Reference no: EM132389996

FNSACC502 Prepare tax documentation for individuals

Assessment -01 Project

Question 1:

Rafael, a single resident taxpayer aged 24, completed six months of employment in Turkey on an approved overseas aid project.  He derived gross wages of AUD$35,000 from which AUD$5,000 of Turkish tax was withheld.

Rafael also derived a gross salary of $34,000 from his regular employment in Australia.  PAYG tax of $5,400 was withheld.

Required:

For the year ended 30 June 2017, calculate the following:

a. Rafael’s taxable income.

b. Rafael’s net tax payable or refundable.

Question 2:

MeeKong,a Malaysiancitizen,has been in Australia for 10 months on a working holiday visa during the current income year. During that time,shehas been employedas a medical research scientist and has livedin a rentedapartment in Melbourne.

Required:

a. Determine whether MeeKong is a resident of Australia for taxpurposes.

Question 3:

A client of many years provides this information for you to complete his current tax return.

Income	Employer: Reliance Imports
Gross salary	$87,500
Allowances	Allowance for company logo $1,250
Interest from term deposit A/C #123456	$400
Tax withheld	$20,325
Allowable work deductions	$7,450(receipts and log book supplied)
Union Fees	$450
Dry cleaning of work clothing	$150

Non-working spouse and no children Private health membership was cancelled on July 1st of the income year Use the table and the information provided for 2016-17 to calculate the taxpayer’s taxable income and the liability for income tax. Provide reasons for your treatment.

Taxable income	Tax on this income
0 - $18,200	Nil
$18,201 - $37,000	19c for each $1 over $18,200
$37,001 - $87,000	$3,572 plus 32.5c for each $1 over $37,000
$80,001 - $180,000	$19,822 plus 37c for each $1 over $87,000
$180,000 and over	$54,232 plus 45c for each $1 over $180,000

These rates do not include the Medicare levy of 2%, or the Medicare Levy Surcharge which is calculated at the rate of 1% of taxable income.

Required:

a. Complete the calculation for each tax bracket and round all calculations to the nearest dollar. Do not use the ATO website withholding calculator as that might provide a slightly different figure.

Question 4.

Ryan Small aged 30 and single, provided the following details for the year ended 30 June, 2017.  Ryan derives income from his employment as a bus driver and some investments.  Ryan has no private health insurance.

Receipts
Legacy from his uncle's estate	$   3,000
Fully franked dividend from F/S Ltd-amount received	3,300
70% franked dividend from Fl Ltd-amount received	2,900
Unfranked dividend from Back Ltd	1,750
Gross wages (PAYG tax withheld $20,500)	78,800
Bank interest (net of $97 TFN tax withheld)	103
Honorarium for duties as president of the swim club	350
Insurance lump sum compensation (for damage to back sustained in car accident)	12,000
Army Reserve payments for part time services	1,200
Expenses (All fully substantiated)
Purchase of compulsory uniform	480
Laundry of uniform (estimate)	75
Parking fees (Ryan drives his car to the bus depot)	440
Sunglasses used for driving	150
Investment journals	230

Ryan has a HELP liability of $6,600.  The repayment rate is 8%.

During the year Ryan received an Australian Government Disaster Recovery Payment.

Required:

a. Calculate Ryan's taxable income and tax payable for the year ended 30 June 2017.

Question 5.

Brian sometimes uses his car for work purposes. He provided the following information in respect of the year:

Items	Amount ($)
Car cost	37250
Fuel	3120
Insurance	563
Repairs	742
parking fees	80
Registration	543
Speeding fine	120
Road tolls	167
Car wash	90

Brian kept a logbook for the entire year and it showed the following:

Trips	Km
Trips between work and home	4917 km
Trips between places of work	5270 km
Private trips	5243 km

Brian's car has a 2.2 litre engine and he prefers to depreciate it at 15% straight line. It was purchased on 1 July.

a) Calculate Brian's motor vehicle deduction using each possible method.

b) Which method should Brian use to minimise his tax?

Question 6.

Mr. Jill is an accounting student and owner of a small coffee – shop, which he purchased this year. He usually comes to you for tax return once in a year. He tried to do his quarterly GST this year (2015) and make a small mistake on the GST report form. As given below:

i. At the total sales (G1) he wrote $ 10100.00

ii. At the total Non-capital purchase option(G11)purchase options he wrote $ 9900.00 and

iii. He calculated his GST accordingly and report the GST without omitting the decimal point (00.00).

With investigating the GST report The Auditor send him a letter informing he reported his total income $1010000 and Total Non-capital purchase of $ 990000 and requested him to provide the necessary documents about this GST reporting. Now, Jill came to you for advice as he believe that he did the right calculations. Now what would be your suggestion regarding:

a. What was the mistake that Jill made for reporting his GST?

b. Calculate the GST for Gill.

c. Properly Fill up the GST form for him.

d. What documents do Jill have to provide to ATO Auditor?

Assessment -02

Questions

1 What is assessable income and Taxable Income? ( Approximate Word Count 20)

2 Define “deduction” and “tax offset” with examples. How are they different?  ( Approximate Word Count 20)

3 What legislation covers Income Tax?  ( Approximate Word Count 20)

4 What constitutes conflict of interest? ( Approximate Word Count 20)

5 What is Debits Tax? Who does it affect? ( Approximate Word Count 20)

6 What sort of records should be kept according the Taxation Administration Act 2005? How long must these records be kept for? ( Approximate Word Count 20)

7 List 5 possible prosecutable acts when lodging a tax return under the Taxation Administration Act 2005. ( Approximate Word Count 20)

8 According to the TAA 2005, when is a taxpayer liable to pay penalty interest? When might the interest be increased? ( Approximate Word Count 20)

9 Discuss the term ‘Confidentiality’.   What legislation covers this? ( Approximate Word Count 20)

10 What is a fringe benefit?( Approximate Word Count 20)

11 What is the code of professional conduct as per the Tax Agent Services Act 2009? ( Approximate Word Count 150)

12 What us the annual depreciation expense using straight-line depreciation, of a vehicle that depreciates over 5 years, was purchased at $17000, and will have a salvage value of $2000 – Students must show their working.

13 Complete the following Chart – using the Declining-Balance method for the same vehicle as in question 12

Year	Book Value (Start of Year)	Depreciation Expense	Accumulated Depreciation	Book Value - End of Year
1	$17,000 (Original Cost)
2
3
4
5				$2,000 (Scrap Value)

14 What is the Private Health Insurance Rebate, and how does it apply to tax obligations? ( Approximate Word Count 20)

15 Some items included in the G1 label at the GST section of a BAS statement are gross sales, interest earned and gross fees for services.  What items SHOULD NOT be included? ( Approximate Word Count 20)

16 The T1 label at the PAYG income tax instalment section of your BAS statement includes items such as gross sales, gross fees for services and gross rent.  What items SHOULD NOT be included?( Approximate Word Count 20)

17 What items should be included in the W1 label at the PAYG tax withheld section of you BAS statement? ( Approximate Word Count 20)

18 What information may be reported on an IAS Statement? ( Approximate Word Count 20)

19 Describe the key features of organisational policy and procedures relating to the preparation of tax documentation for individual taxpayers. ( Approximate Word Count 20)

20 Peter has come to your office to lodge his tax return. He is a new client and you have no information recorded in your office. what questions would you need to ask to elicit the information required to complete and lodge his tax return.( Approximate Word Count 20)

You also need to perform a role-play session with one of the classmates with the questions you have chosen.

21 Describe some of the potential consequences of failing to submit an income tax return on time. ( Approximate Word Count 20)