Reference no: EM132583471

HI6028 Taxation Theory, Practice & Law - Holmes Institute

Question 1 With reference to relevant legislation and case law, determine if the following scenarios give rise to income for tax purposes:
a) John is a pensioner and swapping his surplus free range eggs valued at $150 (for the year) with his neighbour Alex for surplus vegetables grown in his home garden.

b) David is a builder and helping John at weekends to build his home, doing so on the basis that David can have John's caravan towed trailer (which cost him $10,500 on 1 January 1997) when John move into his current home. Assume the value of the David's work was $11,000 and the caravan had a market price of $12,000 when John handed it over on 1 January in the current income year.

Question 2
With reference to relevant legislation and case law, discuss whether the following receipts are assessable or exempt income. Give reasons.
a) Lucas is a full-time student and received a scholarship of $3,000 per annum from XYZ Engineering Solutions, conditional upon Lucas agreeing to accept employment with XYZ Engineering Solutions for at least three years after graduation.
b) Remuneration of $600 earned for part-time services as a member of the Australian Army Reserve.

Question 3
Silvia is a teacher employed by SCHE Education at their Melbourne campus. She lives in Pakenham with her family on the outskirts Melbourne about 60 kilometres from the campus. Silvia only attends the campus on Thursdays and Fridays when she takes her classes and the remaining three days a week she works from home. She prefers to work from home because she dislikes the long commute and because she feels that she can research more effectively from home. She only sees students in her office at the campus on Thursdays and Fridays. All student contact on the other days is via email.

Silvia's home office and work library occupies 20% of the total space in her home. Her outgoings in relation to her home for the current financial year are as follows:
• Rent - $31,200
• Electricity and heating costs - $1,600
• Cleaning lady - $2,500
• Home telephone (10% of which is for university use) - $2,000
• Mobile telephone bill (50% of which is for university use) - $1,250

Required:
Calculate how much of the above outgoings are a deductible expense for Silvia.

Question 4
William is James' employer. William paid the following payments on behalf of James.

Required:

Calculate is the taxable value for FBT purposes of the following payments. You must refer to relevant legislation and/or case law in your answer.

Question 5
Julian and Jenna carry on a partnership business and for the income year ended 30 June, the partnership net income was $38,000, as returned by their accountant. However, included in the deductions was a salary of $12,000 paid to Julian's wife (who is not a business partner). The Commissioner disallows all but $2,000 of this amount.

Required:
a) What authority, if any, does the Commissioner have in disallowing the claim for salary?

b) What course of action, if any, is available to the partners in disputing the assessment?

c) Will Julian's wife be required to pay tax on $2,000, or $12,000, for the current income year. Why?

d) On what basis should future salary payments be made to Julian's wife?

Attachment:- Taxation Theory.rar