Business Taxation

Assessment Task 1- Business Tax

Outcome 1 consequence Study

Badges of Trade
There is no strict definition of whether soul is conducting a business or not, it depends on a whole take off of factors which are outlined in the badges of trade. There are 6 badges of trade which are intended to show if you are avocation or not so in target to charm if Ali is trading we have to look at these, and therefore check if he should register for tax.

Subject matter of the transaction
If an plus is held for enjoyment or personal use then it is classed as an investment and not classed as trading, In Alis slick he is purchasing cars for resale and not for enjoyment or personal use, this would be classed as trading and therefore income earned ordain be subject to tax.

Length of ownership
This relates to the length of date an plus is held for, if the asset is held for a short period of m then it is more than believably to be classed as trading. As Ali purchases cars to restore them it will depend on the amount of yield that one car requires to the length of time he has the cars.

frequency of transaction
If a transaction is repeated of the same temperament i:e buying and selling cars then this would around likely indicate trading.



Ali goes to the auction and buys a car and then returns to sell and purchase another, causing the frequency of transaction to be more than once, so again this would be treated as trading.

Supplementary work
Work carried out on asset prior to sale is a factor in find the existence of trade. In Alis case he pays someone to carry out work in order to win a greater profit, this would be classed as trading.

Circumstances of realisation
This relates to the footing for sale and if the sale is pressure possibly due to cash-flow problems or it is all of a sudden then it is more than likely that this would not be classed as trading. Ali is certainly not forced to sell these cars all of a sudden therefore it would be classed as trading....If you want to get a full essay, order it on our website: Ordercustompaper.com



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