Possible Consequences For Taxpayers: Randy And Ron

What are the possible consequences for Randy if he agrees to do either of these things?

Al Basic, an Australian resident aged 30, received a gross salary of $50,000 and had no other income or deductions. Al does not use the services of a Registered Tax Agent.

Brianna Minor, an Australian resident aged 15, received interest on an investment given to her by her parents amounting to $750. She had no other income or deductions and does not use the services of a Registered Tax Agent.

Drew Toomuch, an Australian resident aged 39, derived net business losses of $15,000. He has no other income or deductions and uses the services of a Registered Tax Agent.

Fritz Watson, an Australian resident aged 19, received gross wages of $11,100 ($500 PAYG tax withheld).  Fritz did not have any other income or deductions and does not use the services of a Registered Tax agent.

a.Which of the above amounts is the Commissioner obliged to refund to Stefan?

b.Are there any other amounts that may be paid to Stefan as a result of the AAT decision?

Assessable Income and Taxation Obligations of Randy

Ron Veldhuis is aged 16 and is currently studying full-time at high school whilstlivingwith his parents.

During the 2016/17 tax year, Ron received the followingamounts:	$
Gross Wages from part-time job (PAYG tax withheld$800)	4,700
Gross Interest received on fund given by his parents (TFNwithheld $4,900)	10,000
Income Distribution from Estate of LateAunt	7,500
Income Distribution from Family Trust (tax paid by Trustee$1,500)	6,000
Unfranked Dividend from shares in QQQ Ltd (these were bought with funds from previous Family Trust distributions)	1,200

(a) For the purposes of Div 6AA, how much excepted assessable income has Ron derived?

Gross wages from part time- 4700 Income distribution from Estate of late aunt- 7500 Income distribution from Family trust- 6000 Unfranked dividend from family trust- 1200 Total                                                            $19400

(b) For the purposes of Div 6AA, how much eligible assessable income has Ronderived?

Eligible assessable income Income from Family trust- 6000 Unfranked dividend from shares in QQQLtd- 1200 Total                                                                   $7200

(c) Calculate net tax payable by Ron for the 2016/17 taxyear.

Tax on Excepted income ($19400-$18200(tax free threshold))*19% = $228 Tax on other income $7200*45% =$3240

The following questions are based on the material in Chapter 2:

(Comprehensive, inter vivostrust)

The Alberts Family Trust, an inter vivos trust, had the followingbeneficiaries:

Candy	(aged 45; entitled to 40% of trustincome)
Dandy	(aged 30; bankrupt; entitled to 35% of trustincome)
Landy	(aged 17; entitled to 20% of trustincome)

The remainder of each year's income was to be retained or distributed at the Trustee'sdiscretion.

During the 2016/17 tax year trust income was $195,000.

A discretionary amountof$7,000 was paid to Landy (this amount was in addition to Landy’s entitlement under the TrustDeed).

The trust also had losses of $15,000 in the 2015/16 tax year. These were to be met out of the trustincome. Landy also received interest of $38,000 during the 2016/17 tax year from investments given to him by hisparents.

Landy is single and is not covered by private healthinsurance.

• Name of theBENEFICIARY
• Whether or not the beneficiary is PRESENTLYENTITLED
• Whether or not the beneficiary is under a LEGALDISABILITY
• WHO IS ASSESSED on eachamount
• Which sections of the Act apply to make the incomeassessable
• The amount retained ordistributed.

Beneficiary	Presently entitled? (Yes/No)	Legal disability? (Yes/No)	Who is assessed? (Beneficiary or Trustee)	Section(s) Applicable	Amount $
Candy	No	No	Trustee	Section 97	72000
Dandy	No	Yes	Beneficiary	Section 97	63000
Landy	No	Yes	Beneficiary	Section 97	43000
Balance
				Total	$178000

1. Calculate tax payable by the trustee on behalf of Dandy, Landy and the balance of trust net income.

Tax payable by Trustee on behalf of Dandy: Assessable income*45% 72000*45%= $32400 Tax payable by Trustee on behalf of Landy: Assessable income Income from trust- 43000 Total assessable income- $43000 Assessable income*45% = $43000*45% = $19350 Tax payable by Trustee on balance of trust net income: Assessable income Balance of trust income- 2000 Assessable income*45% = $2000*45% = $900

1. Calculate tax payable byLandy (only).

Assessable income Income from trust- 43000 Income from investments- 38000 Total assessable income- $81000 Assessable income*45% = $81000*45% = $36450

The following questions are based on the material in Chapter 3:

(Allocation of Partnership Net Income)

Sue, Prue, Lou and Emmet operate a transport company in the ratio 4:3:2:1.  

Their assessable income for the 2016/17 tax year amounted to $780,000 while they had $300,000 of deductions.  

Their partnership agreement states that all profits and losses are to be shared in the ratio 4:3:2:1 after adjusting for partner’s salaries, travel allowances and interest on capital.

The following data was extracted from their financial records:

Interest on Capital

Sue $ 12,000

Prue 15,000

Lou 5,000

Emmet 3,000

Partner’s Salaries

Sue 65,000

Prue 50,000

Emmet 20,000

Travel Allowances

Sue 4,000

Emmet 6,000

Based on the above information, complete the table calculating each partner’s share of partnership net income under the terms of the partnership agreement.

	Sue	Prue	Lou	Emmet	Total $
Interest on capital	12000	15000	5000	3000	35000
Partners’ salaries	65000	50000		20000	135000
Travel allowances	4000			6000	10000
Share of Adjusted Net Income	109091	81819	54545	27273	300000
Total $	190091	146819	104545	83273	480000

The following questions are based on the material in Chapter 4:

Q4.4.21

(Reconciliation of taxableincome)

Trash Converters Limited, a small business entity, has prepared an income statement for2016/17:

	$	$
GROSSPROFIT		1,624,000
Add: OTHERINCOME
UnfrankedDividend	2,300
Fully Franked Dividends (company tax rate 30%)	7,700
Net Dividends from Spain - note1	32,000
Gain on Sale of Shares - note2	2,000	44,000
TOTAL OPERATING INCOME		1,668,000
EXPENSES
Depreciation - note 3	34,000
Fringe BenefitsTax	48,000
Payroll Tax	46,900
Superannuation - note4	75,000
PAYG Instalments Paid - note5	92,000
Other DeductibleExpenditure	965,000	1,260,900
NETPROFIT		407,100

Note 1	The dividends from Spain have had $8,000 of tax withheld.
Note 2	Shares sold during the year were acquired in 1984 as an investment.
Note 3	Decline in value deduction is calculated as $28,000.
Note 4	Superannuation includes an amount of $30,000 paid to a director's spouse. This $30,000 amount is deemed to be excessive.
Note 5	All of the PAYG tax instalments relate to the current year.

Required:

1. Complete the table reconciling net profit with taxable income for the 2016/17 taxyear.

27. Calculate net tax payable by the company for the 2016/17 taxyear. (For the purpose of this exercise, assume a 27.5% small business entity company income tax rate, as per chapter 4.3 of your textbook).

	$	$
Net Profit per income statement		$407100
Add:
Franking Credits	$3300
Foreign Tax – Spain	$8000
Accounting Depreciation	$34000
Superannuation	$45000
PAYG instalments	$92000	$182300
		$224800
Less:
Decline in Value	$28000
Accounting Gain on Shares	$2000	$30000
Taxable Income		$194800
Tax on Taxable Income	53570	$53570
Less:
Franking Tax Offset	$2310
PAYG Instalments	$17000
Foreign Income Tax Offset – tax paid	$8000	$27310
Tax Payable	26260	$26260

Rudimentary Pty Ltd, a corporate tax entity, has the following transactions for the 2016/17 taxyear:

Date	Transaction	$
30/06/16	Balance	Nil
15/10/16	PAYG InstalmentPaid	14,000
15/12/16	2015/16 Tax RefundReceived	9,500
12/03/17	Fully Franked DividendReceived	3,500
08/05/17	Fully Franked DividendPaid	7,000

Note – the benchmark franking percentage is100%.

Required: Prepare the franking account for the 2016/17 taxyear.

Date	Transaction	Debit	Credit	Balance (state if DR or CR)
1/7/16	Opening Balance			0
15/10/16	PAYG Instalment paid		14000	14000
15/12/16	2015/16 Tax refund	9500		4500
12/03/17	Full franked dividend received		3500	8000
08/05/17	Fully Franked dividend paid	7000		1000

The following questions are based on the material in Chapter 5:

(AverageIncome)

Ernie Wombat is a primary producer who commenced business in 2011/12. The following data relates to Ernie’s first 6 years oftrading:

Excepted Assessable Income and Eligible Assessable Income of Ron

Year	AssessableIncome	Deductions
2011/12	$32,000	$15,000
2012/13	35,000	20,000
2013/14	31,000	39,000
2014/15	42,000	21,000
2015/16	45,000	22,000
2016/17	51,000	25,000

• All assessable income and deductions are from primaryproduction.
• The deductions do not include any amounts that may be deductible for losses of previousyears.

Required:

1. Calculate Ernie’s taxable income for each taxyear.
2. Calculate Ernie’s average income for each taxyear.

Year	Taxable Income	Average Income	Notes (if any)
2011/12	17000	8500
2012/13	15000	16000
2013/14	-8000	3500
2014/15	21000	10500
2015/16	23000	22000
2016/17	26000	24500

(Tax calculation under averaging)

Rikki Teabridge had the following income during the 2016/17 taxyear:

Net Business Income from Primary Production $ 35,000

Gross Wages from part-time job at local supermarket $20,000

• Rikki’s average income was$20,000.
• Rikki had no other assessable income ordeductions.
• PAYG tax of $2,000 was withheld from Rikki’swages.
• Rikki is covered by adequate private healthinsurance.

Required:

Complete the following statement showing Rikki’s tax payable for the 2016/17 taxyearincluding any averagingadjustment.

	Notes/Workings (if any)
Tax on Average Income
Tax on $	20000*19%	$3800
Comparison of Tax Rate		30%
Gross Averaging Amount
Tax on $             @ ordinary rates	55000*32.5%	$17875
Tax on $             @ comparison rates	55000*30%	$16500
		$17187.5
Averaging Component		$17187.5
Averaging Adjustment Tax Offset		$2000
Tax Payable Calculation
Tax on $		$21675
Less Averaging Tax Offset		$28
Less Low Income Tax Offset		$1375
Add Medicare Levy		$358
Less PAYG Withheld		$2000
= Tax Payable		$17914

(Trading account, average cost)

Clyde Wishbone breeds and sells sheep. During the 2016/17 year records disclosed the following:

	Quantity	Value ($)
Sheep on Hand – 30 June2016	8,200	47,900
Purchases	500	9,200
NaturalIncrease	2,900
Sales	4,300	92,400
Rations	100
Deaths	300

Clyde chooses to use the prescribed value for natural increase and average cost for rations and closingstock.

Required:

Prepare the average cost calculations and the trading account for the 2016/17 taxyear.

Average Cost Calculations
	Qty. of Sheep	$
Opening Stock	8200	$47900
Purchases	500	$9200
Natural Increase @ prescribed value	2900	$2895
Total	11600	$59995
Average Cost of one sheep		$5.17
Average Costof Rations	Qty Sheep for rations 100	$5.17
Average Cost of Closing Stock	Qty Sheep at Closing Stock	$21.48

Sheep Trading Account
	Qty.	$		Qty.	$
Opening Stock	8200	47900	Sales	4300	92400
Purchases	500	9200	Rations	100	517
Natural Increase	2900	2895	Deaths	300	1551
Gross Profit		182685	Closing Stock	6900	148212
Total			Total		242680

The following questions are based on the material in Chapter 6:

(Assessablecontributions)

The Spotless Superannuation Fund is a complying superannuation fund. The fund received the following contributions:

July 2016	Contributions from contributing employer relatingto2015/16	$27,800
Sep2016	Superannuation Guarantee Shortfall received from ATO	11,400
Oct2016	Contributions from employer relating to Sept 2016 quarter	34,500
Jan2017	Contributions from employer relating to Dec 2016 quarter	36,100
Apr 2017	Contributions from employer relating to March 2017 quarter	27,450
July 2017	Contributions from employer relating to June 2017 quarter	19,320

All of the above amounts related to members who have supplied their TFN.

There was a further $8,340 of superannuation accrued and payable by the contributing employer in relation to 2016/17 but not yet received by the fund.

Calculate the fund’s assessable income from contributions for the2016/17 taxyear.

Contributions from contributing employer relatingto2015/16- 27800 Superannuation Guarantee Shortfall received from ATO- 11400 Contributions from employer relating to Sept 2016 quarter-34500 Contributions from employer relating to Dec 2016 quarter-36100 Contributions from employer relating to March 2017 quarter-27450 Contributions from employer relating to June 2017 quarter-19320 Total                                                                                                156570 Less: accrued                                                         8340 = 148230

(Assessable income, ordinaryincome)

The Blowhard Superannuation Fund, a complying fund, received the following amounts during the 2016/17 tax year:

Unfranked Dividends from listed companies	$12,450
Franked Dividends from listed companies (Fullyfranked. Company Tax rate 30%)	20,300
Interest from cash managementaccount	8,250
Proceeds from redemption of term deposits (includes principalof$50,000)	59,400
Interest from at-call deposit (net of $4,900 TFN taxwithheld)	5,100
Interest from investments segregated to meet the payment of  current income stream benefits	35,000

Required:

Calculate the fund’s assessable income from investments for the2016/17 taxyear.

Unfranked Dividends from listed companies-12450 Franked Dividends from listed companies-20300 Interest from cash managementaccount-8250 Proceeds from redemption of term deposits-59400 Interest from at-call deposit-5100 Interest from investments-35000 Total= 140500

The following questions are based on the material in Chapter 7:

Q11.7.3

(Calculation of income attributable to members)

Dockside Rowers Club disclosed the following data for the 2016/17 financialyear:

DaysOpen	361
Financialmembers	900
Average % of members in attendancedaily	15%
Total visitors for the year	4,200
Visitors accompanied bymembers	1,950
Net Trading Surplus for theyear	$200,000

Required:

Calculate the proportion of the receipts that would be deemed to be from non-members.

Net trading surplus- 200,000*(15%*900)*1950/4200*365 = 45755357144

The following questions are based on the material in Chapter 8:

Q12.8.1

(Professional and other income of an artist)

Sam Journeyman derives income as a professional beach dodge ball player.

During the 2016/17 tax year, Sam received the followingamounts:

Tournament Prizemoney from dodgeball	$85,000
Appearance fees from dodge balltournaments	12,000
Cash sponsorship from Aussieboom	60,000
Jetski provided by Aussieboom as abenefit	8,000
Interest from bank account comprising savings from Prizemoney	3,700
Directors fees from DodgeballAustralia	14,500
Car provided by Dodgeball Australia as abenefit	7,200

Required:

1. Calculate Sam’s taxable professional income for the 2016/17 taxyear.

Taxable Professional Income	$
Tournament Prize money from dodgeball	85000
Appearance fees from dodge balltournaments	12000
Cash sponsorship from Aussieboom	60000
Jetski provided by Aussieboom as a benefit	8000
Total	165000

1. Calculate Sam’s other taxable income for the 2016/17 taxyear.

Other Taxable Income	$
Interest from bank account comprising savings from Prizemoney	3700
Directors fees from DodgeballAustralia	14500
Car provided by Dodgeball Australia as abenefit	7200
Total	25400

The following questions are based on the material in Chapter 9:

Q13.9.7

(False and misleadingstatements)

Randy Michaels has a client, Shonky Pty Ltd. The directors of Shonky have asked Randy to lodge their company's 2016/17 income tax return with the correct taxable income, but with a false address and contact details. They have also requested that Randy does not disclose the fact that the company has made payments to associated persons during theyear.

Required:

What are the possible consequences for Randy if he agrees to do either of thesethings?

Penalty will be imposed on randy for showing misleading information.

The following questions are based on the material in Chapter 10:

Q14.10.1

(Returns required forlodgement)

The following information relates to transactions during the 2016/17 taxyear:

• Al Basic, an Australian resident aged 30, received a gross salary of $50,000 and had no other income or deductions. Al does not use the services of a Registered Tax Agent.
• Brianna Minor, an Australian resident aged 15, received interest on an investment given to her by her parents amounting to $750. She had no other income or deductions and does not use the services of a Registered TaxAgent.
• DrewToomuch,anAustralianresidentaged39,derivednetbusinesslossesof$15,000. He has no other income or deductions and uses the services of a Registered TaxAgent.
• Fritz Watson, an Australian resident aged 19, received gross wages of $11,100 ($500 PAYG tax withheld).  Fritz did not have any other income or deductions and does not use the services of a Registered Taxagent.

Required:

For each taxpayer state whether or not they are required to lodge an incometaxreturnforthe2016/17taxyearandifso,whenthereturnmust belodged.

Name	Required to lodge? (Y/N) (include brief comment/notes to support your view)	If Yes, due by date is
Al Basic	Yes	21 July
Brianna Minor	No, Minor is not required to pay tax
Drew Too much	Tax is lodged for claiming the previous loss
Fritz Watson	No

Trust Income and Taxation Obligations of Ron

Q15.10.5

(Rulings and determinations)

The following tax rulings were issued in relation to the application of tax legislation:

1. A ruling is issued by the tax office relating to investment in a publicly available trust which aims to breed and sell Three-Legged Northern MongolianParrots.

The prospectus claims that investors will be able to claim the cost of any units subscribed as an immediate tax deduction. In the ruling, the Commissioner has indicated that not only will there be no immediate deduction, but investors will be ineligible to claim any interest expenses in acquiring the units until the trust has commenced derivingsales.

1. Joanne Royal has applied for and received a ruling relating to her ability to claim a net medical expenses tax offset for massage oils.  The ruling stated that Joanne cannot include the oils in determining her taxoffset.
2. The Commissioner released a ruling that ‘frequent flyer’ bonuses received by employees as a result of employer expenditure are not subject toFBT.
3. Frank phoned the ATO regarding a meal allowance received from his employer. In the course of the phone conversation, he provided full identification and was advised by a tax officer that the allowance is assessableincome.

Required:

For each of these examples, indicate the type of ruling or decision that has beenmadebytheCommissionerandtheextenttowhichitisbindingonthe taxpayersinvolved.

Taxpayer	Type of Ruling [Oral, Public, Private, Product, Class, Tax Determination]	Extent to which it is binding (provide your explanation/reasons)
a.	Tax Determination	Onwer of the investment is required to abide by all the rules
b.	Product rulings	It will bind the product owner to get the tax offset
c.	Public Ruling	It is applicable for all the employer
d.	Oral	Franked Phoned ATO about the business matters to include mel allowances in the assessable income is valid.

 The following questions are based on the material in Chapter 11:

Q16.11.1

(Due dates forpayment)

The following taxpayers are required to lodge income tax returns and each has a tax liability in respect of the 2016/17 taxyear:

2017. Sophie Wilson, an individual resident, has lodged her 2016/17 income tax return on 15 September2017. Based on the return, she will have tax payable of $2,000 She is not on the lodgement list of a registered taxagent.
2018. Payable Pty Ltd, a resident corporate entity, has lodged their 2016/17 income tax return on 10 August They were not on the lodgement list of a registered tax agent. Based on the return, Payable Pty Ltd will have $1,200 of taxpayable.
2019. On 20 August 2017, Dianne Porterhouse received her 2016/17 assessment indicating that she had $4,000 payable on 22 November 2017. Dianne lodged an objection and on 15 November 2017 received an amended assessment showing that $2,900 was nowpayable.

Required:

For each of these taxpayers, specify the date due for payment ofamounts owed to the taxoffice.

Taxpayer	Due Date for payment to ATO
a. Sophie Wilson	21 October
b. Payable Pty. Ltd.	21 September
c. Dianne Porterhouse	21 December

The following questions are based on the material in Chapter 12:

Q17.12.5

(Previousoffences)

Cheryl, a single resident taxpayer, is employed as an elite full-time soccer referee and claims that she plays video games for ‘practice in making decisions’. In her 2016/17 income tax return, Cheryl disclosed taxable income of $153,000 after claiming video game expenses of$1,500.

Cheryl is also subject to the Medicare Levy Surcharge (Tier 3). Cheryl has been penalised previously following an audit of her 2013/14 income taxreturn.

Required:

Calculate the likely penalties that would be imposed on Cheryl iftheresulting shortfall were uncovered during ATO auditactivity.

Cheryl	Disclosed Taxable Income	Amended Taxable Income
Taxable Income	$153000	$151500
Tax on income	$68850	$68175
Medicare Levy 2%	$1377	$1364
Medicare Levy Surcharge 1.5%	$1033	$1023
Total	$ 224260	$222062

Total shortfall of tax payable(= Amended Total less Disclosed Total)

$ 2198

Penalties	Calculation details	Amount $
Base penalty amount		$2198
Increase for previous offences		$100
Total Penalty		$2298

The following questions are based on the material in Chapter 13:

Q18.13.7

(Successfulappeal)

Stefan Hawkins has been successful with an appeal to the AAT against his 2016/17 income tax assessment. The basis for the challenge was $20,000 of deductions that were disallowed by theCommissioner.

The AAT indicated that the entire amount should have been properly allowed as a deduction. The Commissioner has advised that he will not seek to have the AAT decisionoverturned.

The amount that was challenged by Stefan comprised $8,000 of income tax, $2,000 of additional penalties, and $1,500 of general interest charge. Stefan had paid these amounts infull.

Required:

1. Which of the above amounts is the Commissioner obliged to refund to Stefan?

11500 will refund by the commissioner

1. Are there any other amounts that may be paid to Stefan as a result ofthe AATdecision?

Rest of 8500 will be paid by AAT to qualify the total challenged amount of 20000

The following questions are based on the material in Chapter 14:

Q19.14.9

(Tax planning, Superannuation co-contributions)

Jim’s taxable total income is $37,000. In addition to this he received reportable fringe benefits of$3,500.

Required:

Calculate the maximum Superannuation co-contribution he can receivefor the 2016/17 year.

(Show your workings)

Maximum super annuation Taxable income- Reportable FBT = 37000-3500 = 33500 = 33500*10% = 3350

 The following questions are based on the material in Chapter 15:

Q20.15.1

(Personal serviceincome)

Required:

For each of the following, state whether the income described would be classed as Personal ServicesIncome (include a brief explanation/reason for your decision):

• Sally, a marketing consultant, provides consulting services to a soft drink company.

• Greg owns a block of holiday apartments that he leases for holidayletting.

• Rochelle is a music producer.  She does not use her own studio, but employs a team of five engineers and producers who contract to produce complete projects for various artists.

• Howard receives monthly payments from a produce co-operative for the right to use software that he has developed. The software records all classification, inventory and financial transactions.

• Mal receives contract receipts to act as general manager of a lighting company. His contract is for eighteen months only. Mal is provided with an office, furniture and a computer for the duration of thecontract.

Taxpayer	Is this Personal Services Income? (Yes/No) (provide your explanation/reason)
a. Sally	Yes it is personal income as Sally provides their consulting services as a marketing expert to a soft drink company.
b. Greg	No, it is not a personal income as there are no efforts applied by Greg.
c. Rochelle	No it is personal income as she employs a team of members who is earning for her.
d. Howard	Yes, it is a personal income as he is getting amount for his intelligence in the form of softwares.
e. Mal	Yes it is personal income, as he is earning money on the basis of their talent.

The following questions are based on the material in Chapter 16:

Q21.16.3

(Definition of taxhavens)

 Required

What are two key factors that the OECD identifies in considering whether a jurisdiction is a taxhaven?

Tax haven is a terminology used to describe a jurisdiction under which lower rates of taxes or no taxes applicable on the income of an individual. Aim of the country is to reduce their taxes on various things to grab the attention of foreign investors by increasing the flow of foreign capital in the country. There are two key factors considered by OECD by knowing this jurisdiction are mention as below: · Lack of transparency · No nominal taxes

 The following questions are based on the material in Chapter 17:

Q22.17.5

(Calculation of FBT liability, gross upvalues)

Hook, Line and Plunger Coffee Shop provide their employees with the following fringe benefits during the 2016/17 FBT year. The employer is registered for GST and able to claim input taxcredits.

Description of FringeBenefit	TaxableValue
Low interestloan	$2,450
Payment of private telephoneaccount	1,940
Use of a Volkswagen car (purchased January2000)	3,380
Use of a Holden car (purchased March2015)	9,415
Payment of private school fees (noGST)	10,825

The employer has not paid any FBT instalments during theyear.

Required:

Calculate Fringe Benefits Tax payable by Hook, Line and Plunger Coffee Shop forthe 2016/17 FBTyear.

Show separate calculations for any Type 1 and Type 2 fringe benefits.

Type 1 (only) Fringe Benefits:
Taxable Values of Fringe Benefits: (List by description)
Use of Volkswagen car	$3380
Use of Holden car	$9415
= Total Taxable Value (Type 1 only)	$12795
Gross-Up Factor (Type 1 only)	2.1463
= Total Grossed-Up Value of  Benefits (Type 1 only)	$2.1463
@ FB Tax Rate %	49%
= Total FBTax Payable (Type 1 Benefits only)	$2919.8

Type 2 (only) Fringe Benefits:
Taxable Values of FB:   (List by description)
Low interest loan	$2450
Payment of private telephone account	$1940
	$
= Total Taxable Value (Type 2 only)	$4390
Gross-Up Factor (Type 2 only)	1.9608
= Total Grossed-Up Value of  Benefits (Type 2 only)	$1.9608
@ FB Tax Rate %	49%
= Total FBTax Payable (Type 2 Benefits only)	$1096.62

Total FB Tax Payable (Type 1 plus Type 2)

$4016.42

The following questions are based on the material in Chapter 18:

Q23.18.5

(Active asset reduction and retirement exemption)

On 1 July 2016, Micah Wong, a resident taxpayer aged 58, sold his mortgage broking business for $2,675,000 and retired. The proceeds are entirely for goodwill and the cost base for this asset consists solely of second element costs on disposal of $35,000.

Micah commenced business in 2007 and does not have any other current or prior year capital gains or losses. His business satisfies the requirements of Subdivision 152-C.

Required:

	Yes / No?
a. Does the 50% CGT discount apply?	Yes
b. Does the Small Business Active Asset reduction apply?	Yes
c. Does the Small Business Retirement Concession apply?	Yes

1. Calculate Micah's net capital gain for the 2016/17 tax year (use grid provided to show your workings):

	Calculation details (if any)	$
Sales consideration		$2675000
Cost on disposal		$35000
Net Capital Gain		$2640000

 The following questions are based on the material in Chapter 19:

Q24.19.7

(GST attribution transactions)

Jack Ramjet owns a clothing store in Melbourne. The following transactions occurred in the September 2016quarter:

All applicable transactions include GST.

Cash sales	$ 65,000
Credit sales (accounts receivable customers)	120,000
Collections of accounts receivables	90,000
Cash purchases	50,000
Credit purchases to suppliers (accounts payable customers)	55,000
Payment of accounts payables	68,000
Wages paid to employees	24,000
Interest received	200
Interest paid	1,200

Required:

Calculate the GST payable for the September quarter:

(a) On a cash basis.

(b) On an accrual basis.

( a) Cash Basis
GST Collected:	Amount $ (incl. GST)	GST $
Cash Sales	65000	6500
Collection of accounts receivables	90000	9000
Interest received	200	20
Total GST Collected		$15520
GST Paid:	Amount $ (incl. GST)	GST $
Cash Purchases	50000	5000
Wages paid	24000	2400
Payment of accounts  payable	68000	6800
Interest paid	1200	120
Total GST Paid		$14320
Net GST	(specify if Payable or Refundable)	$1200

( b ) Accrual Basis
GST Collected:	Amount $ (incl. GST)	GST $
Credit Sales	120000	12000
Total GST Collected		$12000
GST Paid:	Amount $ (incl. GST)	GST $
Credit Purchases to Suppliers	55000	5500
Total GST Paid		$5500
Net GST	(specify if Payable or Refundable)	$6500

The following question is based on the material in Chapter 20:

Q25.20.1

(What is tax crime?)

Required:

Provide five (5) methods of “criminal attack” that are most commonly used by criminals to evade taxation obligations or fraudulently use the system to obtain an improper financial benefit.

5 Most common ‘criminal attack’ methods on the tax system:
1.	Malware is severe attack method used by extruders to steal the confidentiality of the tax systems in the form of various viruses, bugs, and worms to collapse the important data. The Trojan virus affects the whole tax systems which need to protect against the hackers.
2.	A Phishing attack is another criminal method used by hackers to manipulate the taxable records of an individual to evade the assessed amount of tax for a particular year. Aim of this attack is to affect the quality of data as hackers will send email to get their personal data to evade their tax.
3.	Denial of service attacks is another cyber criminal method in which the whole server of the tax websites of HM&RC got hacked to obtain all the confidential data. Through his way, hackers will come to know about the personal details of a taxpayer.
4.	Password attack is one of the severe cyber attack in which hacker will spoil the conoodential information such as username and password of a taxpayer.
5.	Malvertising is a fraud committed by hackers in which fake tax website is created to steal the confidential information of all the taxpayers of Australia.