Reference no: EM132361132

QUESTION 1

a) What topic does Taxation Ruling TR 2019/1 cover? 1 mark
b) Which Division of the Income Tax Assessment Act 1997 outlines the legislation regarding deductibility of gifts or contributions? 1 mark
c) What is the top tax rate applicable to a resident taxpayer in the current tax year? 1 mark
d) Is a car or motorcycle exempt from capital gains tax? 1 mark
e) What does the CGT event C1 s104-20 tax? 1 mark
f) What is the current tax-free threshold for a resident individual? 1 mark
g) Explain the significance of the High Court case, Hayes v FCT (1956) 96 CLR 47 with reference to assessable income? 4 marks
h) Explain in your own words the difference between Ordinary income and Statutory income? 5 marks
i) Explain the difference between Medicare levy and Medicare levy surcharge?

QUESTION 2

Section 6(1) of the 1936 Act defines Australian resident as it relates to individuals as follows: ‘"resident" or "resident of Australia" means -

(a) a person ... who resides in Australia and includes a person -

i. whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia;
ii. who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia; or
iii. who is [a member, spouse or child under 18 of a member of certain Commonwealth public service superannuation funds]' (underlining added).

REQUIRED:
Discuss the difference between ‘permanent place of abode' and ‘usual place of abode' with reference to the residency requirements stated in s6(1) ITAA36 and reproduced above. Ensure your answer includes a discussion of the context in which it is referred. Total 15 marks

QUESTION 3

Briefly explain the extent, if any, to which each of the following payments made by a trainee accountant, during the current tax year would be an allowable deduction:

a) HECS-HELP $850
b) Travel - work to university $110
c) Books $200
d) Childcare during her evening classes $80
e) Repair to her fridge at home $250
f) Black trousers and shirt required to be
worn at the office $145
g) Legal expenses incurred in writing up a new employment contract with a new employer. $300

State any assumptions you have made and provide legislative reference to support your explanation. Total 10 marks

QUESTION 4

a) John owns some land and grants a lease to David for seven years, at a premium of $7,000. 3 marks

b) Deepak is an IT specialist and in his spare time tries to make some extra money investing in shares but he is not so successful. On the 1 September 2018 he bought 10,000 shares in IOOF Pty Ltd for 55 cents and sold them on the 30 June 2019 for 67 cents per share. At the same time, Deepak also purchased 12,000 shares in Greencross Pty Ltd for $1.67 and decided to also sell them on the 30th of June 2019 as he could see they were drastically falling in value. He sold his Greencross Pty Ltd shares for $1.18 per share. Outline and calculate the net capital gain or loss that Deepak would record in his 2018/19 tax return. 7 marks

c) Li bought a home in March 2010 for $200,000. In March 2013, she converts the separate garage into an office for her physiotherapy business. The garage comprises 20% of the floor space of the dwelling on the property. She sells the property in March 2019 for $700,000. Its market value at the time of first using the converted garage for income producing purposes was $400,000. What are the CGT implications for Li of converting her garage on the sale of her home?

d) Explain in your own words the difference between cost base and reduced cost base.

Outline the CGT consequences in each of the above situations for the 2018/19 tax year and state if the 50% discount would be applicable to any of the above transactions?

QUESTION 5

a) Is income earned from illegal means (e.g. drug-dealing, insider trading or theft) assessable income?
b) Calculate the assessable income of a resident taxpayer in the current year if they were to be in receipt of $500 bank interest from their savings account,
$10,000 won at the Crown Casino, $2,000 rent earned from a boarder sharing a house. Give reasons, considerations and quote reference to sections of the ITAA in your answer.
c) Would a $500 allowance paid to an employee by an employer be assessable income to the employee. Explain your answer.
d) Calculate the Medicare payable for a resident individual with a taxable income of $20,000, $24,900 and $100,000
e) Calculate the gross tax payable for the taxable income of $25,000, $40,000 and $95,000. (Note Gross tax payable is the amount of tax due before Medicare levy and tax offsets)

REQUIRED:
Answer each question above giving consideration to the allocated marked.