work activities. By conducting business on different sectors, earning
can be confirmed. With business taxation, process is related and in order to
earn more than requirements, it is important to follow all rules and regulation
of taxation. Not all working activities are described as business. When
production of any working activity exceeds the requirements then it called as
business. If any person produces something or conduct any work activity for
their requirement and maintain the limitation of production, then it can be call
as hobby instead of business.
Conducting any kind of jobs or
working activities not directly related to business. There are differences
between the working activities, which can be considered as business or cannot
be considered as business. Business process is depended upon various activities
and indicators. If indicators of business match working activities of any
person then it can undertake the process of taxation. Based on information in
Ferguson v FCT (1979) 9 ART 873, there is some difference in activities of
business process or non-business process. If any person conducting the activity
maintains regularity of process and doing it continuously, then it is indicator
of business. A systematic way of record keeping of the activities is an indicator
of business.
Scale of activities also indicates
the business. If activities exceed the need then it can consider as business.
On the other hand, the work process that is continuing as hobbies is not under
business process.
Case study: Thomas v FCT (1972) 3 ATR 165
Based on information of Thomas's
case study it is clear that the activities of Thomas cannot be considered as
business. As per the information, Thomas provides taxes for his 7.5-acre land
and in his land he is planting trees. Tree plantation process is a kind of
hobby. A hobby cannot be a business. It can be considered as a small kind of
business, but the activities of Thomas are not indication the business system.
Tree plantation is a type of agriculture, which can be called as domestic
agriculture. To use the resources for domestic needs and the limitation of
production can consider this as hobby[1].
Transaction process makes changes in activities of hobby and it becomes small
business type. Reviewing case study of Thomas, it can be said that there was no
process of transaction and business indicators, so it is clear that it is a
non-business activity.
In the
findings of this case study, it is not important to consider any activity of
taxpayers as business. However, Thomas provides taxes but it is for his land
not for tree plantation. The activity of tree plantation is a hobby, not
business[2].
It can be said that not all earning activities of taxpayers are business.
Case study: Martin v FCT (1953) 90 CLR 470
All earning activities can not
consider as business. Taxpayers can conduct any kind of domestic earning
activities but that cannot be under the taxation process. If the taxpayers
conduct recreational earning process, then it will be considered as their
domestic earning instead of business process. In the case of Martin, he is a
taxpayer for his hotel business but in case of gambling it was not his
business. Their regularity in that process of earning cannot be considered as
his business[3].
Martin conducts this learning process for his part time activity and hobby.
This kind of activity can consider as hobby, not as business. However, the
records of bank balance referring the proof of increase in his income but it is
within his requirement and domestic earning process. The gambling process is
only for the entertainment and it is not indication factors of business.
Gambling is one of the non-business activities and it is maintaining the
non-business rules and factors[4].
As in case of Martin, there is no evidence of business indications and he
conducts the betting process as his recreational activity so it can be said
that this taxpayer is not running a business.
After conducting the study on case studies,
it is clear that other earning activities of taxpayers cannot be considered as
business. If the activities do not provide the indication of business and
production of that activity maintain the scale of requirement then it can
consider as a hobby. As per judgment of courts, activities like tree plantation
and gambling are not a business. Recreational activities do not come under
business and taxation process.
[1] Hopper, Jeffrey D., "Benefits Of
Inmate Employment Programs: Evidence From The Prison Industry Enhancement
Certification Program" (2013) 11 Journal
of Business & Economics Research (JBER)
[2] Tsaioun, Katya, "Evidence-Based
Absorption, Distribution, Metabolism, Excretion (ADME) And Its Interplay With
Alternative Toxicity Methods" [2016] ALTEX
[3] Winkler, A. D. and M. A. Webster,
"Turning Silver To Gold - Blue-Yellow Asymmetries In Color
Perception" (2014) 14 Journal
of Vision
[4] Wurtenberger, G., "Intellectual
Property Law Of Plants" (2014) 9 Journal
of Intellectual Property Law & Practice
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