Posted: April 27th, 2016

What is the appropriate tax treatment of the payment in the hands of both Buyer Pty Ltd and Seller Pty Ltd?

Please read Taxation Ruling TR 2009/5 and answer the following questions. Taxation Ruling TR 2009/5 can be found on the ATO website at www.ato.gov.au .

(a) Seller Pty Ltd makes a payment of $10 000 to Buyer Pty Ltd to cover the cost of in-store promotional activities relating to its products. What is the appropriate tax treatment of the payment in the hands of both Buyer Pty Ltd and Seller Pty Ltd?